A snapshot of the engines of innovation, as they develop new energy sources

Summary: Here are six of the dozens (hundreds?) of new companies working to develop new energy sources. This does not mean that we can ignore peak oil. It does mean that we need not plan for peak oil. It just means that we have tools and options. To make use of these tools, we need to do research about our use of energy and available sources, to build models that provide a sound foundation for large-scale crash programs. We are on the clock, as peak will likely coming while we are still preparing for it.

1. “Are Backyard Ethanol Brewers an Answer to High-Priced Gas?“, Scientific American (9 May 2008)
2. “Corvallis Cellulosic Ethanol Start-Up Receives Energy Grant“, Daily Journal of Commerce (8 May 2008)
3. “Swiss yeast developer Butalco gets financial boost” Ethanol Producer Magazine (6 May 2008)
4. “G.M. Invests in Second Ethanol Process“, New York Times (1 May 2008)
5. “BlueFire to Break Ground“, GreenTech Media (8 May 2008)
6. “Sweet New Fuel“, Forbes (23 April 2008)

Contents, with excepts

Spreading the news: the end is nigh!

Peak Oil as end of civilization is a hot meme.  Its spread illustrates how ideas propagate though our society.

“Why I hope the search for extraterrestrial life finds nothing“, Tim Bostrom, Technology Review (May/June 2008) – This is a long and subtle analysis of the Fermi Paradox.  One section of the essay discusses end-time scenarios:

The other possibility is that the Great Filter is still ahead of us. This would mean that some great improbability prevents almost all civilizations at our current stage of technological development from progressing to the point where they engage in large-scale space colonization. For example, it might be that any sufficiently advanced civilization discovers some tech­nology–perhaps some very powerful weapons tech­nology–that causes its extinction.

In “Fermi’s Paradox and the End of Cheap Oil“, Tim O’Reilly focuses on this section, connecting it to a trendy doomster movie:

Peak Oil Doomsters debunked, end of civilization called off

Summary: a brief analysis of Matt Savinar’s Life After the Oil Crash. Are we doomed? Probably not. My title is, of course, fun but absurd. Peak oil is too vast a subject, the range of expert opinion too wide, for any blog post to pose as more than a introduction — showing one perspective of the many possible. Still, I believe this makes a good case for betting that peak oil will not result in depression and war. Please see the conclusion at the end for caveats, and the links at the end for more information.

“Are We ‘Running Out’? I Thought There Was 40 Years of the Stuff Left”

Oil will not just “run out” because all oil production follows a bell curve. This is true whether we’re talking about an individual field, a country, or on the planet as a whole.

Oil is increasingly plentiful on the upslope of the bell curve, increasingly scarce and expensive on the down slope. The peak of the curve coincides with the point at which the endowment of oil has been 50 percent depleted. Once the peak is passed, oil production begins to go down while cost begins to go up.

In practical and considerably oversimplified terms, this means that if 2005 was the year of global Peak Oil, worldwide oil production in the year 2030 will be the same as it was in 1980. However, the world’s population in 2030 will be both much larger (approximately twice) and much more industrialized (oil-dependent) than it was in 1980. Consequently, worldwide demand for oil will outpace worldwide production of oil by a significant margin. As a result, the price will skyrocket, oil dependant economies will crumble, and resource wars will explode.

The issue is not one of “running out” so much as it is not having enough to keep our economy running. In this regard, the ramifications of Peak Oil for our civilization are similar to the ramifications of dehydration for the human body. … A loss of as little as 10-15 pounds of water may be enough to kill him. In a similar sense, an oil based economy such as ours doesn’t need to deplete its entire reserve of oil before it begins to collapse. A shortfall between demand and supply as little as 10 to 15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty. …

Before booking flights to New Zealand or Tasmania, let’s consider this carefully.

I. These forecasts seem very confident. Are they credible?

Does Savinar subscribe to the Psychic Hotline? Energy forecasts — esp. those warning of Peak Oil — have been notoriously wrong for many decades. Has the future suddenly become clear as glass? Let us parse the third paragraph on this home page.

An effective rebuttal to warnings about Peak Oil?

Summary: A common rebuttal to “peak oil” is to show that we are not running out of oil. While true and comforting, this is irrelevant and can blind us to the serious danger of declining oil production. Things will certainly work out in the long run, but that will not offset pain during our lives — and our children’s.

