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Peak Oil: The Cause of Ultra-Deepwater Drilling June 11, 2010

Posted by Jamie Friedland in Climate Change, Offshore Drilling, Politics.
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As Americans now know, it is difficult, risky, and expensive to obtain oil from deepwater reserves.  So why are we drilling there?  The answer to that question is a simple, two-word phrase you will hear more and more: “peak oil.

Oil is a finite resource (hence the distinction with “renewable” energy sources) that takes millions of years to form.  While more oil will eventually form on this planet again, the current global supply is, for all intents and purposes, all we’ve got.

In 1949, American geophysicist Dr. M. King Hubbert made an alarming prediction: the U.S. will start to run out of oil in 1970.  His theory was not taken very seriously at the time, but his analysis proved to be quite accurate.  As a result, peak oil is also called “Hubbert’s peak.”

On a graph, oil production forms what are essentially bell curves.  For example, in an oil field, production starts off slowly as only the first rigs come online and begin to pump oil.  Production increases quickly as more rigs are added and more oil is pumped.  Production begins to decline as rig construction tapers off or most of the oil is pumped, and then production falls quickly towards zero as the reservoir empties.  Past a certain point, no amount of extra drilling can increase the extraction rate because there is no more oil.

Oil production for a given region forms a bell curve.

This general bell curve holds at any scale: if you add up the production curves of all the individual oil wells in an oil field, you get a bell curve for that field.  If you add up the production curves of all the oil fields in a country, you get another bell curve for that country.  And if you add up all the production curves for all the countries in the world, you get our global oil production curve – also roughly a bell curve.

Hubbert analyzed data from U.S. oil fields and projected that domestic production would peak in 1970.  He was correct.  There have been many oil discoveries since then, and new technology and drilling techniques have given us access to resources previously unaccessible (including many in the Gulf of Mexico), but Hubbert’s peak accounts for this.

The U.S. passed its production peak in about 1970 - just as Hubbert predicted.

Make no mistake, any politician who tells you we need to increase domestic drilling to wean America off foreign oil is misinformed or lying to you. As of 2008, the Energy Information Administration (EIA) reported that the U.S. imports 57% of its oil.  With our country well past its production peak, that import percentage can go nowhere but up.  The only way we can get off of foreign oil is to stop using oil altogether.  Which, as it turns out, we will have to do anyways, regardless of politics.

The longer we use oil, the more of it we will import. We simply do not have enough oil left to drill our way to energy independence.

Our planet, like our country, has an oil production peak.  While peaks are only visible in retrospect, there is concern that we are nearing or potentially even past global peak oil.  It is widely believed that OPEC has long been overstating its reserves and production capabilities.  But even if they aren’t, and we haven’t passed our global production peak yet, we will at some point in the not too distant future.

Oil consumption is steadily rising as a result of inexorable population growth and a constantly industrializing world.  Unless oil production can also continue to rise, it is only a matter of time before oil production cannot satisfy demand.  That has not happened.  And the ramifications for our oil-centric economy in a world in which oil demand vastly outstrips supply are disturbing – they are essentially doomsday scenarios for life as we know it (not because our standard of living cannot necessarily occur without oil, but because we would not be able to recover from an abrupt cessation of cheap oil if we have not already been working on suitable alternatives).

This deserves an entire post of its own, but I have to mention that oil as an energy source is used almost entirely for transportation fuel.  This is why mass transit and hybrid/electric vehicles are so important.  If we can power transportation with our electricity grid, we can eventually power transportation from renewable energy sources like wind, solar, and geothermal. But that transition will take time, and peak oil will not likely give us much.  Especially not if oil companies refuse to accept this reality and politicians refuse to acknowledge and act to prevent this threat.

Critics of peak oil point out that there is still a lot of oil underground, and they are correct.  However, the oil that is left is the most expensive and difficult to obtain.  Energy Return On Investment (EROI) is the ratio of how much energy is obtained from resource extraction compared to how much energy it took to get it, and EROI is a critical measure in this discussion.

There remain vast quantities of oil underground, but most of them are in places that are difficult to access or even beyond the reach of current technology.  A given oil field will provide a finite amount of energy and, at market prices, a certain amount of revenue to an oil company.  If it costs more money and energy to get that oil out of the ground, transported, and refined, than that oil will provide, then it is not worth drilling; such oil will never be extracted (unless prices rise drastically).

