this program is brought to you by Stanford University well as you’ve had in fact those of you have been around for a while I most recently spoke to the energy seminar on the subject of geothermal. Which is how I lead about half of my life and the other half of my life. I have until recently been a professor of petroleum engineering so in the range from green to black you can sort of decide where I fit but today I’ve decided to move to the dark side and talk about oil and I’m going to make some discussion about where they boil future. Maybe, perhaps life and I like to begin by you know putting this little in context the energy that we use today and throughout the world is largely fossil-based and fossil-based actually can be defined perhaps a little more broadly than we often do obviously oil natural gas and coal is what we conventionally imagine as fossil fuels however if we’re talking about nuclear as a replacement for fossil fuels we have to remember that your am is also dug up out of the ground you burn it in a nuclear reactor and then you hide it in the Yucca Mountain it’s also a fossil fuel and if we want to think more broadly than that hydroelectric power makes you so big holes in the ground that we fill with water and over decades of time they ultimately filled with soil and salt so actually there they the use of fossil holes in the ground which are slowly filling up so in fact pretty much most of the energy that we use in the world today is fossil-based and a lot of it will ultimately go away this graph does not include anything that isn’t possible by the definition I just gave you but actually work I have put it in there you would barely have noticed it’s two or three percent and if you don’t like my definitions you don’t have to accept them anyway eighty-five percent of all of the energy that’s used in the world today is based upon a hydrocarbon fossil fuels oil natural gas and call and I’m going to talk almost exclusively although not quite today about oil so the reason of course oil is important and perhaps the reason you may have come this afternoon is because boilers had been a lot in the news at least in the last couple of years and the recent past this is actually stops before it got to the peak which it did in July has been unprecedented anytime in the period since the oil was first produced in the eighteen sixties we see here oil prices are higher than they ever have been any time in the past the previous maximum being in 1860 soon after all was first discovered and suddenly became very attractive to people so things are changing in the oil world and that’s the reason why I actually prepared this talk to actually sort of speculate as to where they might be going I’m going to talk today in three major areas the first one being how much oil is there and how long it will last maybe that’s what you came to find out second technology how are we going to get the oil that we have how we’re going to get more and thirdly else what I’ll speak to a small degree about people who is going to produce the oil and how they’re going to do it this is going to be a forecast or prediction if you like or discussion perhaps more correctly of the future nobody of course knows what the future is going to be some people and their living doing it like fortune-tellers the other kind of people who earn their living predicting the future reservoir engineers and actually i happen to be one of those so topic number one of the three production and reserves questions are how much do we have and how long it will last and importantly those are contrasting and different questions and I’d like to talk about them separately how much do we have is like saying how much do we have in the bank we refer to that as reserves how long will it last depends on how fast we produce it ok and that’s a distinct and separate thing how much money you have in the bank and how fast you’re spending your money separate things obviously they’re related to each other the more you got in the bank the faster you can spend it but you don’t have to spend it just because you have in the bank and recently of course the banking industry has found you can spend it even though you don’t have it in the bank unfortunately that doesn’t work with oil you have to actually have it before you can consume it and I’m going to unrelated to those two issues i’m going to talk about two separate ideas that are associated with reserves and production and one of them has a name which is peak oil I’ll talk about that the other one doesn’t really have a name I should perhaps have called it not peak oil and I couldn’t think of a good name for it I’m going to call it business as usual and these are contrasting ideas that you may hear discussed you will hear them discuss today with regard to how these two questions how much do we have and how long it will last let me talk first all about peak oil and peak oil is an idea which is probably familiar to you it’s been discussed a lot in the newspapers and whatever and let me talk about what it means if you haven’t seen it this line drawn here is a model known as the habit curve defined by M king Hubbert 50 years ago and what happened proposed was that the amount of oil Hubbard was a geologist by the way he worked for shell or he proposed that the amount of oil that was available and amount of oil that could be produced was governed by you know the likelihood of oil being discovered and the amount of which was available to be produced and what you can see here importantly this graph comes from another famous people person Mr. lo hare la Carrera who was a dealer just with guitar in France is the green curve which is the actual discoveries of oil and the time at which they were discovered in billion barrels per year and the amount of oil that was produced in billion barrels per year in the United States the lower 48 and the lower for the fact that the lower 48 is important because it excludes Alaska was kind of a perturbation in the oil production of the United States the lower 48 represents a very rich statistical sample hundreds of thousands of wells that were drilled over the last 100 years and produced many more than anywhere else in the world so the lower 48 of the United States is a very good example of what the sort of global oil market can be like what you see is that the discoveries of oil in the United States peaked at about three and a half billion barrels per year in the nineteen thirties and exactly 35 years later the production of oil in the lower 48 peek at exactly the same level these codes are in fact identical separated by 