The Four Horsemen of the Energy Apocalypse Caused This Oil Mess“, the Rush Limbaugh radio show (29 April 2008) –Excerpt:

Have you seen these stories, these scaremongering, fear-oriented stories? Some people predicting $200 a barrel per oil. Somebody out there saying $10 a gallon gasoline. Now, let’s not get carried away here and pile on the panic, but for heaven’s sake, can we look at the real world? Not at the windmill wackos and how they would like us to see the real world.

Let me give you some reality, and this is from Bloomberg: “Brazil may be pumping ’several million’ barrels of crude daily by 2020, vaulting the nation into the ranks of the world’s seven biggest producers.” Several million barrels of crude daily by 2020. They’re talking about pumping oil 12 years from now, folks. How can that be if we’re running out?

That stupid question that Bush got about we’re reaching our peak, asinine. Absolute BS, undiluted, pure stinky BS! They’re pumping billions of dollars into developing the Caspian Sea for oil 20 years from now. We are not running out.

Limbaugh is the mass-market voice of the “we are not running out” rebuttal to Peak Oil. He finds support from many sources. Their optimism comes in several forms.

Fusion energy, too risky a bet for America (we prefer to rely on war)

Summary:  The polywell is one of the most promising of fusion technologies.  This post describes its history and potential.  But the significant lesson from this is America’s irrational policy for investing in its future.

The Polywell has come up in the comments several times, so perhaps deserves an update.  The polywell is the last work of that giant in the world of physics, Robert W. Bussard (who passed over in October 2007). This is the Polywell.

The Polywell, excerpt from the Wikipedia entry:

The Polywell is a plasma confinement concept that combines elements of inertial electrostatic confinement and magnetic confinement fusion, intended ultimately to produce fusion power. The geometry is a polyhedral configuration of electromagnets, within which the magnetic fields confine a cloud of electrons. The “quasi-spherical” negative electric potential well created by the electrons is in turn used to accelerate and confine ions, which will then undergo nuclear fusion. It was developed by Robert Bussardunder a US Navy research contract as an improvement of the Farnsworth-Hirsch fusor.

Nigeria, a weak link in the global oil supply

Shell got their money’s worth from this study. Events in Nigeria so far are moving just as the consultants predicted.  That is bad for oil consumers, like us.

“Peace and Security in the Niger Delta“, Conflict Expert Group of WAC Global Services (December 2003)

From a story about this study on National Public Radio:

This 2003 report was commissioned by Shell and written by outside consultants. Since it was first leaked, Shell has not disputed the document’s authenticity, but has said it strongly disagrees with some of the report’s conclusions.  This copy, obtained by National Public Radio, appears to have had some language deleted. … The consultants warned that, without big changes to how the giant company works with the government and the communities of the delta, a discontent delta population could drive Shell out of the oilfields by 2008.

This is a form of political peaking.  Nigeria can produce at current rates for years or decades, but political factors might prevent this.

For more information about Nigeria’s oil production, see Wikipedia.

 Please share your comments by posting below, brief and relevant, please.  Too long comments will be edited down.  Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

Other posts about Peak Oil

When will global oil production peak? Ask the CIA!

Summary:  The date on which global production peaks depends to a large extent on the Saudi’s.  Political peaking occurs if they decide to no longer increase production.  Geological peaking occurs when they cannot increase production.  The plans of the Saudi Princes shift with the political winds.  The size of their oil reserves are a matter of fact known only to them, and is among their most closely guarded secrets.  Might others also know?  {excerpt from a post on 1 November 2007}.

What do the KGB and CIA know?

The world changed last week, with no headlines to mark the news

At least, in the American media.  Mostly small stories in the back of our newpapers about this significant event, a milestone on the road to Peak Oil.

“King Abdullah stresses the need to keep oil for future generations“, Saudi Press Agency (13 April 2008) — Excerpt:

Custodian of the Two Holy Mosques King Abdullah yesterday emphasised the importance of keeping part of the Kingdom’s natural resources for the welfare of future generations.  “When new discoveries were made, I told them ‘leave them in the ground because our children and grandchildren will need them’,” the Saudi Press Agency quoted the King as saying.

… During the meeting, King Abdullah highlighted the significance of oil revenue and said that as long as there is oil, the Kingdom would not experience economic problems. “I told them once, ‘may God give it long life’… they asked me what is that… I told them petrol. As long as petrol is there, we will remain well. Our country will not have any problems,” he said.

The three forms of Peak Oil (let’s hope for the benign form)

This post is a follow-up to The most dangerous form of Peak Oil (8 April 2008), which I strongly recommend reading. Peak oil is a theory in that, like evolution, it is difficult to prove — at least, until after peaking occurs.  We can describe three forms of the Peak Oil theory. 

