Philosophia Naturalis 4 has been published

Daniel Collins at Down to Earth has posted the 4^th edition of Philosophia Naturalis. Its your gateway to interesting science reading, right here.

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Biofuels Production Has Unintended Consequences on Water Quality and Quantity in Mississippi

Science Daily has a look at the impact of biofuel production on water quality in the Mississippi river - Biofuels Production Has Unintended Consequences on Water Quality and Quantity in Mississippi.

More water is required to produce corn than to produce cotton in the Mississippi Delta requiring increased withdrawals of groundwater from the Mississippi River Valley alluvial (MRVA) aquifer for irrigation. This is contributing to already declining water levels in the aquifer. In addition, increased use of nitrogen fertilizer for corn in comparison to cotton could contribute to low dissolved oxygen conditions in the Gulf of Mexico.

These are some of the key findings from a study conducted by the U.S. Geological Survey (USGS) to assess water quality and quantity in the Mississippi Delta, in relationship to biofuels production.

"Because corn uses 80 percent more water for irrigation than cotton, exchanging corn for cotton will decrease water-levels," according to Heather Welch, USGS Hydrologist and author of this USGS Report. Declining water levels in the MRVA aquifer are particularly significant in the Mississippi Delta, where the infiltration of rainfall to replenish the aquifer is low. "This is a low flat area. When it does rain, much of the precipitation is lost through evapotranspiration and to streamflow, so the rainwater never reaches the aquifer," explains Welch.

In 2006, the U.S. Department of Energy Biomass Program implemented the Biofuels Initiative. The initiative calls for the replacement of 30 percent of gasoline levels by ethanol by 2030 and the reduction of ethanol costs to prices competitive with gasoline by 2012. In the Mississippi Delta, implementation of this initiative resulted in a 47-percent decrease in the number of acres dedicated to producing cotton, which resulted in a corresponding 288-percent increase in corn acreage in the region from 2006 to 2007.

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Has The World Reached Economic Peak Oil

The peak oil world seems to have (thankfully) mostly moved from viewing the defining aspect of the peak of oil production as a function of oil in the ground to being a function of the price it takes to produce new oil - David Strahan has a good example of this at his blog - HAS THE WORLD REACHED ECONOMIC PEAK OIL? .

Whisper it. Oil production in the US is increasing. The country where output peaked in 1970 and then shrank by 40 per cent over four decades, has turned some kind of corner. Between 2008 and 2010, production rebounded by 800,000 barrels per day to 7.5 million barrels per day, and analysts forecast more growth to come. Goldman Sachs predicts that by 2017 production in the US could reach almost 11 mb/d, just shy of its all-time high, restoring the country to its former glory as the world’s biggest producer. ...

Indeed, if the world is suddenly awash with oil, somebody forgot to tell the oil market. Oil remains stubbornly above $100 per barrel of Brent crude, the main international benchmark. Most analysts agree this is because supply is struggling to keep pace with demand, despite weakening western economies. But if all this extra oil is coming on-stream, how come?

Part of the reason is down to short-term unforeseen disruptions, such as the Deepwater Horizon disaster in theGulf of Mexico last year which delayed many drilling projects, and the Libyan revolution which cut global supply by almost 1.6 mb/d. The impact of these events should fade in time but there are clearly deeper forces at work. Producing oil is getting harder.

Not that it was ever easy. The amount of oil produced by existing fields is always in decline because as oil is extracted, pressure in the reservoir falls and the oil comes out more slowly. As a result, every year the industry must drill new wells capable of supplying around 3 mb/d – or 30 per cent of Saudi Arabia’s production – just to stand still. Satisfying the growth in global demand, at least when the economy is expanding, requires roughly another 1.5 mb/d annually.

Filling these holes gets more difficult as the “easy oil” gets scarcer. Companies are now exploring to the ends of the earth – from the Falklands to the Arctic– and are drilling reservoirs that are deeper, hotter and higher pressure than ever, all of which raise new engineering challenges. That has pushed costs up massively, with effects that have yet to be widely understood.

Offshore, companies are working at ever greater depths. During the 1980s and 1990s, for instance, Petrobras, Brazil’s state oil company, made most of its offshore discoveries beneath about 3 kilometres of sea and rock. In 2007, it found the Lula field, about 7 km down. Drilling Lula needed 4 km more specialist steel pipe at a time when steel prices were soaring because of higher energy costs.

Even onshore, costs are rising. Shale-oil fracking wells typically run horizontally and need four times as much steel as a vertical well. According to analysts at JPMorgan, such inflation is rampant throughout the industry. Exxon’s production investments, for instance, soared from $15 billion per quarter in the 1990s to more than $100 billion in the second quarter of 2008 – while the amount of oil and gas it produced scarcely changed.

Some of the most costly oil comes from the tar sands of Canada, with its vast open-cast mines and energy-intensive production processes. According to investment bank Barclays Capital, new projects here need to earn as much as $90 a barrel just to break even. Saudi Arabia, the only country with meaningful spare production capacity, could have produced oil more cheaply a few years ago, but not now. It has increased public spending following the Arab Spring, and now needs $95 per barrel to balance its budget. These pressures, says Paul Horsnell, director of commodities research at Barclays, mean that oil prices are unlikely to fall below these levels unless the economy collapses. He forecasts $137 per barrel in 2015, and $185 in 2020.