35 years that is the peak oil argument as you discover the oil and ultimately start running out of oil to discover this curve goes down and ultimately because you’re using up your money in the bank the amount by which you can produce will ultimately go down to in the united states including Alaska actually we know exactly when the peak was because it happened a long time ago happened in the nineteen seventies so the question then is if that’s what happened in the most mature oil province in the world what’s going to happen in in all of the rest as well and unfortunately for the peak oil argument the same graphs are not true because although the discoveries of oil in the rest of the world actually this is not quite the rest of the oil this is the world excluding the swing producer at Saudi Arabia Kuwait UAE and Iraq the reasoning they’re excluded is because they basically turn the taps on and off anytime they choose to the rest of the world is producing oil at the most they can that’s why they left out of the craft but you see here even leaving them Out although the discoveries follow the hobbit curve the production does not ok now this particular graph the one that you’re seeing here is very important in terms of what I have to talk about today because the direction of this line causes a lot of people to think differently than the peak oil argument this if you like is the non-peak oral argument which says that well who cares about this discovery idea anyway the oil production is just going up and up and up and therefore it will Forever that’s the business as usual argument now this is where it gets to be Important the distinction between reserves and production because discoveries of oil basically represent reserves the amount of money in the bank production represent spending this is the rate at which you spend it these are not quite the same thing at all same way as banking and spending so even if you have this oil in the ground you don’t have to produce it you may not choose to do so beginning in the nineteen eighties one of the things that happened in the oil world was that oil production shifted from being largely in the control of the international or companies ExxonMobil Shell BP the big guys they control pretty much everything through the nineteen seventies to the national oil companies Saudi Aramco National Iranian or company Abu Dhabi national company etc. they had a different ambition a different perspective on what they wanted to do with their oil Exxon Mobil and chevron of companies that want to make money that produces my shoulders they could if you’re Saudi Aramco you may not choose to produce all of your oil because that’s all you’ve got and therefore you may choose to save some of it for later and that’s sometimes what they did importantly therefore is a one of the most important points of my talk and I have to thank David Victor for pointing this out to me or discussion that we have this graph the green one this habit curve is constrained by geology there’s certain amount of oil in the ground and there’s nothing more to be said about that this curve however is not this is constrained by politics and economics you can choose to produce your oil or you can choose not to produce there are depending on you know what you want to gain from it so there’s no expectation that these curves have to be the same in the united states they were because of the statistics of the way that the wells were produced but in the rest of the world it turns out they are not that’s not quite the end of the story however because we don’t have to imagine that oil production and discovery is kind of a one-shot thing you have find it once you produce it once it’s happened over a long period of time more than a hundred years and during that time the technology and the methodology and the business world everything a lot of things have changed in a hundred years the initial geological exploration for oil basically produced discoveries that followed the peak something like that then what happened was your physics okay once we had seismic exploration and other tools the success at finding or fields improved greatly so there was a second peak which gets added onto the first one we also have other kinds of technology for example very deep water spin the last 10 20 years now we’re discovering oil in here this over here what up to 10,000 feet depth found and produced today so this little extra thing gets added on once that or becomes Available so the habit pic isn’t really a peak it’s a amalgamation of Peaks it gets to have this lumpy shape same is true of the production the amount of others but that’s available follows the amount which is in the ground and therefore whether or not you have tight controller in any one place overall it tends to follow big models as well the same number of pictures in the district in the discoveries and by this author again This is Mr. laree he has calculated in the model that the peak the midpoint where half of the oil has been produced actually occurred already in 2005 remember that number and that the peak will occur in 2012 ok that’s the peak oil argument let’s talk about the sort of business as usual the other point of view and this is another graph of reserves it’s not quite the same as I’ve been talking about I’ve been talking about discoveries I’ll be talking about production reserves a little bit like discoveries except it’s an accounting of how much oil is actually in the ground right now and BP makes a review every year we put all these numbers on the internet and you can download them of where the oil is how much been produced etc. and what you see about this graph and again that the direction and character of this graph if you know governs a lot of thinking about oil because it starts on the left and it goes up to the right that keeps on going up ok and that’s causes people to think in a given direction it doesn’t appear to stop going up now there’s a number of things that happened in this graph that appointed out particularly in the late nineteen eighties OPEC the Organization of Petroleum Exporting Countries decided to change the way that they allocated production to their member countries based upon the proven reserves in the country that says if you own a 20-percent if you have twenty percent of the reserves in your country you get to produce twenty percent of the oil and sell it on the world market what happened as a consequence of that is everybody said oh last year I said I had a hundred billion barrels but actually you know I just added up again and now I have a hundred and twenty and