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Challenges of Oil & Gas Industryin the 21st Century
A view of the Himalayas from Lhasa
Tad Patzek, Petroleum & Geosystems Engineering, UT AustinSPE Seminar, Brookhaven College Geotechnology Institute, 03/27/2013
3939 Valley View Lane, Framers Branch, TX 75244, 12 - 1 p.m.
You Might Read Our Book. . .
It is discounted at Amazon.com
– p.1/69
MassStayson Earth, Heat Leaves
Source: Image Science & Analysis Laboratory, Johnson Space Center
– p.2/69
Membrane on which we live
Top of atmosphere
Earth
Environment
Air,wa
ter,soil, food, biom
ass
Energy
Solar,wind, geothermal, fossi
l, nucle
ar,hydro
Econom
yNeeds,wants,waste
– p.3/69
Technology. . .. . . Challenges and reveals the Earth:
“Such challenging happens in that the energyconcealed in nature is unlocked, what is unlocked istransformed, what is transformed is stored up, whatis stored up is in turn distributed, and what isdistributed is switched about ever anew. ”
“Everywhere everything is ordered to stand by, to beimmediately on hand, indeed to stand there just sothat it may be on call for a further ordering.”
Technology is a “standing-reserve” of energy forhumans to order nature and, in turn, be enframed bytheir technology.
Martin Heidegger, The Question Concerning Technology, 1954
– p.4/69
In Plain English. . .What Heidegger meant is:
We are an impatient species that regards astanding-reserve of energy as a must
Since we cannot control technology, technologycannot be our tool to control nature
We are a part of technology
We tend to think of technology as an instrument thatis outside of us. Instead, we are a part of a biggersystem that comprises us and technology
– p.5/69
Talk Outline. . .
Fuels that run the U.S. and world
Types of crude oil and other fuels
Complexity and risks
Gulf of Mexico’s oil and gas production
Conclusions
– p.6/69
Summary of Conclusions. . .
The global rate of production of oil is peaking now,coal will peak in 2-5 years, and natural gas in 20-30years
There is PLENTY of fossil fuels (“resources”) left allover the Earth
The resource size (current balance of a bankingaccount) is mistakenly equated with the speed ofdrawing it down (ATM withdrawals)
Few understand the ever more stringent dailywithdrawal limits imposed by nature on our ATMcards (oil & gas wells and coal mines)
Until we all learn about our limitations, we willcontinue to hallucinate about energy and technology
– p.7/69
Summary of Conclusions. . .Our civilization is about power or rate of energy use,not resources or energy potentially available
Offshore fields will be producing an increasingportion of global oil&gas supply
Shale plays will also be producing an increasing partof global hydrocarbon supply
Energy flow-based solutions (wind turbines,photovoltaics, and biofuels) will require most radicalchanges of our lifestyles
Thermodynamically, industrial-scale biofuels are notsustainable, and will quickly degrade and destroy theEarth’s most vital ecosystems
– p.8/69
Sustainability
Tadeusz W. Patzek, 2004: A cyclic process is sustainableif and only if
It is capable of being sustained, i.e. maintainedwithout interruption, weakening or loss of quality“forever,” and
The environment on which this process feeds and towhich it expels its waste is also sustained “forever”
Thermodynamics of the Corn-Ethanol Biofuel Cycle, CRPS, 23(6), 519-567, December2004
Practically all human activities are unsustainable; they’re not evencycles. “Forever” must be defined.
– p.9/69
Facts
Tokyo
A modern society is a dynamic,far-from-equilibrium structure thatrequires constant flow of energythrough it
The more complex the society is themore energy throughput (power) itrequires
Conversely, the diminished powerresults in a simplification of socialstructures
Edible food-like substances we con-sume require huge energy flows
– p.10/69
Facts
CT scan of brain
Pharmaceutical research, cancertreatment, biotechnology, nano-technology, computer manufacturing,solar photovoltaics, etc. require hugepower, mostly from fossil fuels
Advanced education for many requireslarge energy flows
Modern science & technology requirethe ever-increasing energy flows
All these activities are unsustainable
– p.11/69
Science and Technology
What if Galileo (1610) had the 100-inch Mount Wilson telescope (1918)?