Think about the old gusher oil fields back at the turn of the last century, such as Spindletop in Texas.  All you had to do was pierce the reservoir and the oil flowed out under its own pressure.  The EROI from fields like this was well over 100 (and very profitable).

This kind of thing doesn't happen much anymore. Except underwater...

That doesn’t happen anymore.  Today, oil EROIs have fallen by an order of magnitude. Oil companies have long extracted the easiest-to-reach and most profitable oil reserves.  Those are gone.  What remains is the less lucrative oil.  Oil you have to actively pump out of the ground in harsh environmental conditions.  There is a gradient of extraction ease, which is largely correlated with profit potential:

Image Source: The Oil Drum

Once you move offshore, the investment (both financial and energy) is greater.  The deeper you go, the more money and energy that drilling costs.  As oil fields become depleted they lose pressure, so carbon dioxide must be injected into the ground to keep the oil flowing, and that takes more money and energy.  Aside from being terribly polluting, extracting oil from oily sand is very energy intensive; the EROI for projects like the Alberta Tar Sands is about 5.

Oil companies are drilling in ultra-deep water offshore because we are literally running out of oil. The one “bright side” of this is that as oil supply lags further and further behind demand, prices will rise (possibly into the realm of $500/barrel).  When prices go up, really hard to reach oil that was previously prohibitively expensive becomes economically feasible to recover.  But our modern world relies not just on oil, but cheap oil.  For everyday people (and small businesses), oil that expensive might as well not exist.

We may have passed global peak oil. But even if we haven't, moving off of oil should be a no-brainer.

Even if climate change didn’t present a compelling argument to move off of oil, and I cannot overemphasize how much it does, this is a transition that we will need to make anyways.  If we switch to a new fuel source before we run out of oil, we may able to make the transition without too much disruption.  But if we ignore this looming threat and try to make the transition off of oil at the last minute, a global crisis of unprecedented magnitude is a distinct possibility.  We are doing virtually nothing to avert this coming crisis.

Our ignorance is not so vast as our failure to use what we know.” -M. King Hubbert (1903-1989)

Have a nice day!

If you are interested in Peak Oil, I encourage you to look up author James Kunstler, energy expert Matthew Simmons, or check out the discussion and resources on TheOilDrum.

Full list of oil spill questions/answers here.


2010 Oil Spill Answers (Pt. 1) May 3, 2010

Posted by Jamie Friedland in Offshore Drilling, Politics.
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1 comment so far

Since the explosion on the Transocean Deepwater Horizon rig in the Gulf of Mexico, many people are trying to understand what happened.  Traffic to this page has spiked significantly because I recently wrote about the dangers and strong cases against offshore drilling in general.  But I have not yet addressed the current crisis.

This post and those to follow shortly will explain what has happened and is happening.  Below, you will find basic questions about this disaster and answers to them.  I will add additional questions and answers later today, but I want to get this out as soon as possible.  If any of you have additional questions, please add them as comments and I will try to address them.

These are the questions answered below:

  • What was the oil rig doing?
  • What caused the explosion?
  • How much oil is spilling?
  • Where is the oil spilling from?
  • Can we stop the spill?  How?
  • Could the spill get any worse?

What was the rig doing?

The oil rig in question was drilling an exploratory well called “Macondo” to see if that site could be used for large, commercial-scale production.  Signs were promising, and the attempt was soon to be labeled a success.  That has changed, but the site will definitely still make it into the history books.

This was a deepwater operation, even riskier than shallower “normal” offshore drilling, but at this point, the world’s oil companies have tapped all the easily accessible resources.  At that site, the ocean floor was nearly a mile beneath the surface.  The oil formation was another 3 miles underground.

What caused the explosion?

The exact causes have yet to be determined, but educated guesses can and have been made.  You may recall old time footage or photos of oil geysers shooting into the air after big oil finds in Texas.  Many oil formations are pressurized such that if a drill pierces the geological formation, the oil escapes under its own power.  This is a cheap way to get oil out of the ground since it comes up on its own.  Rigs like the iconic grasshopper oil derricks you may have seen around the country must be used if the pressure is not high enough.  For offshore drilling, the pressure is always high enough.