they all did that and the consequence of that was that there was 300 billion barrels of oil added in the late nineteen eighties now there’s some you know some kind unkind thinking reflected in you know the way that people react to that everything’s okay well they just everybody exaggerated their numbers and probably some of them did but the fact of the matter is that the way that reserves are accounted everywhere in the world including the United States and many other places is in general conservative there are many examples of oil fields in the world that are quoting you know 102 percent recovery they have produced a hundred to $OPERAND percent of the oil that they said that they had of course that that doesn’t make any sense you can’t do that what it means is that they produce 202 percent of the oil that they said that they had when they first discovered the field is bigger than they thought it was and that’s common so-called reserves edition happens everywhere so at least some of this oil was reserves edition countries who never really had to care about how much oil they had suddenly had to care and then they went down added up more carefully and said okay this is now how much we have and probably in all likely hood a good fraction of that 300 billion barrels that got added 1988 1990 and I was actually probably real Saudi Aramco for example had many fields that were in excess of a hundred percent reduction in the 1980s before the restatement of their reserves another thing that happened is right here in whenever that Was 2002 BP decided to start counting the oil in a different way up to this time they were only counting so-called conventional oil which is you know crude oil and at this time they decided to add the oil sands from Alberta in Canada and the reason they did so because significant fraction of signal amounts of oil were produced from that source about 1 million barrels today a little less in 2001 and that’s conventionally that’s normally known as unconventional or we’re going to talk about it in five minutes they decided it was so big and so significant when add it into the total and that is a very important change in thinking that is reflected in some of the ways we predict the future there’s a hundred and seventy-five $MONEY billion barrels i added just all at once now coming back to OPEC and their restatement of their reserves in 1989 300 billion barrels added that appears on the graph as an increase in the world or reserves as of you know 1989 plus 300 billion barrels but if you go back to more careful accounting you have to take account of the fact that the oil that was counted in 1989 was not discovered in 1989 except by accountants it was actually discovered by geologists you know in 1950 and therefore if we scale this diagram and take the oil that was booked in 1989 and we booked it in the year where it was discovered the graph changes by a very substantial amount that it actually moves back all of those big fields in the Middle East that worried the enumerated basically we discovered a very long time ago post-world war two what you see then and this actually scrap also leaves out the oil sands of Alberta because they’re not conventional actually there’s something else we could count them separately and we will soon what you see now is that the reserves counted in that manner basically peaked and they picked about nineteen eighty so the upward forever upward graph that we looked at is perhaps not so if you look at it from that point of view ok let me switch from reserves and change to production and I want to make that emphasis because it looks like the same graph but it’s not this is now reserved this is this is a production this is the amount by which we actually producing oil and I superimposed two different graphs here it’s kind of an alphabet soup that you have to get used to the red one is by the IAEA the International Energy Agency which is a consortium of OECD countries that go into looking in predicting what all is going to do so they can use it for economic planning the CIA the energy information agency is an an armoire division of the department of energy that’s us the US government telling us what’s going to happen and what I was superimposed on here is the actual production of oil in a thousand barrels per day so this right now 85 million barrels per day this is as of $MONTH 2008 couple months ago and then this is the forecast of where I ETA the international energy agency says the oil production is going and you can see that they have a sort of drew this line pretty much onwards and Upwards ok now in actual fact there’s some complexity in this line that’s important and interesting one of the things that you notice is that we have 2005-2006 2007-2008 on this graph the trend isn’t like this at all actually basically the more production over the last three and a half years has been flat at 85 million barrels per day so that certainly doesn’t appear at least over the short time frame which is always a dangerous thing to look at in a statistic but anyway it hasn’t continued that ever upward rise now we don’t have to we don’t have to destroy the ever upwards argument to explain that because one of the reasons that could possibly why the oil production has gone down or state level is the price and you’ll notice here in the last time the oil price went really high which was the early nineteen eighties production soon dropped the reason why nobody could afford it anymore people started getting rid of their pickup trucks and buying time the Corollas and Volkswagen beetles and things like that they used a lot less oil and they looked for other things to use as fuel instead as well so maybe in the last three or four years the reason that oil production has state level is because not so much is being sold people are not buying so much you decide okay and just to emphasize this point slightly more the green line here is the same data showed you before these however are monthly world production figures there’s actually a couple of different sources shown here but importantly what I want you to see is a very clear indication that oil production over the last three or four years is basically flat not going up Anymore ok so I’m coming to the end of my discussion about production and reserves and this graph is only slightly relevant but I love it so much I want to show it to you we’re talking about forecasts and what people predict about the future a very interesting thing to do is to go back and see what they predicted before and see how correct they were so once again this is the CIA this is