– p.12/69
U.S. Hydrocarbon Metabolism
Each day, a U.S. resident gulps 4 gallons of hydrocarbons as crude oil equivalentsMy VW Jetta DTI, drives on this amount of energy for 5 – 6 days – p.13/69
U.S. Hydrocarbon Metabolism
In one day an average U.S. resident consumes 4.2gallons of oil equivalent, or a 1/10 of a barrel:
An average U.S. resident develops 100 W of powerper 24-hour day
Let’s assume that he/she can work for 8 hours/day at200 W on average
Then, 4.2 gallons of petroleum is equivalent to0.1× 6.1× 109/200/3600/8 = 106 days of labor
We would have to work hard for over 100 days tomake up for what we consume as hydrocarbons in 1day. One year of gorging on hydrocarbons is equal to1 century of hard human labor.
– p.14/69
Global Hydrocarbon Metabolism
10−4
10−3
10−2
10−1
100
100
101
102
Barrel of oil equivalent/day−person
GD
P (
US
D)/
day−
pers
on
Burundi
Chad
Congo
Togo
China
Gibraltar
Luxembourg
Poland
Qatar
US
Brazil
y∝ x0.63 − mammal skin area with body mass
y∝ x3/4− metabolism with body mass
Sources: CIA, EIA, Patzek’s calculations, 03/28/11 – p.15/69
Global Hydrocarbon Metabolism
10−1
100
101
102
103
100
101
102
Personal, 24 hours/day energy slaves
Ene
rgy
Tra
nsfo
rmat
ions
, $/d
ay−
pers
on
US123
UruguayBrazil
US
Qatar
Poland
Luxembourg
Gibraltar
China
Togo
Gabon
Congo
Chad
Burundi
Botswana
Angola
y∝ x0.63 − mammal skin area with body mass
y∝ x3/4− metabolism with body mass
Sources: CIA, EIA, Patzek’s calculations, 03/28/11 – p.16/69
Global Metabolism
The three vertical lines are the U.S.
1. On all renewables,
2. All renewables minus hydropower, and
3. All renewables minus hydropower minus biofuels andtheir coproducts
On a diet of renewables, a statistical U.S. residentwho currently gulps a 1/10 of a barrel of oil equivalent(BOE) per day, will be sipping roughly 1/100 ofBOE/day as renewables only, thus reducing the U.S.energy “metabolism” to the level of China, Gabon,Uruguay, Botswana, or Angola. But, because of theomnipresent fossil fuels, this statement is blithecheating. Reality is much worse
– p.17/69
Coal Metabolism, 1965-2006
1010
1011
1012
1013
1010
1011
1012
1013
Coal consumption, kg oil equivalent
GD
P, U
SD
of t
he d
ay
ChinaIndia
Sources: WTO, BP, Patzek’s calculations, 04/02/11– p.18/69
IEA Demand Growth Scenario. . .
OECD/EIA 2008 scenario of annual energy demand in the world
Source: www.iea.org/speech/2008/Tanaka/cop−
weosideeven.pdf– p.19/69
IEA and an Oil Production Peak?!
There is an oil peak and 58 millions barrels of oil per day will be missing by 2030
Source: www.iea.org/speech/2008/Tanaka/cop−
weosideeven.pdf
50 million bopd
– p.20/69
Units in My Presentation. . .
The fundamental unit of energy is 1 exa Joule (EJ)
1EJ = 1,000,000,000,000,000,000 Jis the amount of metabolized energy in food
sufficient to sustain the entire U.S. population forone year @100 J/s-person = 100 W/person
continuously
Currently the U.S. uses 105 EJ/year; one hundredand five times more than we need to live
If we were to metabolize this amount of energy, wewould be 15 m long sperm whales, each weighing 40tonnes. There are ∼300,000 sperm whalesworldwide and 1000 times more Americans
– p.21/69
Homo Colossus Americanus. . .
