In this particular case, the "thing" is an oil report overshadowed by the economic crisis. Had everything not hit the fan last year, I believe more people would have taken notice.
After all, it took $150/bbl oil prices and $4-5/gallon gasoline to get people's attention. Unfortunately, their memories were wiped as soon as pump prices came back down and oil prices crashed to $30 per barrel.
However, a November report released last year by the International Energy Agency was grossly overlooked. The report painted a sobering picture for us... and it wasn't just a generalized warning that we need to get our act together.
Canadian Province Says "No" to Coal...
You thought the U.S. Government was intrusive?
Right now, Canada's new "Green ATF" is closing down coal/oil power plants all over British Columbia...
While funneling over $30 billion to companies of their choosing to pick up the slack.
Find out here which company will more than double in size as coal and oil are switched off.
Putting the Pieces Together
Ask yourself, where does our oil come from?
Easy enough, right?
The answers you'll get from a quick survey of the public are indicative of how little people know about global oil production. Sure, Saudi Arabia will come to mind. They are one of the world's top oil producers — even if you overlook the fact that Ghawar will be little more than a wishing well for tourists in the future, considering how much seawater the Saudis are injecting into it.
Or perhaps you'll get a few responses naming Russia. After all, Russia recently surpassed the Saudis in crude production. In fact the last time I asked this question, an overwhelming number put Russia at the top of their list.
The interesting part — to me, at least — is that when I asked this question of my readers, everyone focused on production from individual countries like Russia or OPEC.
To a certain extent, they're all correct; truth be told, I probably would have answered similarly.
But after looking at the IEA oil report from last year, I'd be forced to change my response. And my [informed and accurate] answer is downright frightening...
More than one-quarter of our crude production comes from just 20 oilfields. Most of these massive oil fields were discovered about 50 years ago. Another 50% of global oil supply comes from about 110 other fields, with the remaining production produced by approximately 70,000 smaller fields. The natural rate of decline in fields past their peak was approximately 9%.
Of course, of those 20 largest oilfields, every one of them has passed their peak production.
If you really want an idea of what can happen to these oil fields, look no further than the once-mighty Cantarell field in Mexico.
Ignoring Cantarell's Lesson
I know this isn't the first time we've talked about Cantarell, but the lesson is too important to forget.
Discovered in 1976, the Cantarell field was the second largest oil producing field in the world at one point. In 2000, Pemex began injecting nitrogen into the field. Three years later, Cantarell was pumping out 2.1 million barrels per day.
Since then, the field has been in an out-of-control death spiral that nothing could stop. Production started to decline at a rate of 14% per year. Today, production has fallen to half a million barrels per day.
The consequences will be even more drastic: Approximately 90% of Mexico's electricity generation is dependent on fossil fuels. Recently, the country's energy minister announced its goal to have 26% of its power-generation come from renewable sources. That may be little more than wishful thinking. Revenue from Pemex accounts for 40% of the country's budget.
It's only a matter of time before Mexico becomes a net oil importer. If so much of their budget is dependent on oil, how can they possibly afford it?
So today, let me pose two questions to readers:
1. What do you think will happen to Mexico?
2. And what happens when those 20 oil fields suffer the same fate as Cantarell?
I'd love to hear your thoughts on the matter. Just click "Comment on/Rate this Article" below to leave your comment.
Those 20 oil fields pump out more than 19 million barrels per day. Once we lose them, can we honestly expect them to make up that production? Remember that some of those fields have been pumping for over 60 years.
Left Out in the Cold
The real losers from peak oil, however, won't be the state-run oil companies across the world...
Last Thursday, I told you that international oil companies like ExxonMobil and Shell are being threatened. And if we've learned anything from the past, it's that oil-rich countries are going to have a much tighter control over their oil assets.
After all, we've seen how easily these companies can lose everything. It doesn't matter how big the company is — their vulnerability is obvious. Whether it's Chavez nationalizing Venezuela's oil industry; Russia slamming down an iron fist on Shell's stake in the Sakhalin project; Iraq rejecting foreign oil bids... it's hard not to see where all this is headed.