the US government telling us what is going to happen is all they were telling us been telling us for the last 30 years actually and interesting what you see on this graph I collected all of the predictions or at least some of them starting back in 1985’s 1985 their forecasts of oil production in the United States is the blue line and they predicted you know out into the future the black. so what we actually produced in the united states after they made their prediction they nailed it ten years in advance in 1985 they now that well not too bad again in 1991 and in 1995 they were just hidden in each time they were predicting the future with great success you know take stock market predictions from those people they were getting it right 10 years in Advance but in 2004 they predicted that the oil production of the United States was going to go up it did it went down so do those files as well didn’t go out last year so it’s going to go out this year but it did it went down and then they predicted again here and this is 2008 well it has gone up yet but it’s going to go up now this is the current forecast to where the oil is supposed to go where those numbers come from why don’t know that I suspect that they’re discussing or imagining increase of oil Deepwater offshore Gulf of Mexico enhanced oil recovery things like that they’ve been expecting that for the last 45 years it has not yet happened so this agency which was doing a great job of predicting the future up until $MONTH 2004 suddenly stopped doing it in 2004 what happened to 2004 don’t know anyway closing this sort of first part one of the things that thought that I want to go forward with is this question how much oil is there you know and where’s it all going to be we don’t really know that but here is a collection of calculations by several different groups including the US Geological Survey of how much oil there is in the world left in the ground to be produced and you know on it you talk about round numbers it’s about one trillion barrels of oil 1 trillion is nice to talk about because it happens that we have in all history to this moment produced about one trillion barrels of oil this says we have about one trillion barrels in the ground now and we know where it is this is all that we already discovered but we haven’t yet produced so the question now is moving to my second topic where’s the third trillion going to come from we know where the second one is how do we get the third one and with there is a number of different ways by which we can do that first of all we can go and look for more oil secondly we can take more oil from the reservoirs that we already found because we don’t produce it all currently thirdly we can go and look somewhere else for oil than in oil fields ok and those three areas are going to come from new discoveries enhanced or recovery and these unconventional sources which are the oil sands I mentioned them a few minutes ago in Alberta and also oil shale now adding up what all of those things might be is something that people like to do because they want to know what the future is going to be like and this particular graph comes from the IEA again and they’re sort of counting how much he is the one trillion that we already produced here’s the other one trillion actually but somehow it became too in this calculation this Middle East 1,000,000,000,000 and another one trillion they count 2 trillion more and then these other things we talked about is the very deep water here is the Arctic now the ice is gone we can get That here’s the extra deep reservoirs this is deep in the ground this is deep in the Water enhanced oil recovery will talk about that soon this is the oil sands of Alberta and Venezuela these are the oil shales which we’ll talk about soon so according to this graph which looks tremendously pleasing and encouraging there’s you know five and a half trillion barrels actually four-and-a-half ones already gone four and a half trillion barrels that we could achieve you know at less than eighty dollars a barrel whether or not you agree with this and I do not you have to look at where these numbers are coming from remember the calculations of several different groups said there was one trillion left that we know where it Is this is counting 21 in the Middle Eastern one somewhere else when in the rest so this is certainly a more expansive number then is conventionally used enhanced or recovery is listed here as sort of new and extra enhanced or recoveries will talk about soon is used all over the world today so enhanced or Required very low it can be applied to fields to which it has yet to be it’s not necessarily a completely new thing there’s lots of places in the world where most of the oil is produced by ER California actually is one of them Indonesia is another heavy or bitumen remember Canada ok twenty percent of their current or production comes from oil sands already and then all chance all shells to forty percent will see so if we if we look at you know what the future may hold this is the oil that we know this is the current production this is the second trillion if you like that we have in the ground but have yet to produce we’re going to produce those and then these are the three additive numbers and remember this is the IEA now they’re looking for a hundred and sixteen Merrill million barrels per day in the year 2030 so you can see how much of this oil has to come from those other sources so this is cor this is the oil sands and or shell and this is the new Discoveries let’s talk about some sort of specific cases and this is a summary of the 15 largest or producers as of $MONTH 2006 his Canada here three million barrels per day one of them is oil shale and clearly the guys who really make a difference in this picture Saudi Arabia and Russia United States is kind of rac1 out but we still produce quite a lot is however other swing produces whatever as goes Saudi Arabia there goes the or business okay we can look at them and really understand most of the future that lies ahead of us remember the total is 85 there twelve percent of it rushes and other twelve percent the two of them together twenty-five percent of the total oil market so let’s look at Saudi Arabia this is the mom number seven it’s the discovery well-drilled actually you know who drilled it Max Steinke graduate of Stanford 19-21 geology discovered sell you a total Arabian oil with that well the mom number seven which produced for more than 50 years until $YEAR when it got down to about fifteen hundred barrels per day they just got tired of producing they switched