I.  The “weak” form –  This the current consensus in Peak Oil circles (the Assn for Study of Peak Oil 2004 forecast falls in this group) — Global oil production (including unconventional sources) will peak unpredictably at some point in the next 10 - 20 year.  Perhaps less, as our limited knowledge about global reserves makes accurate forecasting impossible.  Until then oil production will decline in most nations, offset by increased production from Middle East and perhaps the Former Soviet Union (FSU).

What you probably do not know about China’s food crisis

With the support of modern media and the Internet, we are well-informed about the state of the world. But perhaps not so well-informed as we believe. In The Myth of Grand Strategy I state

It is hubris to believe that any person or small group has sufficient information to develop a plan on a global scale. There are too many complex, unknowable factors. Social factors, such as ethic and religious dynamics. Plus economic, military, and political factors. We lack the understanding to process the data into accurate patterns – a plan. That requires a science of sociology developed to the degree of modern chemistry, so that we could reliably predict results of our actions. Unfortunately sociology is at the stage of chemistry in the Middle Ages, when it was called alchemy. In fact, the yearning for a grand strategy is the equivalent to the search for the Philosopher’s Stone.

Here is a small, brief test. The global food crisis is front-page news. How well-informed are you? Here are a few questions, based on the Bank Credit Analyst report “Is China Running into an agricultural dead end?” (16 April 2008).

1. As China emerges from poverty and famine, their consumption of of food is low compared to the global average. True or False?

Fantasy sells so much better than news!

How does one become a super-node on the Internet?  Newspaper editors believe “if it bleeds, it leads.”  Taking an opposite approach, the Instapundit has found that a steady diet of good news can attract a large audience.  (Note:  he also tells readers not to rely on him as their only source of information)

Rising food costs have made biofuels controversial.  The Instapundit refers us to an exciting story with this:

BIOFUELS VS. FOOD SUPPLIES: The debate continues: “More to the point, though, is the mistaken notion that we have to use food crops for fuel production. In test fields in Minnesota, Tilman and his colleagues have found that the best energy yields actually come from native prairie grasses, not corn or soy.” 

The story is as exciting as he bills it. ”Scientists weigh in on biofuels vs. food debate“, Popsci.com (16 April 2008) — Excerpt”

With debate raging on whether biofuels are robbing the world’s hungry of food, scientists and engineers at the first annual BioMass conference in Minneapolis say it ain’t so.

The Internet makes us dumber: the Bakken euphoria, a case study

Summary:  A case study of information flow on the Internet, and some conclusions.  Why does the Internet sometimes make us dumber?  How can we use it better?  We will need all the help we can get in the days to come.

The Internet can make us smarter — or dumber.  It depends on how we use it.  This post examines the euphoria over the Bakken Formation, and how it grew, briefly flowered, and died.  It is a case study, showing the flows through the Internet of information and misinformation.

I.  We start at the beginning.  This paper sparked new interest in the potential oil output of this area:  “Origins and Characteristics of the Basin-Centered Continuous Reservoir Unconventional Oil-Resource Base of the Bakken Source System, Williston Basin”, Leigh Price (1999/2000) — Price estimated the Bakken formation may hold as many as 900 billion barrels of oil. He died in August 2000; the study was never published by the USGS.   Here is a link to the paper. 

Price’s paper was both technical and obscure.  For anyone wanting facts about this topic, the North Dakota state website provides a clear statement of the facts: Bakken Formation Reserve Estimates.

As interest in the Bakken formation grew, with drilling of several successful low-output wells, more reports appeared on the Internet. 

The “Oil Shockwave” project: well-funded analysis of the obvious

Summary: The world’s slide towards Peak Oil continues, marked by much chattering but little research. The few well-funded research projects focus not on understanding the dynamics of Peak Oil, but on political objectives. The Oil Shockwave project nicely demonstrates this. Imagine what we might have learned if this money had been spent on actual research, instead of this stunt. At the end is a recommendation on a better way to consider these problems.

The Oil Shockwave 2007 Project

In 2005, Securing America’s Energy Future (SAFE) introduced Oil ShockWave, a groundbreaking simulation exercise that examines the potential consequences of U.S. oil dependence by bringing former senior government officials together into a fictional Cabinet that is forced to contend with a series of international events resulting in a rapid and sustained increase in the price of oil.

Since then, simulations have been held around the country and the world, including the 2006 World Economic Forum Annual Meeting in Davos, Switzerland, and the Aspen Strategy Group’s 2007 Summer Session in Aspen, Colorado. With each event, the simulation scenarios are updated and refined to reflect the most current and realistic challenges. But through each Oil ShockWave, participants have remained consistent in their conclusions: oil dependence represents a grave national and economic security threat to the United States.

