Sunday, January 20, 2008

Rate vs. Reserves

There's a great article over at Peak Opportunity called, Peak Oil: Why is it so difficult to Explain/Understand? which puts a fly in the ointment of all those claiming that we have so much oil in the ground that we won't reach world peak production until at least 2030 and won't see significant decreases in our lifetimes. Apparently, it's not about how much oil we have in the ground (the reserves) it's about how much and how quickly that oil can be processed and brought to market (the rate).

The maximum production RATE for a given field or group of fields in not arbitrary! In other words, it can’t just be anything you want it to be! For instance, if a field has RESERVES of say 10 million barrels, the maximum RATE might be several thousand barrels per day, but it could never be 1 million barrels per day.

Why? OK, here is the key take-away:

Due to the physics of the flow of oil through rock, a field’s (or a country’s, or the world’s) maximum oil production RATE is not arbitrary but is dependent on the RESERVES:
  • SIZE (how big is the field in terms of area and thickness?)
  • AGE (is the field newly discovered/produced, or is has it been producing for 40 years?)
  • QUALITY (how well does the oil flow through the rock?)
  • All of the world’s largest oil fields – Ghawar, Cantarell, Burgan and Daquing - have excellent SIZE and excellent QUALITY ... but their AGE is old! Hence, all of these (except possibly Ghawar) are in decline (their RATE is declining each day).
  • The Athabasca tar sands, on the other hand, have excellent SIZE, they are essentially “new” in AGE (relatively little compared to the RESERVES has been produced so far), but they have the very poorest QUALITY – the oil is so thick it won’t flow and must be melted with heat, dissolved with solvents or mined.

The whole article is very informative. In case you missed the link at the top, you can find the full article here.

Thursday, January 17, 2008

Japan is Much Better Prepared for Peak Oil than we are.

I went to Japan for vacation in fall 2007 to visit my wife’s family. Having been immersed in peak oil stories for the past year, this time when I went I viewed the country through that lens. Japan and Hawaii are somewhat comparable in that they are both volcanic island chains with high population densities. I came home realizing how much better prepared to weather declining oil supplies Japan is than we are.

Half the oil per person:
Japan uses about half the oil per person that we do, while maintaining a similar lifestyle to us in the US. They have cars, ipods, TVs, computers, mobile phones, office jobs, and all the other things that make life “modern.” Of course, it’s not exactly the same as here. Houses tend to be smaller, refrigerators & washer/dryers are smaller, and fewer people own cars, although getting around is absolutely no problem with the excellent public transportation system. When oil gets scarce, people will hang their wash (many still do), bike more (every Japanese person owns a bicycle), shop locally, garden more, and generally make do in an infrastructure already designed to promote conservation.

Mixed use living arrangements:
Most residential and commercial spaces are in the same block or even building. In the cities, condos sit on top of all types of stores, but especially convenience stores where one can buy food and sundries and pay bills. In the countryside, village houses often use the front room as a shop of some kind: barber, beer seller, fishmonger, etc. while the back (or top) is where the family lives. Of course this was, and in many places still is, the standard all over the world for all of human history. Only in the last 50 years have the single building shop/residence been replaced by Wal-Mart. Getting what you need from these shops is easy on foot or via bicycle. What suburbs do exist are walkable and convenient. My father-in-law lives in one. It’s all houses and no stores, but vending machines (for beverages, beer, and sadly, cigarettes) are a five minute walk. The store is a ten minute walk.

Excellent public transportation:
Japan’s public transportation system is one of the best in the world. Trains are clean, fast, plentiful, and on time. Some cities, like Nagasaki, still have electrified street cars. Downtowns in larger cities are clean, vibrant, and alive, with underground walkways to facilitate pedestrian traffic between bus and train terminals. Buses snake off from train stations out to less populated areas. Some of these are electrified, but most are not. However, installing electric buses during oil scarcity could be fairly easily accomplished and economically viable due to the high population densities. In Hawaii, all of our transportation is oil-dependent. And our light rail system isn’t supposed to come online until 2020, if it ever does.

High efficiency vehicles:
First, Japan discourages car ownership by providing barriers to ownership. It costs $3000 or so to get a drivers license, and taxes, registration, and the dreaded shakken (safety inspection) can cost an owner a couple of extra thousand per year. Top that with high gasoline taxes and highway tolls, and owning a car becomes a much greater expense than the cost of the machine. Cars in Japan get almost double the fuel economy of their American counterparts (I read 45 mpg, but I can't find the link) and this efficiency is realized largely without hybrids. Part of this is accomplished through the promotion of “K-cars” (keijidosha, or “light car”). These cars have only a 660 cc engine, thus get great MPG. The government offers lots of breaks on the taxes and shakken for k-cars, and so they are more affordable. By contrast, Oahu passed the million car mark last year, and many of these are large, inefficient SUVs which fall under the light truck CAFE standards required to average only 21 mpg.