it off it produced continuously all of that time there is still there can be produced today if they chose to turn it on again so it’s a completely different world in terms of oil production this is what they produced over time importantly the point of this graph is that Saudi Arabia is a swing producer they choose to produce their oil when they find it useful to do so and they switch it off when they done they attempted to support the oil price in the late nineteen eighties unsuccessfully actually because there was sufficient other oil produced in the early eighties to take away that ability to do so they got down as far as three million barrels per day and they simply couldn’t stop they couldn’t reduce it any further because you know that was their income they had to turn the taps back on again they stayed stable throughout the nineteen nineties and this is where they are right now importantly what i want to point out to you is the last three years again two thousand five six and seven same graphs shown here the production of oil from Saudi Arabia is not necessarily a secret but it’s not necessarily laid out on the internet either there’s three different opinions about you know how much of it actually is but you notice they’re not huge the consistent hugely inconsistent and again you notice that at least by three different measures the production of oil in Saudi Arabia has been going down the last three years or so now also shown on this graph is a very important number which is the Hugh’s rig count which is something that watches of the oil industry look at every single day Hugh’s rig count is published daily by the huge tool company actually Baker Hughes tool coming those are the people who sell drill bits in fact they almost the only people who sell drill bits that’s how who’s got to be so wealthy and they keep track of how many rigs are operating worldwide so that they can understand you know how many how many drill bits they must make and where they have to be a what type etc. and they measure that very carefully and that the Hughes rig count is a very firm indicator of what’s actually happening the rig count goes up that means that there’s a great deal of drilling and exploration taking Place look what happened to the huge rig count in Saudi Arabia over the last few years throughout the front tooth is 2000 up to 2,500 number according to the baker Hughes rig count anyway of rigs operating in Saudi Arabia is about 15 think about that’s twelve percent of the world’s oil 15 drill rigs okay it’s probably 15 drill rigs working in Bakersfield is probably more than that actually but it happened to change about this time and you can see according to this graph you know as of whenever this was Jenny of 2007 there were 54 or these are oil rigs by the way only doesn’t include gas 54 oil rigs operating in the kingdom of Saudi Arabian in 2007 now if this is another of the graph that you should pay attention to if you don’t feel a prickling on the back of your neck you should because this graph right here shows you know where our future relies oil has been produced prodigiously in Saudi Arabia for a long time and there’s lots of loss of oil still left in Saudi Arabia but they’re working a lot harder for it today than they were five years ago and it’s not only in Saudi Arabia it’s happening worldwide this is a graph of cumulative Wildcats if you’re not familiar with the term means a exploration well oh well it’s drilled in a place that nobody ever drilled a well before you know drill it and see drill baby drill ok to see what you will Get and this is the cumulative oil that has been discovered by that process and what you can see that from 19 63 2 1980 they discovered 1.5 15 out of billion barrels what is that is how one half trillion actually with 10,000 Wildcat wells that was a pretty good rate of discovering oil by 2002 then he discovered another three quarters of a trillion so the rate at which new discoveries were made really slowed down in spite of the fact that the technology improved tremendously over this period of time in 1980 the discovery rate for Wildcats will one in five today it’s one in three because of 3d sighs making and methodologies that we now have that makes discoveries more easy to find the point however is that with finding oil fields more frequently but they are smaller oil fields and that’s why we don’t accumulate as much in the discoveries that we’re making and this is a lot of this a lot of wealth of 80,000 well why is that well it’s kind of a paradox of oil exploration is that it’s a lot easier to find a big oil field than it is to find a small one cause i found one I wasn’t even looking this is the world’s largest or feel this is Garfield has a much all 200 billion barrels something like that it’s bigger than any other oil field in the world it produces half of Saudi Arabia’s oil production by itself six percent of all oil in the world comes from this reservoir it was found in 1953 and it was found because it’s 200 miles long and it’s 30 miles wide first or by the way that my number seven they didn’t get lucky he’s over there to get like he just here that’s where that was but there’s lots of other big oil fields they’ve mostly been found not only in Saudi Arabia but in most other places as well there are a total of only 500 so-called giant oil fields those that have more than one bit in barrels in the world out of you know how many oil fields around the world 48,000 so only 500 of them are big and the other 47,500 are not so big and some of them are really little like you know these bits and pieces here even this one is not little it’s a giant field or field to but this is a giant among Giants so the point is it’s easier to find big ones and is to find small ones most of the big ones have been found Already that’s not to say that we won’t find more but we won’t find them at the rate that we did in the nineteen thirties to the nineteen fifties that’s why the graph looks like it did also it’s getting really expensive to find oil these are numbers again from the EIA the red curve here shows that cost of discovering and delivering oil in the United States offshore the big hope of expanding or production in the lower 48 states currently at seventy dollars a barrel while price today certainly 70s right 73 ok so the people who are producing looking in producing oil offshore off of Mexico are making three dollars a barrel in the process of doing that onshore costs have also gone up to about twenty seven dollars about that includes enhanced or recovery if all goes below thirty dollars a barrel of these guys going out of business too and this is the cost of foreign oil imported into the United States which is two-thirds of it it’s at twenty dollars a barrel that’s how much it cost somebody to find and produce a barrel of oil to sell to us so it’s getting really hard okay second topic that was seen that in the vein of how do we discover more oil how do we produce more oil enhanced oil recovery is what we call that ten percent of the well we come to this. first of all you realize that when we produce oil from the ground we leave a lot of it behind quite often we leave most of it behind because it can’t be produced methodologies by which we can recover that left behind all our three actually they’re more than three but these are the biggest ones thermal recovery methods co2 and chemical 10% of us production comes from one or other of those three sources the idea in general is that the oil that’s left behind under the ground is swept out by injecting something so-called secondary methods are just injecting water these are tertiary methods they’re injecting something more expensive the water steam or co2 or some kind of chemical we need to talk for a few minutes about recovery factor you will hear quoted that worldwide the average recovery factor of wolf is about thirty-five percent and that is perhaps true however you can see from this graph that there’s a lot more complexity to recovery factor than just an average of thirty five percent there’s a significant number twenty-five percent of the world’s oil fields only ever recovered twenty percent of their oil is also a small number that produces much as seventy percent of their oil we of course would like to move this graph in you know that direction so that more of them produce towards seventy percent and few of them at twenty percent there’s also a difference wherever in the world you maybe you can see this is not all of the world’s all fields but most of the significant ones about 12,000 here depending on whether you’re in this part of the world or that part of the world you can be ten percent difference in your ultimate recovery this is conventional recovery how much difference can it be this is the example from Indonesia which is a heavy oil field in just base production just normally pumping it out of the ground this very heavy oil in this field called dory one of the cornerstone oils in the world during oil they were recovering between eight and eleven percent starting in the 1970s they developed steam injection methodology and they pulled that recovery factor up to something between 50 and eighty percent they were producing 300,000 barrels per day out of this field that formerly will only produce about 40 that’s about at the time half of all production from Indonesia so this is clearly a great example of what enhanced oil recovery can do this happens to be thermal methods where thermal methods come from where they developed actually California half of California’s always produce the same way which university has the largest and longest standing thermal or recovery research group Stanford huh he said second method is co2 carbon dioxide carbon dioxide is not a hydrocarbon gas however it sometimes pretend that it is it behaves rather like a Hydra cub in that it can be miscible with oil and therefore hydrocarbon co2 is quite a good way of sweeping oil towards production wells and of course the idea is for the future carbon capture and sequestration is that you capture carbon dioxide from the fix source like a coal-fired power plant or something like that injected into the ground and use it to sweep more oil to the surface and ten percent no not ten percent 230,000 miles per day that’s not ten percent it’s about 5% of us or production comes from that source right now there’s more than 80 projects that are using co2 enhanced oil recovery right now it’s not something for the future has been done for 30 years already at the moment the co2 that’s injected into us or fields is not coming from carbon capture it comes from co2 that’s produced naturally out of the ground that all companies by co2 and injected into the ground for enhanced or recovery they like to get it back so they don’t have to buy it again they separate the surface they put it back in again but in the future with carbon capture if we lose some of it we’d be Delighted ok if it doesn’t come back put in the ground doesn’t come back we get some oil instead that would be great last one chemical methods asp stands for alkaline affected polymer and that is a relatively it’s an old technology that’s relatively recently applied this is a graph from watching it again another of the supergiant fields in China produce about half of oils China oil in china by itself almost run down it has a ninety-seven percent water cut three barrels of oil 97 barrels of water they are injecting this mixture of our clients effect of polymer they are expecting to add twenty percent of their original oil in place they produced about thirty percent they’re hoping to reach fifty percent by this method and this is actual production over the last 10 years or so third method audios and talk about its non-conventional sources oil sands and oil shale they’re actually different things oil sands is all the oil it’s all that’s come close to the surface and it’s degraded to a very heavy stuff it is pervasive throughout the province of Alberta in Canada and if you were here in one of the earlier energy seminars Tony cop stick talk about it all these flu areas that’s what it looks like take that stuff and roll it across the road but a stream over steamed all across it you drive away that’s what they do it just looks like pitchman called bitumen it’s produced in two different ways one of them is surface mining they just scoop it up in big shovels and they take it away and separated from the sand and they separate it using heat and chemicals and things like that and this is an example of one in Alberta doing that they have a second method to do that when the when the top the or sands rd. / and can’t be reached with surface shovels they have a method called sag be steam assisted gravity drainage which is done with horizontal wells then Jack’s team in one of them they make the oil easier to flow they lower the viscosity flows out of the other well and this is an example of a segment d operation also in Alberta and one of the things that you notice in both cases there’s lots of stuff involved there’s a lot of industrial equipment it also consumes a lot of energy and that basic Lee is the issue that we have to talk about in 2004 Alberta by itself