Segment 1 of the scenario: instability in the Caspian — May 4, 2009

• The outbreak of violence in Azerbaijan, a key Caspian Sea oil producer, sends a shiver through an already tight global oil market.
• An explosion in Baku has temporarily disrupted the operation of a key regional oil artery, and more violence is anticipated.
• With global spare production capacity already below 2.0 million barrels per day, the possibility of unrest in a major oil producing region sends oil prices up to $115 per barrel.

Later the president’s advisors are interrupted by breaking news…

• The sudden spike in oil prices is leading to speculation of financial turmoil on Wall Street.
• Hedge funds are reporting major losses, the stock market is down several hundred points.
• Tetail gasoline prices are expected to climb to well over $4.00 per gallon.

June –July 2009

• Continued violence in Nigeria causes Western oil companies to shut-in an additional 500,000 b/d of production.
• Inspectors from the International Atomic Energy Agency discover an undeclared nuclear facility in Iran, causing tensions to rise.
• Scientists predict that the peak months of Atlantic hurricane season will be highly active.

Segment 2 — August 7, 2009

• With tensions rising over its nuclear program and the threat of harsh international sanctions growing increasingly real, the government in Iran suspends nearly 10 percent of daily oil exports.
• Later, Venezuela joins the limited embargo.
• The combined actions of Iran and Venezuela remove 700,000 barrels each day from an already jittery oil market and send crude prices soaring to unprecedented levels.

The president’s advisors are once again interrupted by breaking news…

• The government of Venezuela has announced its intention to match the Iranian oil embargo, bringing the total amount of oil withheld from global markets to 700,000 barrels each day.
• The news significantly accelerates the upward climb of crude oil prices.

The economic impact of $165 oil

To analyze the impact of $165 oil, SAFE commissioned The Interindustry Forecasting Project at the University of Maryland (Inforum) and Keybridge Research llc. Using the well-respected LIFT Model, an interindustry macroeconomic model of the U.S. economy, researchers were able to provide some detailed characteristics of the potential economic impact of the events depicted in Oil ShockWave.

Euphoria about the Bakken Formation

Summary:  The euphoria about this is nonsense.  The Bakken Formation was discovered in 1953; production started in 2000.  The USGS report will discuss the recoverable resources, which are important.  But the key questions concern the maximum flows produced and the cost of production — which answer make this just another unconventional source, of marginal significance in the peak oil calculations.

As usual, the internet can make us dumber or smarter — depending on how we use it.

1. Example of good reporting:  “Report on Bakken oil potential expected“, Business Week (7 April 2008)
2. Clear statement of the issues from the North Dakota state website: Bakken Formation Reserve Estimates.
3. The paper that started the discussion:  “Origins and Characteristics of the Basin-Centered Continuous Reservoir Unconventional Oil-Resource Base of the Bakken Source System, Williston Basin”, Leigh Price (1999/2000) — Price estimated the Bakken formation may hold as many as 900 billion barrels of oil. He died in 2000; the study was never peer reviewed or published.   Here is a link to the paper.
4. Example of nonsense:  “North Dakota Discovery - 200 Bn Bbl of Oil“, Classical Values (April 2008) - “Here is a technique for Mining Oil. I think the peak oil folks got it wrong. As usual. Capitalism beats the fear mongers. Again.”
5. Update:  The USGS pricked the balloon.  For a retrospective see The Internet makes us dumber: the Bakken euphoria, a case study.

The most dangerous form of Peak Oil

Summary: Robert Hirsch describes another form of Peak Oil: political peaking.  Perhaps the Middle Eastern nations can produce more oil to meet the world’s growing thirst — but will they?  Is it in their interest to do so?  Also, the focus of doomsters on shockwaves — instantaneous and large production cuts — ignores the more likely forms of slower political and geological peaking.   Ending on a more optimistic note, history does give us some grounds for optimism.

Robert Hirsch, one of the world’s top energy experts, has an important article in the February issue of Energy Policy magazine, “Mitigation of maximum world oil production: Shortage scenarios.” As usual with his work, it offers a mixture of new insights and careful analysis seldom found in Peak Oil research — on either side of the debate. I strongly recommend reading it. Unfortunately Energy Policy is subscription only. Here is a brief review of his analysis. Here are slides to an earlier presentation on this topic by Hirsch at the ASPO-USA conference in October 2007.

Political Peaking

Hirsch introduces an important concept which he (and many others) has long discussed, but only now is formally described: political peaking, an extreme form of resource nationalism.