Oil

Ralph Nader once said the world was flooded with oil. He knows nothing about auto safety so why should he know anything about oil? (Ralph did the easy part of safety, mitigation and not elmination. It was the Founders of Mothers Against Drunk Driving, Candy Lightner, Cindy Lamb who eliminated accidents.) So we ignore Nader and confess we are running out of oil. The world has been running out of oil since the first Greek used Greek Fire in combat (673 AD) and we began to run out even faster when Edwin Drake struck the first commercial oil well at a depth of 69.5 feet in Titusville on August 1859. (1859). Oil was found to be a better lubricant than bear fat, better for light than tallow, and better for heating than wood or coal. Since then we've drilled everywhere, burned ever greater numbers of barrels so we can run out of it even faster.

There are three defining points of running out of oil; new discoveries peak new discoveries are less than production, and there is no more oil. This latter can be subdivided into market segments where the price of oil will exceed the benefit of using it. Fist to go will be drivers of private autos unless they are very rich. Last will probably be plastics manufacturers. The first peak occured in the '70s and the second is occuring now. Dr. M. King Hubbert, geophysicist, created what is known as "The Peak." This method is based on production following the normal curve (most complex things follow the normal curve) and from this it follows that the peak extraction rate is always close to the mid point of depletion (Hubbert 1949). In the U.S., the rate of discovery of oil peaked in 1930. From this and the depletion curves for oil wells, Hubbert predicted that oil production in the U.S. would peak in 1970 and decline thereafter (Hubbert 1956). At that time,this concept was universally ridiculed but for the lower 48 states, U.S. oil production peaked and began to fall in 1971-1972 (Campbell and Leherrere 1998).

The world has been using oil at a greater rate than the discovery rate. For every new barrel discovered the world is currently using 4-6 barrels. During the past two years, the discovery rate for new oil has only been about 10–20 billion barrels despite use of the most sophisticated and accurate methodology for identifying geological formations where oil and gas have accumulated. Discoveries of oil fields with capacities of more than 500 million barrels of oil were frequent a few years ago but no discoveries of this size have been made since 2002 (there were two in 2002, six in 2001 and 13 in 2000). It is widely publicised that the net value of all discoveries for the five major oil groups during the three years, 2001–2003, was less than the exploration costs (Duffin, cited by Ruppert 2005).

Greatest Oil Reserves by Country, 2005

Rank	Country	Proved reserves (billion barrels)
1.	Saudi Arabia	261.9
2.	Canada	178.81
3.	Iran	125.8
4.	Iraq	115.0
5.	Kuwait	101.5
6.	United Arab Emirates	97.8
7.	Venezuela	77.2
8.	Russia	60.0
9.	Libya	39.0
10.	Nigeria	35.3

Source: Oil & Gas Journal, Vol. 102, No. 47 (Dec. 10, 2004).

Note that the United States is not among those on the list. The U.S. has been pumping its oil longer than anyone else and to a large part the wealth of the U.S. resulted from this resource. Before Oil, most of the wealth came from cutting the forests. The forests in Michigan alone are estimated to be of more value than the gold produced by California. Farm produce to generates wealth slowly but steadily as do many other small producers but trees and oil built America.

World Proved Reserves of Oil and Natural Gas, Most Recent Estimates

 	Oil	Oil	Oil	Natural Gas	Natural Gas	Natural Gas	Natural Gas
 	(Billion Barrels)	(Billion Barrels)	(Billion Barrels)	(Trillion Cubic Feet)	(Trillion Cubic Feet)	(Trillion Cubic Feet)	(Trillion Cubic Feet)
Country/Region	BP Statistical Review	Oil & Gas Journal	World Oil4	BP Statistical Review	CEDIGAZ	Oil & Gas Journal	World Oil
 	Year-End 2004	January 1, 2005	Year-End 2003	Year-End 2004	January 1, 2005	January 1, 2005	Year-End 2003
 							 
Middle East	733.859	729.341	686.345	2,570.793	2,589.649	2,522.125	2,539.650
 							 
Eastern Europe & Former U.S.S.R.	121.871	79.190	89.013	2,081.433	2,043.750	1,964.160	2,693.227
 							 
Africa	112.233	100.784	104.644	496.430	498.860	476.509	443.200
 							 
Central & South America	101.165	100.595	75.160	250.595	243.956	250.520	240.937
 							 
North America	60.955	215.291	41.445	260.491	259.639	260.494	268.853
 							 
Asia & Oceania	41.100	36.246	37.703	501.517	504.793	383.913	449.910
 							 
Western Europe	17.372	16.255	16.382	178.305	217.929	182.487	170.054
 							 
World Total	1,188.556	1,277.702	1,050.691	6,339.563	6,358.575	6,040.208	6,805.830

NOTES: Proved reserves are estimated with reasonable certainty to be recoverable with present technology and prices.