burned point seven billion cubic feet per day of natural gas in order to produce the oil sense and that has to be taken in the context of the total of seven point seven billion cubic feet the Canada burned throughout everywhere the whole of Canada 17.7 about ten percent of it went to false and development and again for reference you know if you’re not Canadian 8.2 million cubic feet at least in 2006 came to us ok so if you look at it in the context of where Canada chooses to expand its gas you know maybe in the future they’d rather make oil with it then sell it to us and we were kind of rather counting on using it to looking ahead right now this is 2006 when this graph was made the amount of oil produced from that source 1 million barrels per day we’re already about one-and-a-half million barrels per day from that source 2030 they’re looking at four and a half million barrels per day that’s more oil and Canada currently produces conventionally but asking for 30 billion cubic meters per year of natural gas which is 2.9 billion cubic feet per day which is you know half of what they can’t currently sell to us where they remember the hundred and seventy-five million billion barrels remember that the step in the curve this author Soderbergh looked at this issue of the gas he counted only 242 but anyway that’s of similar figure if we wanted to recover that hundred and forty-two billion barrels it would require two hundred trillion cubic feet of gas Canada only has 58 trillion cubic feet of gas that’s their known reserves of natural gas so that’s clearly a problem in addition all of that natural gas being burned produces at least currently 45 million tons of carbon per year and the process also generates a lot of dirty water that has to be gotten rid of this change the oil shales or shares the opposite of all sense yes it’s way better there’s a lot more comes out and goes in one shares the opposite all sounds old oil or shell is oil infant oil that isn’t even yet oil it is material called carriages hydrocarbons that exists in the pore spaces of the rock not yet kind of just stated to become Oil the idea is that you carry it up you take that rock and heated up you turn the carriages into oil and you’ve produced we got lots of that in the united states actually in the central part of the country these big green areas have a lot of producible or shell or supposedly producible people have done it already in Estonia they use surface mining to produce oil shale and they use it kind of like coal burning in the fireplace they’ve done it four hundred years already we also can recover oil shale institute just like surface mining and insist you with us with oil sands and this is a process held closely secret by shell but now being actually used to recover oil from shale my last topic and I’ll be very brief but this one is people so we’ve obviously got a lot of things to do if we want to go forward with oil we have to discover more we have to produce more so the question is who’s going to do it and this is a complicated graph but I’ll show you the good bits this is a graph of the age distribution of members of the society of petroleum engineers and they’re about 70,000 this is not only us operations sort of worldwide but most of them are us and what you see is that we choose a good figure here 2004 at least this is right here now this is a better figure 2004 forty percent of the employees but I mention is in this part of the population was over the age of 50 ok and the mean average age of SB members today is 46 which is about what it was 10 years ago but in this period of time what you see is that distribution came down and down and down the average age of petroleum engineers got one year great every year when it was 45 next year’s 4660 was 47 engineers call that a rigid body translation ok means everybody just got older and nobody join recently or prices going up there some young people joining in here but what you see is really a serious problem the blue is today the red is the expectation of the future all of the all of these people move to the right the blue guys and we got lots of people over age 50 the number of people joining in their twenties is quite high but there’s a huge gap right here in people who have 10 years of experience 15 years’ experience that people need to be supervisors production Foreman Chief Engineers things like that there’s nobody there that’s a serious problem because the expertise is being lost off the right-hand side and although it’s being replaced on the left is a space in the Middle what that means however is that the way that an industry accommodates that situation is to give more skill training first of all to the younger engineers and secondly more responsibility because there isn’t anybody else here to give it to so these people can have a pretty nice life they have new challenging jobs and more responsibility it’s not universally that way this is a graph put out by slumber j showing places where there’s a huge shortage of professionals United States and Canada being one Middle East being another Russian not so much so in other places where there are plenty including China India Indonesia and Venezuela here because it’s lots and lots of people here because Mr. Chavez fired them also they’re all available but important places of the world where there’s a shortage of oil and gas professionals so this is a small sort of add-on right here the point of the matter is that we talked about oil and/or peak etc. and I talked about how other sources of energy kind of fossil to and everybody says well we’re an hour while we use guess well there’s a guest speaker as well coming soon also there whenever we use call Nicole well yes but there’s going to be a cold peak to $OPERAND and x list particular groups prediction the cold fusion. comes around 20-30 so we got lots of call but we don’t have an infinite amount of call and well one day we’re going to have picked uranium to what that means is that sooner or later the fossil fuel. of our human history will end and we have no alternative at least that we can see at this moment then renewable energy if you can think of one let me know so what that means is for people who are studying to be a petroleum engineers today they may begin their careers petroleum engineers but they were surely end it as something else assuming they work for a long time so let me summarize then all of the good easy oil is basically discovered already and produced there’s lots of oil left but it’s getting a lot harder to find It a lot more expensive we’re using more and more technology