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Thursday, January 12, 2006

Oil companies don't do depletion modeling, or they did at one time but now just don't care

Compared to the clueless petroleum engineer featured in yesterday's post, the geologist rockdoc takes a measured view of things. He remains optimistic and offered up some thoughts on my depletion modeling approach here. However, I still get frustrated because of the casually dismissive attitude that big oil has apparently indoctrinated into anyone that gets within a 10-ft pole distance of their clutches. I annotated his musings with my own rhetorical questions in the following snippet:
rockdoc123 wrote:
WebHubbleTelescope...what you just created as I remember was being used some twenty years ago in the research labs (back when oil companies like Gulf and Shell had large research facilities and had no problem hiring people with a maths jones to sit in an office and fiddle with data).
So why did not such a fundamental analysis get transferred to the textbooks? The lack of this kind of analysis is much like teaching first-year electrical engineering without introducing Kirchoff's Law. It's just freaking rate equations and conservation of matter. This to me is deeply troubling. I didn't take an earth sciences major, but I have taken classes in subjects such as limnology and the first thing you learn is that all freshwater lakes go through a life-cycle, birth through death. Are the petroleum engineering departments so vain and self-conscious not to even broach the subject of the life-cycle of oil? To avoid teaching that the whole thing is just a house of cards or a ponzi scheme, certain to eventually collapse, strikes me a bit irresponsible.
rockdoc123 wrote:
Today most oil companies are just not that interested in how much might be left overall (exception would be BP who still has a pretty big research component)...they spend their time modeling existing production and coming up with predictions on whats left to be discovered in various parts of the world where they are working.
And will this get out to the textbooks? Or will it get buried like the rest of the stuff, until we all say "Wha' Happ'n?"
rockdoc123 wrote:
This sort of analysis involves more subsurface information and requires less math analysis of past trends. If memory serves me correctly some of the old analyses were published in the AAPG Bulletin.
OK, so this got published. How about the results from 20 years ago?
rockdoc123 wrote:
It would be interesting to look at the same analysis for somewhere other than the US.
I have analyses for North Sea, World, lower-48, even for natural gas.World | Lower-48 | UK North Sea | Former Soviet Union | New Zealand NG | Norway

I use the same model for everything, vary the parameters a bit, and gain an understanding that I surely would not have if these rate equations were not available. We could be mining for marbles, it doesn't really matter, I see no fundamentals being taught or published anywhere. The more I look at it, this stuff with the Logistic curve and Gaussian fitting is basically rubbish. It's equivalent for me to trying to teach the response of analog electric circuits by looking at the output waveform. I would like to see the oil depletion modeling rise a step above shear empiricism.
rockdoc123 wrote:
Arguably the US has been a poster child for making discoveries and getting them on-stream with little in the way of interuption or government imposed obstacles.
Government-imposed obstacles seem like a second-order effect when put up against the greed of the human animal. Teach the first-order effects first. Just about everything in engineering is first -order effects. If you don't do the first-order stuff first, you should just give up. They don't call it first-order for nothing.

I also think it important to do this fundamental kind of analysis to prevent the Michael Lynch's of the world to continue to drive a tar sands truck through the occasional gaps in the logic of conventional oil depletion analysis. You basically have to get rid of all of the logistic or gaussian curve fitting arguments or you will fall into Lynch's favorite tautology traps -- notably that of impossible symmetry and causality violations.

Most of the people on the oil depletion sites seem to want to hang on to their belief in the logistic formulation, and so Lynch will continue to eat their lunch, in a figurative sense. Lynch has it wrong of course, but his arguments amount to a perfect framing that every right-wing political tactician would be damn proud of. A commenter at TOD mentioned the technique of "psychological and/or language patterning". Whether the oil companies actually fund Lynch, Yergin and others, I don't really know, but if they did it would make an effective 1-2 punch.
  1. Withhold information, both data and analysis
  2. Hire consultants and political cronies to run interference and obfuscate.
Hey, if it works in politics...


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