1 Statistical American = 1 Sperm Whale
EUGENE ODUM, Ecological Vignettes, 1998
– p.22/69
Preindustrial England, 1.8 EJp/y
1600 1650 1700 1750 1800 18500
50
100
150
200
250
300
350
Day
s on
ene
rgy
sour
ce/y
ear
Coal
Humans
Draught animals
Firewood
WindWater
Source: Tony Wrigley, Opening Pandora’s box, accessed 09/21/2011
– p.23/69
Global Primary Energy Use
1840 1860 1880 1900 1920 1940 1960 1980 20000
50
100
150
200
250
300
350
400
450
500
Prim
ary
Ene
rgy,
EJ/
year
Coal
Oil
Gas
Wood
NuclearHydro
Source: Rembrandt Koppelaar, Primary_Energy_1830-2010.xlsx, 01/16/2012– p.24/69
Predicting the Future. . .
1970 1975 1980 1985 1990 1995 2000 20050
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Mill
ion
BO
PD
Production histories of 65 oilfields in the North Sea.Sources: Norwegian Government (2009), Patzek & Croft (2010) – p.25/69
. . . Emergent Behavior. . .
1960 1970 1980 1990 2000 2010 2020 2030 20400
0.5
1
1.5
2
2.5
3
3.5
Mill
ion
BO
PD
A single Hubbert curve explains almost all of Norwegian production in the North Sea– p.26/69
A Future of Norwegian North Sea
1960 1970 1980 1990 2000 2010 2020 2030 20400
5
10
15
20
25
30
Bill
ion
Bar
rels
of O
il
Sources: Norwegian Government (2009), Patzek & Croft (2010)– p.27/69
Hydrocarbon liquids and gas
Different kinds of oils
Classifications of liquids by the Energy InformationAdministration (EIA) and BP
Valid and invalid comparisons of liquid hydrocarbons
World production of oil and condensate
U.S. production of oil and condensate
U.S. consumption of liquid hydrocarbons
– p.28/69
Different Kinds of Oil
Condensates
Natural gas plant
liquids (NGPLs)
Associated lease
condensate
ALL LIQUID AND SOLID HYDROCARBON MIXTURES BIOMASS
Light Crude Oil
Heavy Oil
Extra-heavy Oil
Oil sand/Bitumen
Oil shale/ kerogen
Heavy Oil
Gas-to-liquids
Coal-to-liquids
Biodiesel
Methanol
Ethanol, etc.
Ultra-deep Oil
Tight Shale Oil
Arctic Oil
Transitional OilsEasy Oils Unconventional Oils Alcohols
All Naturally Occurring Oils
Source: T.W. Patzek, drafted by Erik Zumalt – p.29/69
EIA Data Classification
Crude Oil and Lease Condensate = All NaturallyOccurring Liquid and Solid Hydrocarbons +Associated Gas Condensate
NGPL = Natural Gas Plant Liquids
Other Liquids = Gas-To-Liquids + Coal-To-Liquids +Alcohols + Biodiesel + Anything Else
– p.30/69
BP Data Classification
Crude Oil = All Naturally Occurring Liquid and SolidHydrocarbons + Associated Gas Condensate +Natural Gas Plant Liquids
Other Liquids = Gas-To-Liquids + Coal-To-Liquids +Alcohols + Biodiesel + Anything Else
– p.31/69
Comparisons of Hydrocarbons
The only valid comparison of different hydrocarbonliquids must be based on their Higher Heating Value(Energy/kg) multiplied by mass production rate(kg/day)
Instead, volumes are reported. A gallon of one fuelcan have 20-40% more or less heating value than agallon of another fuel
Average liquid densities and their higher heatingvalues (HHVs) are uncertain and seldom reported
Thus, comparisons are approximate
– p.32/69
Global Liquid Production by EIA
1980 1985 1990 1995 2000 2005 201040
45
50
55
60
65
70
75
80
85
Pro
duct
ion
Rat
e, 1
06 bar
rels
/day
NGPL + Other liquids (OL)NGPL and OL densities adjusted to oilCrude oil + lease condensatePlateau = Peak oil
Source: EIA Database, accessed 11/15/2012– p.33/69
Global Liquid Production by EIA
1980 1985 1990 1995 2000 2005 2010110
120
130
140
150
160
170
180
Pro
duct
ion
Rat
e, E
J/yr
NGPL + Other liquidsCrude oil + lease condensatePlateau = Peak oil
Source: EIA Database, accessed 11/15/2012– p.34/69
Global Liquid Production: Comparison
1980 1985 1990 1995 2000 2005 2010110
120
130
140
150
160
170
180
Pro
duct
ion
Rat
e, E
J/yr
EIABP
Source: EIA and BP databases, accessed 11/15/2012– p.35/69
Global Production of Liquids
1850 1900 1950 2000 2050 2100 21500
20
40
60
80
100
120
140
160
180
EJ
per
Yea
r
EIA dataHubbert cyclesTotal
Source: EIA Database, accessed 11/15/2012
– p.36/69
U.S. Oil Production
1880 1900 1920 1940 1960 1980 2000 2020 2040 20600
5
10
15
20
25
30
Cru
de O
il P
rodu
ctio
n, E
J/Y
ear
Actual productionHubbert cyclesSum of cycles
Smaller cycles are waterflood, Alaska, Gulf of Mexico, Austin Chalk, EOR,Bakken, Eagle Ford, etc.