Food production:
Japan used to have a law that prohibited building on farmland, so that Japan could maintain self sufficiency in food production. I don’t know if this law is still on the books, but it appears so. The demarcation line between the city and countryside is sharp. One moment you’ll be driving by beige, ten-story condominiums (called “mansions”), and the next moment you’ll be driving by rice fields. Most cities are surrounded by farmland, and Japan kept subsidies on rice and other products in place to keep farmers in business. The Japanese pay some of the highest prices for rice and other food in the world. While the average age of farmers is very high, the infrastructure is still there. If peak oil results in the loss of a lot of city jobs, there are farms nearby that will need manual laborers, and the higher price of food will encourage this. The food won’t have to go far, either, to find its way to hungry mouths. Hawaii, by contrast imports over 90% of its food.

Another benefit is that the Japanese have kept their traditional diet made mostly from whole foods. Sushi, gobo, daikon, tsukemono, yamaimo, and many other foods are easy to prepare from vegetables and fish by hand from unprocessed ingredients. In an energy scarce world, processed foods will be the exception, and the Japanese won’t have to relearn how to make and eat traditional food. Assuming we could even grow enough to feed ourselves in Hawaii, would we be able to make sweet potatoes, pineapple, papaya, and poi dietary mainstays?

Shrinking population:
Japan’s population is shrinking, and is expected to fall from a current 120 million today down to 90 million by 2050. As oil and gas become scarce, food production will become more difficult, and a smaller population will be easier to feed. While this issue is currently viewed by the government as a negative (the growth model is the only model), I believe that this will definitely be viewed as a benefit during the lean years.

“The nail that sticks up gets hammered down”:
Japanese society is very orderly. Crime rates are among the lowest in the world. The Japanese people, for the most part, follow both the law and societal rules. While these rules have been described as oppressive, it has long been the case in Japan where people have been living in close quarters for centuries, and these rules create personal space and avoid conflict. Having such customs in place when times get tough will serve as a bulwark against chaos. In America, with our emphasis on individuality, where we’re so sure about our rights, and where the number of guns in private hands is the same as the population of the country, we’ll be lucky to avoid a blood bath when gas and food rationing begin.

Japan is far from a perfect country. Much product distribution is done via diesel truck. Japan, like America, has bought into globalization and imports billions in cheap foreign-made goods each year. Even with population shrinkage, the population is still far above the pre-industrial level of 20 million or so. The vast majority of the population goes about their daily business and pleasure completely unaware that peak oil is looming around the corner.

However, I was heartened the other day to read this article about how the Japanese government is aiming to install 30% of households with solar power. While I personally think they need a more aggressive program, it’s certainly a good start, and much more than we are doing here in Hawaii, with our favorable latitude and hundreds of sunny days per year:

I was also surprised at the number and types of people aware and concerned about global warming. I talked to three different people about it, each of whom had brought the issue up without prompting from me. A rental car salesman, a hotel worker, and a gas station attendant I talked to all made comments about it during our conversations. I can only hope that peak oil soon rises to the same level of consciousness.

UDPATE 1/22/08: I came across this article about how Japan is only 27% self sufficient in producing grain. I guess they weren't maintaining that old law about not building on farmland, or perhaps their population simply outstripped their ability to produce. 27% is the lowest rate in the world for a nation, but it is still better than the 10% or so self sufficiency Hawaii has.

Article here.

Tuesday, January 15, 2008

What is peak oil and how does it affect Hawaii?

Oil is a finite resource. There haven’t been any large discoveries of oil deposits since the 1970s. Known deposits have been drilled and pumped relentlessly. Many of these deposits have been pumped so much that they no longer produce the same amount of oil as they initially did. Their production reached a maximum output, or “peak,” then began to decline. The term “peak oil” refers to the point at which oil production begins to decline for a given well, field, region, country, or the world. Many experts believe that the world-wide peak has either begun or will occur in a few years.

As demand continues to rise, oil production is failing to keep up. On the contrary, oil production has been stagnant for the past few years, and we appear to be currently at or near peak production. The disparity between supply and demand will cause prices to go up sharply. We’re already at $100 per barrel up from a little over $10 per barrel in 1998. Oil prices will continue to rise affecting the price of all other goods and services, since oil is used to create or transport almost every product consumed or used by human beings on this planet. There really aren’t any substitutes for oil as a raw material in many products and as an engine fuel for many machines.

Hawaii’s food, electricity, transportation, and economy are more dependent on oil than any other state. This state is unique in that over 90% of our energy and 90% of our food are imported in freighters that run on oil. About 80% of our electricity in the state is produced by burning diesel. Another 15% is from burning coal, which is mined and shipped here using oil-driven machinery and ships. We are the most isolated place on the planet, separated from any continent by over 3000 miles. The mainstay of our economy, tourism, is completely dependent on cheap oil in the form of jet fuel to remain viable. More than any other state, we are completely and utterly dependent on oil for economic prosperity. Before supplies get much more expensive, and shortages occur, we need to have alternatives in place. Failure to take action will lead to job loss, poverty, and hunger of large portions of the population here.

I’ve given a brief description of peak oil, but others have done it much better than I ever could. Here are some links which describe the phenomenon in more detail.

The Energy Bulletin has a great explanation:

The detailed and refined explanation at The Oil Drum is has a FAQ-style set up with excellent charts:

Wikipedia is a bit dry, but is fairly comprehensive and has some good charts: