## Thursday, September 10, 2009

### Abiogenic birth of oil

At least a large portion of petroleum is believed to originate from biological processes. However, an article in Nature,
Kolesnikov, Kutcherov, Goncharov: Methane-derived hydrocarbons produced under upper-mantle conditions
uses spectroscopic methods applied to laser-heated diamond to argue that at temperatures around 750-1250 °C and pressures around 20,000 atmospheres, methane transforms into ethane or propane or butane, combined with graphite and hydrogen. Under the same conditions, ethane decomposes into methane: the transition is reversible.

It should also mean that it is easier to find oil, as The Swedish Royal Institute of Technology puts it.

New oil reserves

Such a statement is not too shocking: two days ago, 1-2 billion new barrels of light oil were announced by BG in Brazil, increasing the world's proven reserves by 0.1-0.2%. One week ago, BP found 4-6 billion new barrels in the Gulf of Mexico, previously thought to be "finished".

Also, two weeks ago, Israel moved towards energy independence when its Mediterranean natural gas reserves were re-estimated to be 16% higher than previously thought, and chances of additional hidden reserves have grown.

Peter Foster nicely summarizes the main difference between oil discovery and the "peak oil" reasoning:
The great petroleum geologist Wallace Pratt famously said that "Oil is found in the minds of men." Discoveries depend on visionary theory, technical innovation and commitment to risky drilling. Plus luck. Peak Oil theory, by contrast - which asserts that global oil production has, or soon will, peak, and that this has powerful policy implications - is found in the limitations of the minds of men. It is less geological theory than unevolved intellectual shortcoming, although it certainly has its political uses.
Some other comments by Foster - about the climate - are less wise. But I may have misunderstood something.

You can see that the new oil reserves are being discovered frequently enough to keep the "oil constant" genuinely constant, up to small fluctuations. If you haven't heard about it, the "oil constant" is the number of years in the future after which we will run out of oil, and it's been equal to 40 years or so for quite some time. ;-)

1. The math on this is quite simple and works against your thesis.

First, most of the world has been explored thoroughly and we know which structures to look at so that we can find the oil that we know exists but was too small to bother with previously. (I'll get back to this later.) While your examples of deep water finds are legitimate, they are too small to offset the depletion issue, which I'll get to below.

Second, most oil producing regions are already past their peak and it is hard to see any scenario that permits those peaks to be surpassed for long, if at all. For example, no amount of drilling will allow the US to reach the peak production levels of 1970. Let me note that I am not suggesting that we do not drill. We clearly should drill because we need all the oil that we can find.

Third, those small deep water fields require prices to increase substantially before they can justify production in quantity. While 2 billion reserve seems large you need test wells to determine how much of that oil can be extracted. And given the infrastructure needed to bring the oil to the transportation hubs the amortization period may limit the total production possible to very low levels.

Forth, much of the world's oil production over the past 50 years has come from a few very old, very large, and very productive fields. All of these fields are now past their peak. Depletion runs from around 4% on the larger fields that have not used technology to enhance production levels to more than 20% for the off shore and smaller fields, particularly if they have used horizontal wells and water or nitrogen drives to increase production levels. This means that we need at least 4 mbpd of new production each year just to offset the decline rate.

Fifth, the promising ideas that you bring up are incapable of producing enough oil to offset this depletion. Even if oil is formed abiotically we need to find it in concentrated form in order to extract it economically. We need the proper geological structures to ensure that the produced oil does not dissipate, reservoir rocks with the proper porosity and permeability profiles, adequate pressures to lift the oil to the surface, etc. I don't know about you but I think that methane hydrates are much more promising than relying on all those factors working out.

I think that this is one place where the reliance on improper applications of economic theory leads to wrong conclusions. The economics tells us that we will have to find substitutes but do not assure us that we will produce a lot more oil than we are capable of producing on a daily basis at this time. Keep in mind that the rising cost of whale oil did not cause us to find more whales but to find cheaper and better substitutes. This debate needs to head towards that direction rather than to rely on misplaced economic theory and ignorance of geology and the history of the petroleum business.

2. I think the greater issue for us (the West) at the moment is the question of where the oil to meet our needs can be derived. At present, most of it is under the control of thugs and dictators.

The argument for or against "peak oil" has no immediate relevance to resolving our current reliance on oil from untrustworthy suppliers who for the most part, would like the West to be dependent, subjugated, and at their mercy.