Looking at how closely-guarded countries are becoming with their resources, those top oil stocks will continue to struggle.
If you're counting, national oil companies (an oil company owned fully or in the majority of the government) control about 95% of global oil reserves, and produce more than half of the world's oil supply.
Believe me, dear reader, it's only going to get tighter from here on out.
But in stark contrast to the tightening collar of the oil world, the green sector is opening up wider and wider — and the roof is about to blow off this next opportunity. The mineral rights for this tiny piece of Arctic tundra are up for grabs come January 1. One company stands to control this piece of land worth $273 million in rare earth metals. You can read all the details in this free bonus report.
Until next time,
Keith Kohl
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In regards to Mexico.....I think the U.S. better get that fence built sooner rather than later, once Mexico's oil runs out there will be even more poverty than there is now...which will eventually drive even more people into the Northern Tier of the U.S.
I doubt they will bother with getting proper immigration docs.
I live about in the middle of the Bakken Sanish formation....35 miles southeast of Estevan Sask Canada the activity we see here is astonishing....just yesterday I saw a rig drilling on an already occupied location...this site had a successful well established in May of 09 now they are drilling another hole 100 ft or so from the original...I can only assume that they are going for the Sanish as the other was a Bakken Horizontal I believe.
Again...I appreciate your news letter...my primary bus. is Beef Production but oil has always been of great interest.
Best Regards
Dan Pandolfo
By reducing the demand on oil we can extend the life of it in order to keep costs down and release dependency.
I used to work for a company which coined the phrase "What mankind can imagine, technology can deliver" We need to use our imagination and think the unthinkable in order to provide a future, hope and a better life for future generations.
On a supply vs. demand basis price will obviously go up, which makes the smaller more expensive to develop fields economic. I agree that this development may not keep up with the rate of decline.
I think that substitution is a large part of the answer. Bio fuels to a limited extent, electric vehicles, LNG fueled tracks (California and Australia), hydrogen (don't hold your breath as you know a lot comes from oil refining and ethylene production - go Lyondell!!) converting remote generation (esp. at Australian mines and remote towns) from diesel to gas and renewables, and syn fuels (coal to diesel - massive cost, but justifiable at sustained high oil prices). This is ignores public transport (esp. heavy and light electric rail), which is growing rapidly - Mr Buffett would agree given his purchase.
So, a lot of solutions but they require long term investment so prices have to stay high.
I also agree that ExxonMobil and Shell will be big losers because what they could have sold to the State Owned Oil Companies is services, but the majors have outsourced most of their knowledge to the Halliburtons of the World.
You know and I know that there is a glut of available oil at the present moment. There is a glut of natural gas at the present moment. There was a glut when oil was at 150 dollars a barrel and there was when it was 30 and now that it is 70. That tells me the price is not determined by supply and demand.
We do live in a universe that has abundant energy. The problem is getting it to where we want to use it in a form that is handy such as gasoline for our motor vehicles - at a price we can afford.
it does make sense to me to use the cheap fossil fuel avaiable to us today to create the next energy sources we will need shortly. Funny how the priority seems to be to fight wars in oil important places or create record profits on Wall Street.
There is lots of oil all around the americas. It takes plannig and energy to extract it. USA doesn't seem too concern about it.
AT wil replace much of our 'lost' oil production. No one offically is developing submersible oil
drilling capacity.
Since the 1960s, AT funding has mostly gone to research grants machine . . . much like cancer and crime prevention. Churchill was right . . . 'The Americans will do the right thing . . . after they do everything else.'
Time and Energy are the two vital values americans lack a sense of.
The Asians have commented . . . Americans are Fat . . . Lazy and Stupid. Are we?
Less disposable income means that
strength will revert to braun!
As for what will happen with Mexico. There are a few different answers to this. They are raising taxes I hear, if they have collection issues, along with food/job riots - you can bet they'll become more and more like a police state, including using their army.