These quantities are the oil that can be extracted from the ground and can be sold competively. Obviously some oil fields cannot be drilled for a reasonable amount of money. As mentioned above, recent oil discoveries are not expected to return their cost of exploration and development at current prices; a possible explanation of why the price of oil is climbing rapidly. Additionally, not all of the oil can be extracted from the ground.

Oil comes up from the ground easily at first but soon begins to be more and more difficult. This has been divided into three phases:

1. Primary recovery produces oil and gas using the natural pressure of the reservoir as the driving force to push the material to the surface. Wells are often 'stimulated' through the injection of fluids, which fracture the hydrocarbon-bearing formation to improve the flow of oil and gas from the reservoir to the wellhead. Other techniques, such as pumping and gas lift help production when the reservoir pressure dissipates.
2. Secondary recovery uses other mechanisms - such as gas re-injection and water flooding - to produce residual oil and gas remaining after the primary recovery phase.
3. Tertiary recovery involves injecting other gases (such as carbon dioxide), or heat (steam or hot water) to stimulate oil and gas flow to produce remaining fluids that were not extracted during primary or secondary recovery phases.

Perhaps Quaternary recovery will become popular. There are feasible ideas although the economics might cause people to wait for horrendous prices. One proposal is to use explosives to break up the sandstone so more oil can seep out. Another is to lower grinders down wells so they can grind the rock horizontally. Nuclear explosions have been floated and it might not add much radioactivity compared to that already underground.

Bubble Point

Oil is under high pressure from the rock above it. As oil is pumped out any natural gas trapped will expand and force the oil from the narrow capilliaries in the rock. If you think oil just flows out to a sandstone court house in almost any midwestern town (or Stanford University's Quad), apply your lips to the sandstone and suck out the air to breathe. They'll find you on the ground, passed out and turning blue.

It is great that natural gas pushes the oil out at least for a little while but there is one problem. Natural gas dissolves in oil like CO₂ dissolves in beer. When you lower the pressure by opening it some of the gas bubbles out. The channels in sandstone are tiny and a bubble can plug it. Each plugged channel reduces the overall flow and if enough are plugged the flow may choke off. This has happened, reportedly in Saudi Arabia, and those wells are limited in production.

Repressurizing the well will redisolve the gas but it goes back in slower than it comes out.

Oil Deposits are estimated to be between 2 to 3 trillion barrels of oil for the entire world.

http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.html

http://www.eco-action.org/dt/oilfut.html

Oil provides 40% of the energy in industrial countries. Oil is especially critical for agriculture, transportation, and the chemical industry. To a significant degree, oil is the engine that has driven the explosion in human population - far more oil than sun energy was used to produce your lunch. The production of food, the price of food, and the availability of food are strongly dependent on oil.

Humans have searched for oil for over 100 years. Until 1962, the rate at which we discovered new oil was an upward curve. But 1962 was the peak of oil discovery. Since that year, the discovery of new oil deposits has been in a steady decline. When the OPEC oil embargo of 1973 sent prices up sharply, there was a tremendous increase in exploration activities. We literally scoured the face of the Earth, looking for new oil. Even with the latest in high-tech exploration equipment, relatively little new oil was found.(10)

in the late '80s some strange things happened to oil deposit estimates. Estimates went up by 150%. Look at these changes in billions of barrels.

Abu Dhabi from 20 to 90
Dubai from 1.5 to 4
Iran from 50 to 90
Iraq from 40 to 100
Saudi Arabia from 150 to 250
Venezuela from 20 to 55

production is estimated to peak in 2008 at about 30 billion barrels a year compared to about 28 billion barrels a year in 2005. After that it will decline at an average decline of 2.5 %/year

Hubbard used the Normal Distribution by finding a fit to an exponential distribution in the years the oil industry was increasing. He fitted this to a normal for whatever goes up must come down. Comparing his chart to those for individual oil fields that had gone up and down he was able to develop a probable shape and with this he forecast the peak U.S. production in the 1970s.

Some look at the same data and develop a curve with an area of 2/3 of Hubbard's.

Using the normal for the peak will not have much error

Normal Distribution, also called a Gaussian distribution, is in practice one of the most important distributions, since experimental errors are often normally distributed to a good approximation. This has been proven to be the limit for adding distributions. For example, multiple factors affect the height of a ten year old boy; genetics, care during pregnancy, early childhood disease, adequate food, nutrition, incidence of injuries and social and economic factors. All of these acting in their own ways on a large number of boys results in their heights being normally distributed.

Binomial distribution, also called Bernoulli distribution, is the probability distribution of selecting p out of n objects. As n approaches infinity this distribution approaches the normally distribution.

Exponential distributions describe the distance between events with uniform distribution in time. Decay of radioactive particles is an example of an Exponential distribution.

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