So if there is lots of oil down there but it is much more costly to produce, can we have as much as we want if we are prepared to pay for it? Well, that depends on what you judge to be enough and who you mean by “we”, says Steven Kopits, US managing director of energy consultants Douglas Westwood.

The trouble is, high oil prices don’t just encourage oil companies to innovate, they also damage national economies – although some countries are more resilient than others. A penetrating analysis by Kopits found that historically theUSgoes into recession whenever it spends more than about 4.5 per cent of its GDP on oil. Today, that would equate to $90 a barrel. That level also holds for others in the OECD club of wealthy nations, says Kopits. But the evidence suggests thatChinais willing to pay more; it only cuts back on oil purchases when they account for more than 6 per cent of its GDP, equivalent to about $110 per barrel.

The disparity, says Kopits, arises because Chinese society assigns more value to a barrel of oil. Gaining a barrel can transform the lives of Chinese people – allowing them to travel by car for the first time, for example. In the west, losing a barrel merely means trading in a gas-guzzler for a more fuel efficient model.

But oil is so useful that nobody cuts back voluntarily, meaning prices must rise to excruciating levels to force rich western consumers to economise. The first “peak oil recession” started in 2009, says Kopits. It took oil at $147 a barrel and the deepest recession since the 1930s to prise oil from the grip of consumers in OECD countries. Since early 2008, OECD oil consumption has fallen by 4 mb/d, while non-OECD consumption – mainly inChina– has gained 6 mb/d. Global oil production rose 2 mb/d during that period, so developing countries have consumed all the additional supply plus that given up by industrialised economies. “China is bidding away the OECD oil supply,” says Kopits, “and recessions are the mechanism by which that oil is being transferred from weaker economies to faster growing economies.”

With China embarking on rapid “motorisation” – car sales in China leapfrogged those in the US in 2010 – the outlook is for repeated oil price spikes and recessions. We appear now to be entering the second peak oil recession, says Kopits, and others will follow. For the time being this is a problem for the west, but prices could rise to levels that are unsupportable even for China. On this view, peak oil is as much an economic construct as a geological one.

Analysts at Deutsche Bank are more optimistic, and predict that a final oil price spike to $175 in 2015 will lead to rapid electrification of transport and relieve pressure on the oil supply. But Kopits is doubtful that we can escape so easily. “Buckle up,” he concludes, “we’re in for a bumpy ride.”

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Philosophia Naturalis 10 has been published

By Stuart Coleman at Daily Irreverence. Its full of quantum goodness and other delights. Thanks, Stuart!

And if that whets your appetite for more, be prepared to come back in four weeks for the next edition, which will be hosted June 21 by Chris Rowan at Highly Allochthonous.

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Has Peak Oil Come To The Non Opec World Maybe

Forbes has a look at peak oil production in the non OPEC world - Has Peak Oil Come To The Non-Opec World? Maybe..

The world’s biggest oil companies put in a pretty pathetic performance in the second quarter of 2011. Not in terms of earnings — those were great, with Exxon posting $10.7 billion and Royal Dutch Shell doing $8 billion. Just what you’d expect with Brent crude at a lofty $120 a barrel.



Where the results were disappointing was in the barrels. Of the 16 big U.S. and European oil companies studied by Deutsche Bank analyst Paul Sankey, 14 of them saw their production of petroleum decline in the quarter. Collectively, the drop amounted to 12% of total liquids volumes, or 1.2 million bpd. Their average output for the quarter totalled, 14.67 million bpd. Even excluding the effect of Libya’s issues, the decline was 8%.



Only Exxon and Shell managed 1% volume gains in liquids.



The situation didn’t get much better when Sankey looked at other big non-OPEC producers. Brazil’s supposed growth engine Petrobras was down a touch, as were Russia’s Lukoil and TNK-BP and China’s Sinopec. Rosneft (2.2 million bpd) and PetroChina (2.4 million bpd) did eke out gains of 2% and 4%.



Overall, the producers of 31 million bpd (out of a worldwide total of roughly 86 million bpd) saw their output fall 4%. No wonder Sankey titled his report “The Death of Non-OPEC.”



OPEC volumes, by contrast, were up 2% in the quarter, figures Sankey.



So what’s going on? Is Peak Oil here, at least in the non-OPEC part of the world? Maybe so. “In identifying mega-themes, we have argued that the shift from the 20th to 21st century represents the end of the oil age and the beginning of the global electricity age,” writes Sankey. “The concentration of remaining (abundant) oil reserves into OPEC hands derives an obvious corollary: the end of growth from non-OPEC supply.”



The supermajors are finding it harder and harder to pry away the remaining megaprojects from state-run oil companies. Of the biggest OPEC members like Saudi Arabia, Iran, Venezuela and Iraq, only the latter is eager to bring in the majors to help develop reserves.



Add in the fact that natural decline rates on big fields average 5% a year, and it will become ever harder for Big Oil to stay big. Christophe de Margerie, the pragmatic chief executive of French giant Total, believes that global peak oil will hit within five years (see my story on Total: “High Friends In Low Places”).

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