After all, this isn't New Zealand. Mexico already has a number of problems with drug lords and corruption.
I think it will be a least a few years before large areas of Mexico are essentially ungoverned. How bad is it currently with the drug cartels?
Frankly, I'm mystified. Is there an unorganized conspiracy to keep this dirty big secret a secret, because our leaders think we can't take it on top of everything else? Or is it buried in psychological denial and ignorance? I'm inclined to think that all of financial pirates must know, otherwise why the frantic often amoral efforts to feather their nests before the rest of us find out?
On the other hand I recently read Paul Krugman's book about the causes of this Great Recession, "The Return of Depression Economics and the Crisis of 2008." I was flumoxed. I don't think that there was one mention of oil, let alone growing oil scarcity in the whole book. He puts it all on the backs of the Kings of the Universe, and bad economic policy with not even an inkling of the oil shock we experienced in '08. If a guy with that big a brain could be so clueless, I guess there must be a huge amount of ignorance in our leaders and opinion leaders.
I don't think that can last much longer. The second leg of the double whammy can't stay secret once the "recovery" is slammed back again and again by ever ubiquitous oil price run-ups.
2. The world will collapse
Have a nice day!
http://www.davidstrahan.com/blog/?p=408
Cuba pulled through, but the average Cuban lost 20lbs in weight over the ensuing 5 years!
Mexico is not Cuba however. From the news reports is seems that Mexico is already sliding into violent lawlessness, with endemic corruption and grinding poverty.
The brutalised, desparate citizens of Mexico will not be welcome anywhere.
The US military is the biggest single user of oil on the planet. They will not give up their power without a fight.
If the US$ collapses the price of oil will go skywards. If The British Pound collapses we
will not be able to pay for oil, or for the French to build us the nuclear power stations we need.
In short, if we fail to plan now, for a transition to renewable energy, then sudden oil
price spikes, supply hiatus etc., will further destabilise the economies of oil import dependent countries, further hindering the chance to plan a transition. A downward spiral will ensue.
Mexico is probably beyond redemption now. Their best chance to throw their hands up in the
air (Mexican wave?) and insist on becoming the 53rd (or whatever number it is next) state of the Union, part of the European Union, or selling their souls to China (best bet).
Cuba is a model for what will happen to us, and what we will be needing to do. I suggest we all take a closer look at what is happening in Cuba. And I me "WE", not government. All they will do is send in the troops to grab the last remaining oil fields for Uncle Sam, thus leaving the USA in the worst possible position! No oil, no friends and the rest of the world having made the transition without them!
Cuba pulled through, but the average Cuban lost 20lbs in weight over the ensuing 5 years!
Mexico is not Cuba however. From the news reports is seems that Mexico is already sliding into violent lawlessness, with endemic corruption and grinding poverty.
The brutalised, desparate citizens of Mexico will not be welcome anywhere.
The US military is the biggest single user of oil on the planet. They will not give up their power without a fight.
If the US$ collapses the price of oil will go skywards. If The British Pound collapses we
will not be able to pay for oil, or for the French to build us the nuclear power stations we need.
In short, if we fail to plan now, for a transition to renewable energy, then sudden oil
price spikes, supply hiatus etc., will further destabilise the economies of oil import dependent countries, further hindering the chance to plan a transition. A downward spiral will ensue.
Mexico is probably beyond redemption now. Their best chance to throw their hands up in the
air (Mexican wave?) and insist on becoming the 53rd (or whatever number it is next) state of the Union, part of the European Union, or selling their souls to China (best bet).