Deepwater enhanced oil recovery all of those things to recover the oil that we have what that means is that it’s a much although the or business has always been technology-driven it’s much more so now than it ever was is that a good thing not a bad thing if you were looking for you know a professional career there’s lots of interesting things to be done in the recovery of all get so I’ll leave you with the slide or actually different slide that same place that I started with the title of my talk was the future of oil and I didn’t really say what the future wall is going to be because I don’t know but let me make a few rash forecast and you can remember this and either laughs what’s a while he was like Nostradamus my prediction which is a sort of a gut guess if you like right now we’re producing 85 million barrels per day of the last three years I don’t believe in this only a belief not a calculation I don’t believe the world will ever produce more than 19 million barrels per day and you right there down and will laugh if I’m wrong and laugh even harder if I’m right so let me leave you with that and invite your quest the is particularly so the question is about Cantarell Cantarella is one of the world’s giant oil fields in its most of the production of Mexico and I’ll sort of answer that expensive dress in a slightly different way almost every country of the world has a field like candle Russia has somewhat LA and Saudi Arabia has go on and Kuwait has company was called all of them are at different stages of their sort of peek cantarella is clearly passed its peak goal has clearly not passed its peak still increasing but a greater cost schools correct so the questions about coal to oil and there are places where industrial plants are already turning coal into oil and it’s one of the particular hopes for China’s manufacturer turn coal into oil sure it can be done and it will extend the available peak but it’s a lot easier to get oil when I was easy it’s a lot easier right now to get oil from oil sands or even all the shells and is from call because of the industrial plant and investment required as those figures change will probably will see more of it senior picture there can you set an assessment your community and students alike in the present situation that picture I was hoping somebody was asked me that it’s matt Simmons in the room it’s a i have you read it read his book it’s a book that contains how many people haven’t read it ok what let me tell you what it says it says that the oil in Saudi Arabia will eventually run out ok don’t need to read it that’s the that’s the only well i would say the only it’s the most correct statement in the book and it’s accompanied by 400 pages of largely nonsense because he made a huge story about you know the Saudis messed it up and Exxon messed it up and it’s you know it’s a big catastrophe about to happen none of those are actually true and he backs it up with some security pseudoscience scientific arguments his conclusions actually correct Saudi Arabia will run out of oil and the numbers I’ve shown you here is that Saudi Arabian oil is perhaps speaking now or will very soon but it’s not what you know he draws it as a catastrophe and he draws it as a conspiracy and it’s been messed up but it’s one of the most technologically advanced come these guys are not wasting any or they did not do all the bad things that Matt Simmons suggested they may have done energy said that cane administration has a goal throughout you’re really making the US energy independent sir yeah self-sufficient is that possible through offshore drilling yeah that’s a loaded question the answer is actually no but there’s more to it than that but the question of our show drawing is actually a kind of an interesting one I believe firmly that there’s nothing wrong with offshore drilling you know people are against offshore drinking things going to environmental problems can be spills and it’s going to be terrible and it’s going to block the glans get away i honestly don’t accept that argument but I myself do not believe that we should be drilling offshore more right now we’re much better off to leave that oil in the ground because what happens if we produce it now some idiot will take it out of the ground and pump it in the tank of their SUV and blow it away for nothing let’s keep it for another 10 or 20 years and use it more productively down the road in our previous fours and get five times they use from it much better to have that oil in the ground we don’t need energy sufficiency no country has ever had or energy sufficiency in the last 100 years except Saudi Arabia the United States certainly has not had it and has done just fine without it we don’t need energy independence what we need is they will supply yeah sort of looks like that he is the one we’re going to two cents a gallon of gasoline and went through that serum approximately I don’t know you know if you look at the actual figures right now in the gulf of Mexico they are producing about one-and-a-half million barrels per day and remember the lower 48 is producing about five so that’s a lot it’s a big fraction of the lower 48 production you know I i didn’t know this and write but I didn’t learn this until the what was the name of the hurricane in Houston I like the one month ago it damaged 17 structures in the gulf of Mexico and they also showed a picture of all of us the structures that you know how many there are 3000 887 fixed or tethered structures in the Gulf of Mexico 17 were damaged 3807 producing one-and-a-half million barrels per day so yeah we can go and draw someone will get some more oil how much more oil we going to get probably a usable amount how much in the context of what we’re talking about here trillions not much actually understand Stanford University exports electricity and sell to the PG&E to do import contract expire clearly not I’m actually serving on a panel for the president to decide where what staff will do next then I don’t think conclusion has been reached the interesting thing is that they the Cogen plant that Professor clear about just referred to overhear produce about 30 megawatts of electricity for the campus and burns natural guess it however is about 30 years old and is reaching is designed life Stanford is now deciding do they want to build another coach in plant or do they want to do something else and you remember that the president has committed Stanford to a you know a low-carbon future to which a gas-fired coach in plant even though coach n is the most efficient we can do anyway produces co2 can avoid that.