Is Saudi Arabia Running Out of Oil?

This month, I have been following a series of articles over at The Oil Drum. Two knowledgable and articulate members have been having a debate about whether Saudi Arabia has hit Peak Oil or not. Stuart Staniford has been producing graphs, charts and tables that back up his theory that the steady 8% decline in Saudi production over 2006 was not voluntary and they have started down the post-peak slide. Euan Mearns has been arguing that the KSA is just doing what it usually does, acting as a swing producer, and that the declines over the year were not as severe as Staniford showed, nor were they involuntary.

There are a few scary things about this debate. First of all, Staniford is frighteningly well informed, and his numbers are difficult to dispute; most people seem to be disputing his conclusions but not his numbers. Secondly, Mearns doesn't pooh-pooh Staniford's claims outright; the best he can do is, "[I] feel there are several cautionary observations that need to be made before jumping to any conclusion about the end of the oil age. If Stuart is right, and he may be, then the consequences may be dire." Thirdly, the comments at the bottom of each article seem to include many expert sources quibbling over small details, but nobody seriously disputing the observation that started it all, that Saudi's production dropped steadily last year.

Lastly, the most scary thing is that Staniford bets anyone willing to take him up on it that the claim made in a Saudi Aramco press release that they will "increase maximum sustained capacity to 10.7 million barrels per day (bpd)" is total BS. He bets that "the international oil agencies will never report sustained Saudi production of crude+condensate of 10.7 million barrels or more." He starts his bet at $1000, and later raises it to $2000.

Nobody takes him up on the bet. The best that Mearns can say is, "High stakes and long odds! If Stuart was so confident that Saudi production was heading south for good then he would not have set the bar so high." ... gulp ... So even the doubter thinks that the press release's numbers are "long odds."

Anyway, here are the articles (so far). Make sure you peruse the comments as well as the articles. Unlike so many comments on other sites, the comments here seem to be mostly from industry experts.

Saudi Arabian oil declines 8% in 2006: March 2, 2007 (Stuart Staniford)
Saudi Arabia and that $1000 bet: March 7, 2007 (Euan Mearns)
A Nosedive Toward the Desert: March 8, 2007 (Stuart Staniford)
Saudi production laid bare: March 19, 2007 (Euan Mearns)
Water in the Gas Tank, Further Forensics on Saudi Oil Supply: March 26, 2007 (Stuart Staniford)

Stuart has called a peak in Saudi production in 2005 and no matter how many wells they now drill, he forecasts that production will continue to slide in a manner similar to that shown. My position is that recent falls in Saudi production reflect voluntary restraint achieved by retiring wells and that production may rise again in the future, dependent upon global demand picking up.

- Euan Mearns

And yet, Mearns refuses to take up Staniford's $2000 bet.

I think I should start getting all of my world travel in now, before it's too late...

Hydrogen Hoax debunked

A few years ago, I got really excited about Hydrogen when I read the Wired article by Peter Schwartz and Doug Randall, How Hydrogen Can Save America. It became painfully clear to me over time, however, that the article was way off base. They recognize the problem of hydrogen production, but they don't mention it until page 3 of 5, after saying that we should make more fuel cell cars, and dot the landscape with hydrogen filling stations. Their suggested production methods, all controversial and difficult to implement, simply made it painfully obvious that hydrogen was a red herring to begin with.

Far preferable would be to use carbon-free resources like solar, wind, and hydropower to produce electricity for electrolysis, which splits water into hydrogen and oxygen. Hydrogen would make renewable energy practical, acting as a storage medium for the modest amounts of energy such resources produce. Wind power, especially, lends itself to this sort of use. This and other renewables should receive $10 billion as a seed for long-term development.

This suggests a role for a clean, efficient, and much neglected energy source: nuclear. Like the fuel cell, the nuclear generator is a technology ripe for exploitation.

Wind power? Ok, but that's a long way off. Nuclear? Oh my. No wonder they hid this bit in the middle of their article. If we could make plentiful hydrogen from wind or nuclear power, then, seriously, guys, we don't have an energy crisis. Who needs hydrocarbons when you can get reasonably-priced electricity from sources like that? We'll just save the oil for plastics, medicines, and jet fuel, OK?

What frustrated me was that I wasn't able to articulate my opinion with any degree of cogency.

Now, an excellent article by Robert Zubrin over at The New Atlantis debunks the Hydrogen Hoax quite bluntly. One of the things that caught my eye was the fact that the link between nuclear power and hydrogen proponents has been around a long time:

With the advent of nuclear energy after World War II, technologists expected that atomic power would provide electricity "too cheap to meter" -- electricity that could be used to produce pure hydrogen at low cost, which could then be used as a fuel. By the 1970s, however, it was apparent that nuclear energy, while potentially competitive with conventional power, did not usher in a new golden age of cheap electricity.

Zubrin then goes on to provide a clear analysis of the production problem.

[T]he only way to get free hydrogen on Earth is to make it. The trouble is that making hydrogen requires more energy than the hydrogen so produced can provide. Hydrogen, therefore, is not a source of energy. It simply is a carrier of energy. And it is, as we shall see, an extremely poor one.

The spokesmen for the hydrogen hoax claim that hydrogen will be manufactured from water via electrolysis. It is certainly possible to make hydrogen this way, but it is very expensive—so much so, that only four percent of all hydrogen currently produced in the United States is produced in this manner. The rest is made by breaking down hydrocarbons, through processes like pyrolysis of natural gas or steam reforming of coal.

Neither type of hydrogen is even remotely economical as fuel. The wholesale cost of commercial grade liquid hydrogen (made the cheap way, from hydrocarbons) shipped to large customers in the United States is about $6 per kilogram. High purity hydrogen made from electrolysis for scientific applications costs considerably more. Dispensed in compressed gas cylinders to retail customers, the current price of commercial grade hydrogen is about $100 per kilogram. For comparison, a kilogram of hydrogen contains about the same amount of energy as a gallon of gasoline. This means that even if hydrogen cars were available and hydrogen stations existed to fuel them, no one with the power to choose otherwise would ever buy such vehicles. This fact alone makes the hydrogen economy a non-starter in a free society.

And even if you are among those willing to sacrifice freedom and economic rationality for the sake of the environment, and therefore prefer hydrogen for its advertised benefit of reduced carbon dioxide emissions, think again. Because hydrogen is actually made by reforming hydrocarbons, its use as fuel would not reduce greenhouse gas emissions at all. In fact, it would greatly increase them.

So the hydrogen-via-electricity route is very expensive, which means it's inefficient, which means we'd be wasting a lot of energy just to store it in hydrogen. The other, cheaper, route keeps us dependent on hydrocarbons. That's certainly not a solution!

I wish the American policy makers would read and understand this, and start putting the hydrogen money into (1) battery technology and (2) alternate electric generation technologies, such as wind and, yes, nuclear. I still have hope for nuclear, believe it or not!

Oh, the quote from Verne's "The Mysterious Island" that introduces the article is magnificent!