RE: An oil industry leader's perspective on abundance, etc.

Don wrote:

> -----Original Message-----
> From: asa-owner@lists.calvin.edu [mailto:asa-owner@lists.calvin.edu]On
> Behalf Of Don Winterstein
> Sent: Monday, December 08, 2003 2:28 AM
>
> Glenn wrote:
>
> "It
> isn't that there aren't enough molecules. It is that you can't get those
> molecules out of the earth fast enough! Production RATE is much more
> important to world economic health than is reserves."
>
> Good point. I posted my conversation primarily to indicate what a
> high-level person at a major energy company believes and hence to give an
> idea possibly of what such company is likely to do or not by way
> of meeting
> future needs. DLP as chief technology officer probably is having
> constantly to defend and promote technology to the CEO, so it's possible
> (likely?) he takes his own sales pitches too seriously.

I have personally known all the bigwigs in all the companies I have worked
in since 1986. Something happens to perfectly reasonable people when they
get up there. I suspect that people I know would say the same thing. I
suspect that the pressures to hang on to the job (and the big bucks) and the
fear of saying something wrong, which would move the stock in the wrong
direction, makes for a myopic view of the world.

Several years ago, a young geologist told me he couldn't understand why
upper managment was doing what they were doing. I told him it was simple to
understand upper management. I asked him "What would you be willing to do
for $5 million per year?" He replied "Almost anything". Voila. there you
understand upper managment! :-) (Telling stories like this is why I never
made it into upper management.)

  My personal view
> is that prices really are likely to start an inevitable and steep increase
> fairly soon--but I'm not going to say when. You're in a better
> position to
> venture such prediction if you're so inclined.

I don't know exactly when. But in that Bottom of the Barrel article in the
UK's Guardian paper, Duffeyes, whom I respect, said he was 99% certain the
peak would be next year. I tend to think 2005 or 2006, but most estimates
made by politicians for individual countries have always turned out to be
optimistic. When I went to the UK in 2000, the DTI was proclaiming that
they would increase production out to 2010. Unfortunately for those
sentiments, the UK production had peaked in 1999!
>
> I've watched tar sand ("oil sand" would be more accurate) extraction by
> strip mining and participated in an experiment designed to
> produce oil from
> such sands in situ in Alberta, and it's hard to imagine how such processes
> could be sped up by the orders of magnitude that seem to be required. At
> the very least, that part of Alberta would turn into something like like
> moonscape-cum-machinery--not that anybody lives there now or
> would want to.
> As for water, Alberta is well supplied (we had to wear full rain gear much
> of the time!), though it may not be readily available exactly where it's
> needed. Much of the area is covered now (as I recall) by small deciduous
> trees (birch?) and thick, brushy undergrowth on a damp or swampy base. In
> any case that part of Alberta is not like our relatively dry states that
> have the shale oil.

Agreed. I think of the Orinoco Tar belts. To get that oil, we would need
to tear up the entire continental plain of northern Venezuela.
>
> DLP initially was going to say how big a consumer China has become, and he
> thinks of that as good news; i.e., one more big customer for his products.
> Such news has an entirely different effect on me, even though I greatly
> admire the Chinese advances in general prosperity and hope the Chinese can
> improve their quality of life in other ways.

The real danger with China is that they will be competing with us for the
declining oil. They might very well be willing to sell missles for oil to
some nasty dictators. That would get them the oil and the nasties, the
missiles.
Received on Mon Dec 8 06:46:17 2003