The Age of Petroleum is in its infancy
In 1973, and again in 1979, the world was subject to ‘energy crises’ as they were termed at the time. Many readers are too young but those of us who were around recall sitting in long lines in the cold of winter (1973) or the blistering heat of summer (1979 – a time when many automobiles were not yet equipped with air conditioning) waiting to fill our tanks –or, in some cases, to be allowed to purchase a pittance of a prescribed gasoline ration.
Of course, as evident by the super-abundance of petroleum throughout the intervening four plus decades, there really was no shortage of petroleum, in time the gas lines waned and disappeared, and it became apparent that the so-called energy crises were nothing more than calculated moves in a lengthy and high-stakes geopolitical energy chess game.
What those events did do however is to make the western world keenly aware of its dependence on petroleum from politically unstable, and in many cases unfriendly, Middle-Eastern states. The precarious and tenuous nature of our dependence on Middle Eastern oil was made more acute by the Iranian Hostage crisis which overlapped in time with the 1979 ‘oil crisis’ and underscored that domestic energy production had to ramp up to obviate our dependence on unreliable sources.
Just at that same time, we were at the zenith of the self-destructive internal war against nuclear energy and had embarked on a campaign spear-headed by The Sierra Club and others like it to cease further hydro-electric projects. Although petroleum is used primarily for transportation and nuclear and hydro are almost exclusively used for electric generation, it appeared we actually did have an energy crisis, in that we had dug ourselves into an oil dependency with hostile, or at best ambivalent, partners and we were in the process of precluding further development of the only two non-fossil fuel alternatives which are capable of providing energy on a scalable and reliable basis – that remains true today, despite the idolatrous love affair green-inclined people have with zephyrs and sunshine (see, for example: https://insuspectterrane.com/2015/03/18/concentrate-please/) .
Following on the two ‘oil crises’ there was a frantic world-wide exploration for new oil sources, but it was beginning to be borne in on the collective global petroleum appetite (including industry insiders) that within a few decades we would reach ‘peak oil’ and the supply of fossil fuels would begin to diminish. In fact, as recently as the first decade of the 21st Century, American producers were already operating under a prevailing assumption that they had reached “peak production” and a domestic decline was their only portion for the remainder of their tenure as energy suppliers and they were exploring ‘exit strategies from petroleum while still looking to remain ‘energy companies’. More on this below.
Peak Oil, or Hubbert’s Peak
This idea of peak oil production deserves a digression at this point. The concept of ‘peak oil’ or the maximum oil production which will ever occur within a single year was proposed in 1956 by M. King Hubbert, to this day one of the most respected names in geology. He predicted that oil production would peak in about 1970 with a subsequent decline of fossil fuel reserves. In his honor, the peak oil concept has been referred to as the Hubbert Peak. As with most things King Hubbert put his hand (mind) to, he was correct – in essence and to a point.
What he predicted was that the then known and predictable petroleum reserves (in reservoirs) would be produced to the maximum volume and rate possible by about 1970, after which a slow decline would ensue, ultimately to run out. He had no prediction about how long the decline curve would last. The concept of peak oil thrilled the anti-fossil fuel crowd. Their argument was, and remains: “We are fast running out of this nasty petroleum stuff, so why prolong the inevitable? Let’s wean ourselves off it NOW! It will all be gone within your life-time anyway, so rather than being caught short later on, let’s start the transition immediately.”
Well, it is now 60 years later and we have burned our way through a volume of oil and gas many times the entire known reserves of 1970 (and of 1956) and we now have far more proven reserves than at any time in the past; in other words, we have more available now than we did when King Hubbert made his epic prediction.
Even though the several years at and around 1970 were, indeed, peak production years, over the many intervening years since then, the actual known reserves have increased, even though production did peak at that time and that volume remained the top for many following years.
There are many reasons for this apparent discrepancy, not the least of which is increased fuel efficiency in transportation which has improved continually since the 1973 Arab Oil Embargo.
Another reason is better and better oil and gas recovery techniques including secondary recovery techniques applied to oil and gas fields which were on the decline already but which were rejuvenated.
This in no way invalidates King Hubbert’s prediction which was based on the engineering capabilities of 1956 – not 1986, or 1996, or even 2006, and on a fundamental premise in the understanding of petroleum geology, which has since been made an obsolete consideration in oil and gas recoverability.
Hubbert knew that a ‘reserve’ is the proven, recoverable volume of a resource, and in the case of petroleum refers to the recoverable volume of oil or gas from the total volume within a reservoir. At the time of his prediction the best that technology could achieve was about 30% of the total known resource in the reservoirs. By the 1970s, enhanced recovery methods had increased ‘reserves’ (not the resources) and extended the lives of those same reservoirs that Hubbert had predicted would begin to deplete by 1970 with the result that production would continue for decades – which it did.
That seemingly rosy picture of increased reserves through technology notwithstanding, oil and gas producers, by 2006 knew that the reservoirs were, indeed, and finally, becoming depleted and, as energy providers, they were looking at after-oil strategies.
Sidebar: The recognition that Hubbert’s Peak was finally bearing down on them, albeit nearly half a century late, was the key ingredient in what has turned out to be a premature and erroneous, but seemingly politically correct, decision on the part of the oil & gas industry leaders. When they thought that they were going to be transitioning away from fossil fuels, not only did they invest heavily in alternative energy technologies, but they came out with statements that the burning of fossil fuels did need to be curtailed to reduce Carbon Dioxide emissions because – and here is the kicker – they admitted that those emissions DID contribute to climate change.
They thought this would be terrific P.R. with the environmental movement and would show how caring their companies were – at no risk. After all, they knew it would take decades to phase out fossil fuels in the most ambitious of post-petroleum strategies and by then their reserves would be nearly gone anyway. And, they would have bought all sorts of good will and shown themselves to be responsible stewards of the Earth.
That has not worked out well for them. Not only are they now producing so much oil and gas that their own success has driven the price of oil and gas to record lows, there are more reserves than ever, and the environmental activists are aggressively trying to put them out of business with campaigns such as “Exxon Knew” (http://exxonknew.org/)
Now fast-forward one decade to 2016. The petroleum industry is completely different than it was a decade earlier; the global geopolitical framework which had prevailed over the previous 50 years has been turned on its head; the entire outlook for the world’s energy and economic future is now better than ever. To the benefit of all humanity, abundant, affordable energy, the very cornerstone of modern (post-1750) civilization will continue into the next century, at least, with no need for expensive alternative, and unreliable energy sources.
This change of fortune has proven to be the scourge of the very active and long-lived anti-capitalistic cabal of civilization haters currently operating under the naive slogan: ‘Leave it in the Ground’, and, particularly, of that most willfully ignorant and vile of the various species of post-modern environmental activists – the fractivist.
I have addressed the hydraulic fracturing process previously herein: https://insuspectterrane.com/2014/04/17/frick-and-frack/ , so I will not repeat anything here about the specifics of the methods. I have also held forth on the reason fractivists hate it so much: https://insuspectterrane.com/2015/03/18/its-controversial-2/.
The unprecedented reversal of the collective good fortune of the world’s total population did not occur as the sole result of hydraulic fracturing. Hydraulic fracturing is old hat – it’s been conducted since 1949. Horizontal drilling is not new. Combining the two was an innovation, but that is only one component of what caused the rejuvenation of petroleum and has extended the age of affordable abundant energy by many decades.
The other piece of the puzzle is what is known as the Shale Revolution. This, as it turns out , is nothing new either. Call it what we might, this latest example of the limitless potential of human ingenuity has completely re-structured the petroleum industry; Shale Oil and Shale Gas have broken OPEC’s stranglehold on the world economy; Shale energy has sent eco-radicals and western neo-Communists into a frenzied fight for their very existence; and, to the ongoing chagrin of the eco-zealous ‘leave-it-in-the-ground’ crowd, Shale Energy has proved that M. King Hubbert was quite simply wrong and we have not even approached the upslope on the ‘peak oil’ bell curve; we are NOT going to run out in a few decades. So, in retrospect, there is/was no sane rationale for any fossil fuel company to stand behind a position that fossil fuels are bad for the Earth and we should begin weaning ourselves from the umbilical pipelines
So, what is Shale energy, and how could so brilliant a mind as King Hubbert have been that wrong?
Quite simply, Shale Energy is petroleum which had hitherto been locked tightly in a very-fine-grained geologic formation (shale) from which it could not be extracted at the volumes or rates needed to make a meaningful contribution to the world’s energy resources.
In order to discuss the Shale Revolution, some background in traditional petroleum geology is necessary. With just a little background it will be seen that the Shale Revolution involved no new knowledge or methods. Geologist have known about those petroleum-rich formations for a long time, but there was no way to extract the resources economically – until now. Making that extraction economically viable has been the role played by hydraulic fracturing and horizontal well drilling, which I do not mean to downplay, but, as I mentioned above, is not the point of this essay.
The real difference in the industry is more fundamental than a new technique. Unwittingly, probably because the new exploration and development worlds are so different than they were previously, the very nomenclature of petroleum geology has changed to make the paradigm shift the new normal. So pervasive and so rapid has the change been that even geologists forget that what we are dealing with in the ‘new’ shale energy world is nothing new at all. What we coming to grips with on a very real level is that the reserves of oil and gas unlocked from shale by hydraulic fracturing is so vast that the volume we have consumed in the many, many decades since the petroleum age began represents the proverbial tip of the iceberg.
Petroleum is a complex mix of molecules formed exclusively of hydrogen and carbon in a vast array of combinations (hydrocarbons). Those compounds formed from lipids derived from decayed organic matter – essentially plant compost – which became entombed and transformed chemically in sediments deposited in ocean basins. Organic matter in the form of dead plants is continuously settling to the sea floor, but not all of it can become petroleum.
Petroleum is formed from that portion of the organic matter deposited in sediments in a chemically reducing environment – no free oxygen. That condition requires a deep water depositional environment at depths below the oxygenation zone. Ocean water at those depths occurs far enough off-shore that coarse-grained sediments have already been deposited into the shallower, higher-energy and oxygen-rich depositional environments. Farther off-shore the organic matter destined to run diesel locomotives and to heat homes, was being incorporated into an anoxic, organic-rich, fine-grained clay which, when lithified, would become black shale (black because of the reducing environment – red shales are terrestrial and were deposited in aerobic environments).
Of course, geology being what it is, that organic-rich shale was ultimately buried below other sediments. Once buried, the hot conditions deep in the Earth caused the the organic matter to be transformed into isolated blobs of petroleum. At even higher temperatures the resultant product was natural gas or methane, also a hydrocarbon compound (at even higher temperatures the hydrogen is driven off and the product is graphite).
Shale is a sedimentary rock which has a very high porosity (many open pore spaces) but because of the shape of clay particles, those spaces are not well connected (low permeability) so the petroleum is trapped in the pore spaces of the shale – essentially forever. In the case of the Marcellus Shale, the organic matter was deposited in the clay 350 million years ago and the heat of transformation to petroleum occurred at least 300 to 250 million years ago. And the hydrocarbons are still trapped in there
The pathways along which the petroleum (the oil or gas which was recovered in the first century of the petroleum age) escaped the shale were mostly created by earthquakes which fractured the rock along faults which connect the shale to other geologic rock formations (above or below the black shales. Because faults contact only a tiny volume of the rock in the formation, the vast majority of the petroleum (oil or gas) remains trapped in the disconnected pore spaces of the source rock.
The shale formations in which the petroleum formed are known, in traditional petroleum geology, as source rocks. The faults create migration pathways. Oil and gas rise along the migration pathways (because they are low density) and collect in overlying, high porosity, high permeability formations which are called reservoirs. Because the reservoirs are permeable, petroleum flows through the formation, making recovery with a well possible.
That classic scenario is what is now known as a conventional oil or gas field and King Hubbert was correct when he said the reserves would peak, because he was considering the reserves in reservoirs, which are fed by deeper source rocks from which petroleum leaks at a geologically slow rate. King Hubbert knew all that, and it was the basis of his prediction. And indeed, by 1970 the petroleum in the reservoir rock did reach peak oil levels and began a decades-long decline.
The following schematic is a microcosm of conventional gas forming in permeable reservoir rock after migrating along faults from an impermeable shale source. The curved blue lines are natural gas well traces in cross section – three are not complete, but one is complete. It is an unconventional well drilled into the Marcellus Shale.
I want to digress for just a line or two. Until recently, almost the entirety of the petroleum we have consumed has come from the reservoir rocks In other words, even at our voracious rate of consumption we have used the petroleum derived from only the tiniest volume of the source rocks and the vast majority of the petroleum formed in ancient sediments remained trapped and out of our reach.
To paraphrase E. Dijkstra, the Shale Revolution is no more about hydraulic fracturing than astronomy is about telescopes. The Shale Revolution is about going to the source rock rather than skimming off the tip-of-the-iceberg fraction which leaked through narrow, tenuous pathways into relatively small reservoirs – from which we recovered only about 40% of even that sub-set of the original total held as trapped resources which could not be counted as reserves. Yes! The Shale formations of the shale Energy Revolution are the source rocks of the former conventional petroleum industry.
Why is this called a revolution and why does the industry claim that it is a complete game-changer? The way to consider that compound question is to put some general numbers to the previous paragraph.
If we assume that, with enhanced recovery techniques, we have recovered approximately 40% of the petroleum held in reservoirs, and that the volume held in those reservoirs comprised approximately 10% of the petroleum leaked from the source rocks via natural migration processes, it takes only the simplest arithmetic to realize that, rather than reaching the point of peak oil with diminishing returns, we have used only about 5% of the total petroleum produced within the Earth. With 90% of the original petroleum still in the source rock, a recovery efficiency of only 30% in the Shale source rock via hydraulic fracturing would yield 7 times more oil and gas than we have used to date. And that still leaves 60% of the initial volume to be recovered with future enhanced recovery methods.
That is staggering.
The Shale Revolution occurred because we, 60 years after Hubbert predicted peak oil, decided to NOT wait through another geologic time slice for Earth processes to replenish the reservoirs from the sources. Rather, we decided to go directly to the sources, those off-shore, deep-marine, anoxic black shales now buried beneath aeons of other rock types, and retrieve the oil and gas directly.
The proof of all this is realized at the pump. The cost to consumers of fossil fuels is comparatively the same as it was in 1956 when King Hubbert made his prediction and there is no foreseeable end to the current flood of affordable, reliable, transportable, flexible fossil fuels.
The only thing thing which could prevent a manufacturing and economic renaissance is the wholly political farce known as Anthropogenic Climate Change which is an unambiguous non-scientific canard devised with the specific goal of killing the fossil fuel industry to achieve a political goal. But that is a different story.
So, did M. King Hubbert miss the boat?
Not about the topic he was analyzing. He was correct. Where he did err was in selling his own kind short by not allowing for the most precious resource of all – human ingenuity.