– p.37/69
U.S. Fuel Consumption
1960 1970 1980 1990 2000 20100
5
10
15
20
25
30
35
EJ
of F
uel/y
ear
Motor Gasoline
Distillate Oil
Aviation Fuels
Residual Oil
US
Imports
Ethanol
Source: EIA database, accessed 11/15/2012
– p.38/69
All Imports of Crude and Products
1975 1980 1985 1990 1995 2000 2005 20100
5
10
15
20
25
30
35
Impo
rt R
ate,
EJ/
yr
Non OPECOPECPersian Gulf
Crude oil and all petroleum products. Source: EIA, accessed 11/28/2012– p.39/69
Imports from Certain Countries
1975 1980 1985 1990 1995 2000 2005 20100
2
4
6
8
10
12
14
16
18
20
Impo
rt R
ate,
EJ/
yr
CanadaSaudi ArabiaIraqMexicoVenezuelaRussiaColombia
Crude oil and all petroleum products. Source: EIA, accessed 11/28/2012– p.40/69
Imports From Alberta
1985 1990 1995 2000 2005 20100
1
2
3
4
5
6
Pro
duct
ion
EJ/
year
SynCrudeBitumenHeavy OilAll oil&condExports to US
Source: EIA and Canadian Statistics databases, accessed 11/28/2012– p.41/69
Electricity generation: 39 EJp/y
1998 2000 2002 2004 2006 2008 20100
50
100
150
200
250
300
350
Day
s on
Ele
ctric
ity/y
ear
Coal
Natural Gas & Other
Nuclear
Hydroelectric
Rest
154
91
70
29
That’s 37% of primary energy use in U.S. Source: DOE EIA, accessed 11/28/2012– p.42/69
Electricity generation – Rest
1998 2000 2002 2004 2006 2008 20100
2
4
6
8
10
12
14
16
18
20
22
Day
s on
Ele
ctric
ity/y
ear
Petroleum
Wood & Other Biomass
Wind
Geothermal
1
9
9
2
Solar thermal and PV = 1 hour of U.S. electricity. Source: DOE EIA, accessed 11/28/2012 – p.43/69
Transportation Fuels: 33 EJp/y
1950 1960 1970 1980 1990 2000 20100
50
100
150
200
250
300
350
Day
s on
Fue
l/yea
r
Motor Gasoline
Distillate Oil
Aviation Fuels
Residual Oil
Ethanol
205
96
36
16
12
That’s 31% of primary energy use in U.S. Source: DOE EIA, accessed 11/28/2012 – p.44/69
California, Base Electricity
1998 2000 2002 2004 2006 2008 20100
50
100
150
200
250
300
350
Day
s on
Ele
ctric
ity/y
ear
Coal/Imports
Natural Gas
Nuclear
Hydroelectric
Rest
112
138
41
43
Source: California Energy Commission, accessed 07/16/2011
– p.45/69
California, Other Electricity
1998 2000 2002 2004 2006 2008 20100
5
10
15
20
25
30
35
Day
s on
Ele
ctric
ity/y
ear
Petroleum
Wood & Other Biomass
Wind
Geothermal
Solar
0
7
6
161
Source: California Energy Commission, accessed 07/16/2011
– p.46/69
Nevada, Solar Concentrators
Solar 1 in Nevada. 15 MW of continuous power from 1.6 km2 of mirrorsOne coal- or gas-fired power plant produces 1000-2000 MW 24 hours per day
– p.47/69
California, Solar 1&2
Solar 1 produced 10 MW of electricity using 1,818 mirrors, each 40 m2 on 72,650 m2 of landSolar 2, added to Solar 1 a second ring of 108 larger, 95 m2 mirrorsTotal area of Solar 1&2= 82,750 m2, total power 10 MWIn November 2009, the Solar 1&2 tower was demolished; the site was returned to vacant land
1 km2 = 1,000,000 m2
– p.48/69
Texas, Base Electricity
1996 1998 2000 2002 2004 2006 20080
50
100
150
200
250
300
350
Day
s on
Ele
ctric
ity/y
ear
Coal
Natural Gas
Nuclear
Hydroelectric Rest
