Arthur Berman: "Peak Oil - The Hedonic Adjustment"
Episode 54
January 18, 2023
(Conversation recorded on January 2nd, 2023)
Show Summary
On this episode, petroleum geologist Arthur Berman returns to unpack the development and drawbacks of ‘peak oil’. Art explains how our institutions have redefined what is considered oil, which has created an illusion of constantly growing oil production. The reality is that - circa 2023 - fully 40% of what is called oil is comprised of things that are ‘not oil’. What does this imply for global peak oil? Is peak oil, an observation which has been around for decades and repeatedly proven ‘wrong’, even relevant today? Is a specific ‘peak’ date even helpful or should we be focusing on the logical implications of a declining primary resource for global economies? And then, what should we do?
About Arthur Berman
Arthur E. Berman is a petroleum geologist with 36 years of oil and gas industry experience. He is an expert on U.S. shale plays and is currently consulting for several E&P companies and capital groups in the energy sector.
To watch this video episode on Youtube → https://youtu.be/CDBJdQnjE2o
Show Notes and Links to learn more:
PDF Powerpoint used in the show
00:40 - Art Berman website, The Oil Drum + TGS Podcast Part 1 and Part 2
04:20 - What is peak oil
05:38 - Shale plays
07:46 - Oil as the master resource
09:43 - M King Hubbert, Howard Scott
10:53 - M King Hubbert 1956 speech
11:54 - Kjell Aleklett - Resilience
12:29 - With no new drilling, all the current producing wells are declining at 6% per year *More recently updated to 8%*
13:19 - Nate’s PhD writing
15:52 - Low of 5% of energy going back to the energy production sector in 1999, now up to 10%+ (Figure 1)
16:00 - Oil Drum Article of Modeling Oil Depletion Using EIA data
18:42 - Slide #1
18:45 - Peak oil likely to have been November 2018
19:14 - $-37/per barrel oil prices
19:53 - Slide #1
21:32 - USA surpassing 2018 peaks
21:40 - Slide #2
22:26 - Slide #3
23:08 - How is natural gas different from oil/petroleum
23:39 - Refinery gain
23:51 - Slide #3
24:10 - 40% of what the IEA/EIA calls oil is not actually oil
25:20 - Large component of natural gas plant liquids is ethane, which is used to make baggies
26:25 - Oil is extremely energy dense, natural gas is 33% less energy dense than oil
27:36 - Hedonic Adjustment
27:54 - NGL is 30% of what we consider oil production in the US
28:26 - Slide #8
28:35 - Natural gas liquefaction during extraction
29:09 - LNG process
31:57 - Different components of natural gas
32:24 - Natural Gas Plant Liquids
34:28 - The hardest part of find new oil is the deepness - and correlating increasing heat/pressure
35:30 - Types of crude oil and their qualities
36:36 - Slide #9
39:44 - What is NGPL used for
40:40 - Slide #13
40:50 - Half the world oil consumption has been used since 1990
42:45 - The US oil supply is extremely light
42:55 - The US has reduced oil imports over last decades
43:07 - The US exports 3 million barrels, and imports 6-7 million barrels of heavy oil
43:50 - Diesel can have a greater energy content than Crude oil
44:08- Slide #11
46:00 - Ethanol is 40% of the heat content of that of Crude oil
48:52 - Slide #10
50:20 - Slide #14
51:20 - Ethanol
52:38 - Nate’s piece in Nature Science journal (2005)
53:30 - Ethanol mixed fuels don’t take your car as far
54:56 - Slide #8
1:02:20 - Peak demand
1:03:31 - Shell launched an investigation of M King Hubbert to prove him wrong
1:03:52 - Malthus, Paul Ehrlich (TGS Episode)
1:06:47 - Almost all of the fossil energy alternatives make electricity, which is limited in function