Anything that lies 4 miles beneath the surface of our planet exists at very high pressures.  To visualize this, imagine a huge, full water balloon encased in a block of cement.  Imagine that cement casing fits so tightly, that the balloon is squeezed beyond the bursting point but is unable to release its water because the cement is solid and there’s nowhere for the water to go.  Now imagine somebody drilled into the cement block.  When that drill pierced the chamber with the water balloon, that water would shoot back up through the tunnel the drill bored.  Depending on the pressure involved, it might do so explosively.

In the case of this oil rig, we are dealing with pressures that are hard to visualize.  What is less difficult to visualize is that instead of water, this rig had pierced a balloon full of highly combustible oil.  Furthermore, the company had been warned that this reservoir likely held pockets of volatile natural gas.

The exact cause is unknown, but we do know that in a matter of seconds, a huge blast of oil and gas shot up through the 4 miles of pipe and shot clear through the floor of the rig.  One spark lit all that fuel and suddenly the Deepwater Horizon was engulfed in a massive fireball. Drilling Ahead has a well informed and richly presented explanation of the ordeal those workers went through.

The state-of-the-art Deepwater Horizon rig goes up - and then down - in flames.

How much oil is spilling?

The ongoing oil spill in the Gulf of Mexico is worsening at an exponential rate.  BP’s initial lowball figure (and likely lie) pegged the spill rate at 1000 barrels/day. 1 barrel = 42, gallons, so 1000 barrels/day = 42,000 gallons/day.  Government officials examined the data and quickly realized that the rate was more like 5,000 barrels/day (210,000 gallons).  Since then, the spill pattern suggests that the rate is increasing rapidly.  On May 1st, experts determined that the oil could be spilling at a rate of 25,000 barrels per day (1.05 million gal/day). Unfortunately, this is only the beginning and this catastrophe stands to get far, far worse (See “Could the spill get any worse?” below).

Where is the oil spilling from?

It appears that there are three leaks: 2 from the crumpled remains of the pipe that ran from the ocean floor to the rig at the surface, and one from the point on the ocean floor where the subsurface pipe connected to that pipe that rose through the water.  It is this third site that presents the greatest problem.

Where the pipe meets the ocean floor, there is a giant valve called a “blowout preventer.”  In the event of a gusher or other dangerous, high-pressure event, the valve clamps shut, protecting the rig.  It is built with many redundancies as the last line of defense against this very kind of event.  Somehow, that valve failed, and is still leaking a high volume of oil from the reservoir.

There are 2 efforts underway to stop the spill. One has failed; the other will take months. Image Credit: Times/Picayune

Can we stop the spill?  How?

This is the question that makes this situation so dire.  A crashed oil tanker like the Exxon Valdez has a limited amount of oil that can spill.  A tapped reservoir like this has massive amounts of oil to release – it is estimated that this block could contain as much as 100 million barrels (3.1 billion gallons).  As the diagram above demonstrates, there are 2 efforts underway to stop this spill.

1)   Remotely operated submarines are attempting to engage the blowout preventer.  So far, they have been unable to do so.

2)   Another rig has moved into place to build a “relief well.”  To do this, it must drill down to the ocean floor, through the 18,000 feet of sea floor, and then they will attempt to drill into the subsurface pipe laid by the original rig.  If they succeed in doing that, they can stop the oil flow.  But this could take 2-3 MONTHS.

3) A final approach is to build a kind of dome to place over the spill site to funnel the oil up where it can be collected.  This has only been tested in shallow water.  As oil companies and the rest of the world now know, deep water is a whole different ball game.

If the current estimates are correct (and don’t get worse), within 2 months this spill will dump 6 times as much oil as was spilled by the Exxon Valdez.  In 3 months, there would be nearly 100,000,000 gallons of oil floating in the Gulf of Mexico, if not beyond.  And that’s assuming this spill rate doesn’t get continue to increase.

Could the spill get any worse?

Yes.  The blowout preventer isn’t closing like it is supposed to, but it is creating an artificial bottleneck and reducing the amount of oil that can escape at a time.  However, there is concern that behind that valve, the high pressure is circulating a mixture of water, hydrocarbons, and sand.  That sand is moving with considerable force and may be scouring the area behind the valve.  If a part of the valve or the support structure were to give way, the rate of the spill could increase by several orders of magnitude, experts say as much as 150,000 barrels/day (6.3 million gallons).  That would be an Exxon Valdez EVERY TWO DAYS.

More answers to come.  Check back later today and as this crisis develops.