152
145
451
Sources: ERCOT/EIA, accessed 07/16/2011
– p.49/69
Texas, Other Electricity
1996 1998 2000 2002 2004 2006 20080
5
10
15
20
Day
s on
Ele
ctric
ity/y
ear
Petroleum
Wood & Other Biomass
Wind
20.5
20
Sources: ERCOT/EIA, accessed 07/16/2011
– p.50/69
California, Crude Oil Sources
1985 1990 1995 2000 20050
50
100
150
200
250
300
350
Day
s on
Pet
role
um/y
ear
California
Alaska
Foreign
144
55
166
Sources: Texas Railroad Commission, accessed 07/16/2011
– p.51/69
Texas, Crude Oil Production
1960 1965 1970 1975 1980 1985 1990 1995 2000 20050
0.2
0.4
0.6
0.8
1
1.2
1.4
Oil
Con
sum
ptio
n/P
rodu
ctio
n
Sources: Texas Railroad Commission, accessed 07/16/2011– p.52/69
The rare and unexpected. . .
The Lucas Gusher, January 10, 1901
Our ignorance the future should becalled anti-knowledge
Yet, we habitually form models of thefuture
Models are not necessarily bad, butthey are limited
We never know in advance whenthese models fail
The mistakes made using models canhave very severe consequences
Simple iterated/recursive models or of-ten better than complicated ones
– p.53/69
A Harbinger of Things to Come?
Sources: NASA; Physicist Richard Feynman with an O-ring in a G-clamp, National Geographic– p.54/69
Feynman, NASA, and Risk
It appears that there are enormous differences of opinionas to the probability of a failure with loss of vehicle and ofhuman life. The estimates range from roughly 1 in 100 to 1in 100,000. The higher figures come from the workingengineers, and the very low figures from management.What are the causes and consequences of this lack ofagreement? Since 1 part in 100,000 would imply that onecould put a Shuttle up each day for 300 years expecting tolose only one, we could properly ask “What is the cause ofmanagement’s fantastic faith in the machinery?”
Source: Richard Feynman, Report of the PRESIDENTIAL COMMISSION on the Space ShuttleChallenger Accident. Appendix F - Personal Observations on Reliability of Shuttle, 6/1986
– p.55/69
Feynman, NASA, and Risk
We have also found that certification criteria used in FlightReadiness Reviews often develop a gradually decreasingstrictness. The argument that the same risk was flownbefore without failure is often accepted as an argument forthe safety of accepting it again. Because of this, obviousweaknesses are accepted again and again, sometimeswithout a sufficiently serious attempt to remedy them, or todelay a flight because of their continued presence.
Source: Richard Feynman, Report of the PRESIDENTIAL COMMISSION on the Space ShuttleChallenger Accident. Appendix F - Personal Observations on Reliability of Shuttle, 6/1986
– p.56/69
The Essence of the Problem
Here is an exchange that took place in Paris in the1920s. It illustrates well a serious problem with earthsciences (and most disciplines of engineering), as theyare currently practiced:
Scott Fitzgerald: The rich are different than us.
Ernest Hemingway: Yes, they have more money.
