Peak Oil, Ghawar, and Why You Should Buy A Horse

I’m willing to wager most people haven’t heard the term “Peak Oil” yet. That’s about to change in the next few years. First, a little warning - this post will be pretty dense with info, and you might feel like you’re drinking from a fire hose as you read through it. Pucker up, I’m turning on the hose full blast.

Peak Oil is based on the idea that there is a finite amount of oil in the ground, and we will eventually reach the point where we’ve extracted half the oil on earth. As we get to the point where half the earth’s finite supply has been pumped out, a couple of things will start to happen. The total oil production will start to slow down, because we’ll start retiring productive oil fields. We won’t be able to replace lost oil fields by definition: To simply it a bit, say we’re actively running all the available oil fields on earth. If half of those run dry, there’s no place to go to find new ones. So we won’t be able to replace lost production. Let that sink in a moment - we won’t be able to replace lost production. So in effect, at point we reach about half the oil gone, we’ll reach a “Peak” moment - where production in future years will decline and there is nothing anyone can do about it, because we simply can’t find more fields to satisfy world oil demand. That’s a gross oversimplification, but you get the idea.

The fact is most of the continents are past peak and in oil production decline. That doesn’t bode well for maintaining the high standard of living we now enjoy, fueled mostly by, well, fuel. If we run dry, no more affordable airplane flights. No more car rides. No more machinery powering superefficient farms and no more lighter fluid for backyard barbecues.

We’ve been fine so far though, because there’s one area which so far has been pumping out plenty of oil: the Arabian gulf region. In fact, the gulf is home to Ghawar, the largest oil field which will ever be discovered on earth (if there was anything bigger we would have found it by now). Ghawar sits just on the coastline of Saudi Arabia, and the northern part of Ghawar contributes a whopping 55-60% of Saudi Arabia’s oil production. By extension, that means Ghawar is responsible for almost 15% of the world’s production. Fifteen percent from just one field. No other field comes close, and there is simply no way the Saudis can replace this field once it starts running dry. So once Ghawar is past peak production, Saudi Arabia is past peak production. Once the Saudis pass peak, the world is past peak.

Well, guess what: evidence is mounting that Ghawar peaked in 2005. what’s worse, there is also evidence that the Saudis have been too optimistic about the amount remaining. Even non-industry people have noticed.
The most conclusive evidence of a past-peak Ghawar field would be increased drilling with decreasing production, as the Saudis scramble to prop up output of a field in decline. Take a look at the following graph plotting new rigs in northern Ghawar on top versus the area’s oil production on the bottom (click for a larger view):

Not good. So should all go out and buy horses? I hope not. That’s pretty fatalistic, and nobody wants to return to a pre-industrial society. We’ll probably want to design hyper efficient tech goodies. We’ll probably want to stop suburban sprawl and make driving less frequent. Most importantly, we need to start pouring money into research on renewable and nuclear energy. The good news is we have time to start switching now, and we may be able to mitigate the crunch if we attack the problem from multiple angles.

I know what you’re thinking: “dude, we’ve got, like, technology and stuff”. It ain’t going to happen; technology won’t replace lost oil supplies. However, technology can be applied to develop commercially viable nuclear and renewable power. Time to get moving on that.

Commercial Solar at Work in Spain

Both the BBC and Inhabitant have put together a collage of pictures of Europe’s first commercial solar power station, rising up from the Analusian countryside like something out of a scifi flick. Financial geek note - I’d love to see what the financial plan is on this project. I can’t quite do justice to the awesomeness of this with a verbal post, so I’ll let the pictures do the talking for the most part.

Here’s further reading at the BBC and at Inhabitant.

What’s the catch, you might ask? There’s two. Firstly. the current cost of electrical power produced here is triple that of a coal or petrol powered station. Ouch. The second is that this really doesn’t do much in terms of energy independence for contries like say, Scotland or Canada, who would likely end up having to “import” energy from third world nations anyway. But the way I see it, importing power from equatorial countries like Egypt or Mexico is a whole lot better than dealing with Iran or Venezuela. Anyone want to try to put one of these up in Arizona?

CYA.com

I thought we were supposed to be living in the service economy. So what happened to.. you know, that “service” part? Here’s a run down of my experience this week purchasing a new plasma tv, and a side by side comparison of two companies who approach the whole service angle from completely opposite directions.

So I purchase said television from CYA.COM (I’ll withhold the real name unless they screw me, and if so they’ll become my favorite e-whipping boy). This particular internet retailer ships over one shiny new Vizio 42″ plasma screen. When the set arrives, the screen is completely shattered, as is my hope of watching the final episode of Heroes Monday night on a nice set in my new bedroom. I’ll deal. So after spending an annoying 30 minutes looking for a CYA.COM phone number, I find it, call up CYA.COM and get a support drone who promptly tells me the manufacturer shipped it, so I’ll have to contact them. This sad sack proceeds to backpedal and “umm….ahh..errr” himself silly once I inform him that it is in fact CYA.com’s address on both the packing slip and the return label. OOPS!

Fine, whatever. I call up Vizio, and I was passed along to a manager named Laurie. She proceeds to tell me that while the retailer should handle it, she would like to help if they botch a replacement, because afterall “your happiness is paramount here”. She gives me her direct line, jots down a case, and asks me to fill her in either way this goes. Nicely done Laurie - I would be swearing a whole lot more about this if not for your help.

Back to CYA.com, who tries the vendor bit again. Doesn’t fly this time, so then they tell me they will need to have an “inspector” come by. That’s odd, I think to myself - until she mentions the inspector would be someone from the shipping agent (ie FedEx). To make matters worse, I get an email questionaire the next day (today) asking me a series of questions regarding the shipper’s possible tampering with the package. Come on. It doesn’t take a nuclear physicist to figure out what’s going on here. I didn’t buy the vendor shipment canard, so they’re trying to float the culpability the other way at the shipper now. Fine and dandy, but why am I doing their job? Do I end up in limbo if the shipper disputes?

What all this leads me to is an obvious parallel between the two organizations I’m dealing with - Vizio’s team is interested in keeping a customer, and is covering my ass. They gave me a contact point. They care. CYA.COM is busy covering their ass instead, and is ultimately nameless and faceless. Who would you rather do business with?