Cuba is a model for what will happen to us, and what we will be needing to do. I suggest we all take a closer look at what is happening in Cuba. And I me "WE", not government. All they will do is send in the troops to grab the last remaining oil fields for Uncle Sam, thus leaving the USA in the worst possible position! No oil, no friends and the rest of the world having made the transition without them!
http://en.wikipedia.org/wiki/File:World_Energy_consumption.png
above are several graphic links to to some fun figures. (give or take a statistician or 2)
society at this point has some very limited choices to make and we're already seeing them being made.
the amount of infrastructure required to service current lifestyles alone, were oil to be removed from the energy loop due to price or restriction, would eclipse all monies for oil ever spent in it's lifetime of use (adjusted for inflation and including roads, commercial transportation, car companies, the local bus, my plastic underpants, etc).
here's the why:
the onboarding of 'green technology' is rampant in corporate culture, but ultimately selfserving and disingenuous.
take a moment and imagine every single person out there in the world, barring the top 1% of the population that would theoretically still buy gas at any price and the military as it has zero options otherwise, and put them on a bus or in an alternative fuel vehicle. how many vehicles would that be? 500 million? 1 billion? do we make them from scratch? or wait to recycle the metal in the cars first? how much energy is that going to take to shred, separate, reduce and render, recast or roll, shape and assemble? where's the energy going to come from to do all that? the local windmill? the experimental algae biofuel plant down the block? the brand new solar array recently placed in the neighborhood? and this is just the tip of the iceberg. add in fertilizers, that stuff that keeps the farms as productive as they are. then add in commercial shipping. think walmart will still exist if it can't ship cheaply from china? and if chinese made products become an expensive option, then where will all the consumer crap come from? the u.s.? it lost it's manufacturing sector a very long time ago. cars were the last thing to go and they've been gone for a while now, with few holdouts for strictly promotional sake (look! we make our fine car here!kinda, somewhat. <.< >.> ). oh, but then without the oil we might be shy of plastics too. that would be a bummer. no more badly laminated rubber disney character keychains....
the astounding implications become unfortunately obvious as in most systems with nonrenewable resources that are consumed by a mono culture with a sense of entitlement and 'we're doing god's work'. they die, quickly, and uncleanly, until a basic balance has been restored between ultimately available consumption (within arm's reach, whatever that may entail. if your ostrich can pull a cart then it helps.) and population.
just because we can articulate it, does not make us immune to it. ;p
But with PEAK OIL becoming an abrupt reality due to our globalized governments hiding the it from the majority of humanity, what will happen when this material abundance that lulls the lower classes into servitude and tranquil existence disappears forever?
The poor here already HATE their position in the social strata, minorities always expect MORE MORE MORE, the rich OWN D.C. and won't waste a crumb of their spoils if it won't benefit them in the longrun.....what I am describing here is a powder keg.
Prepare you children and families for self-defense....buy guns, ammo, training, off-the-grid and renewable energy-generating capacity, find out who your friends really are, and stock-up on food and tools. Get informed.
As fast as our oil-dependent society has grown and flourished it may also implode and we will be on our own. The rich will be able to HIRE protection, the poor will feel obliged to take all that which is not defended, the government will naturally gravitate to defending the assets of the rich and the politically connected.
Just get ready.
It boils down to the lifestyle the USA has chosen, and the extent it is willing to go to to defend what is, indefensible. Until we are willing to modify this ridiculous lifestyle, we'll stay on the path that will lead to our justly deserved fate. Sad.
When I worked out there for Santa Fe in the mid 80s whenever there was a drilling rig free it was sent down to the empty quarter, down toward Yemen and it drilled yet another well that was capped ready for the day when the main field around Abqaiq ran low. Non of this future capacity was ever reported in the official reserves or has ever been used. Wells had been drilled and capped ready for future use for wellover 20 years so they have a lot of capacity yet.
While I was there they had low oil production which gave them low gas supply from the Gosp's for the power generation, which run's on gas, ran short to the point that whole areas were shut down. Their way out was to drill gas wells to overcome this shortage and these had phenominal pressure in excess of 5000 psi for some of them. So they have a lot to give yet before the religious nutters take over their country.
As a last note why cannot America convert gas to petrol products as the technology is well proven. This may be the way forward now especialy as you have shale gas and the major field in the gulf just announced.