The problem is that bigger systems are essentiallydifferent than smaller ones, but we tend to ignore thisprofound truth
– p.57/69
Complexity and emergent properties
When this clockwork is disassembled and put back together properly, its behavior is predictableThe dissected frog will not hop off the table, when her intestines are squeezed inThe living frog has emerging, autonomous properties that cannot be gleaned from her carcass
– p.58/69
A rare event. But unexpected?
Sources: U.S. Coast Guard, July 12, 2005 photo by PA3 Robert M. Reed, displayed in Wikipedia– p.59/69
A rare event. But unexpected?
Source: U.S. Coast Guard – 100421-G-XXXXL- Deepwater Horizon fire, displayed in Wikipedia– p.60/69
Complex system and simple failure
Complex system System cost Failed part cost
Space Shuttle $1.7 – 6.7 billion $1000a?
Thunder Horse $1 (+1 billion) $100b?
Deepwater Horizon $700c million (+50 billion) $15 milliond?aFailed O-ring was a fluoroelastomer specified by Morton-ThiokolbA 6-inch length pipe (but also bad welds)c$500 million for the rig and $200 million for the well with cost overrunsdA tieback for production casing, pull BOP, 20 centralizers, cement job, CBL, casinglockdown
A complex multi-billion dollar system disintegratesbecause of one or few poorly designed parts that costalmost nothing. Bad management, judgment, andworkmanship are involved
– p.61/69
2006 Reservoir Depths in the Gulf
0 50 100 15010000
9000
8000
7000
6000
5000
4000
3000
2000
1000
Wat
er d
epth
, ft
Rank = Number of fields deeper than a field
Shell’s Perdido
BP’s Thunder Horse
BP’s Macondo Mississippi Canyon Block 252
Source: MMS data, 2006Many ultra deepwater fields
– p.62/69
Emergent Behavior in the Gulf. . .
1940 1960 1980 2000 2020 20400
0.5
1
1.5
Mili
on B
OP
D Shallow water
Deep water Patzek’sProjection
IndustryProjection
Sources: U.S. DOE EIA, MMS, and Patzek’s calculations– p.63/69
A Future of Deep Gulf
1940 1960 1980 2000 2020 20400
1
2
3
4
5
6
7
8
9
Historic data
Industry Projection
Patzek’sProjection
Bill
ion
Bar
rels
of O
il
Sources: U.S. DOE EIA, MMS, and Patzek’s calculations – p.64/69
Total Gulf Oil/U.S. Oil Elsewhere
1940 1950 1960 1970 1980 1990 2000 20100
5
10
15
20
25
30
35
40
45
GO
M O
il vs
. Res
t of U
.S. O
il, %
Sources: U.S. DOE EIA, MMS, and Patzek’s calculations
Thunder Horse
– p.65/69
2006 Oil Data for GOM
1 10 100 10001
10
100
1000
Rank = Number of fields larger than a field
Mill
ion
barr
els
of o
il
Proven oil reservesCumulative oil produced
Source: MMS data, 2006Fractals everywhere! All that is relevant was discovered?
– p.66/69
2006 Gas Data for GOM
1 10 100 1000
10
100
1000
Rank = Number of fields larger than a field
Bill
ion
of s
tand
ard
cubi
c ft
of g
as
Proven gas reservesCumulative gas produced
Source: MMS data, 2006Gas that is relevant was produced?
– p.67/69
Conclusions
Complexity is omnipresent in earth systems andtechnology that orders them:
There is incomplete self-similarity (self-affinity)whose exponent changes across scales
All scales are present and relevant
“Kings” or “black swans” are always possible
Our predictive ability is dismal to none for the blackswans
Epistemic humility and ability to use ignorance of thefuture to our advantage is in order
– p.68/69
Epistemic Humility
The Captive Mind by Czesław Miłosz:
An old Jew in Galicia once made an observation: “Whensomeone is honestly 55% right, that’s very good andthere’s no use wrangling. And if someone is 60% right, it’swonderful, it’s great luck, and let them thank God. Butwhat’s to be said about 75% right? Wise people say this issuspicious. Well, and what about 100% right? Whoeversays he’s 100% right is a fanatic, a thug, and the worst kindof rascal.”
– p.69/69
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