Have you wondered recently what makes us humans do what we do? Have you pondered why can we be so beautiful at times and act like crazed savages at other times?
Why, for example, President Donald J. Trump, who swore to defend the laws of my United States and to protect our Constitution, is glowing about two Confederate generals?
During the bloody civil war of 1861-1865, the Union of northern states declared loyalty to the U.S. Constitution, while the southern Confederacy fought to destroy my country and keep the savage slavery going. So how can a U.S. president praise the two major traitors, who fought against everything we stand for and against the U.S. Constitution?
Perhaps human history and nature can give us clues. So who are we?
Humans are large omnivores, whose ecological niche is to reset (remove mass from) the environment in which they roam. A human requires about 4 square km to roam freely in small egalitarian bands in their natural settings.
Humans are ultra-social animals, like bees or ants, and together they form a superorganism. However, unlike the social insects, humans told stories, and wrote and read records (later books). These qualities made humans super-successful. They started multiplying and burned through their natural habitats.
And so humans became sedentary, and most had to work very hard in exchange for unhealthy food, and short and sickly lives.
Hence humans invented science and technology to free themselves from the boring labor and make more time for what they really like: do nothing but play.
Mostly northern humans invented technology and science because of their latitudinal misfortune: To stay alive, they had to work 3-4 times harder than their southern cousins.
With the superior technology, these northern humans have always had better weapons and armies, so they conquered the world.
Technology quickly exchanges energy and matter flows into things we like, so domesticated humans invented money and credit to speed up these exchanges.
More humans and more exchanges meant more fossil energy acquired, and mass mined as raw materials, water and food. The human superorganism has acquired an insatiable thirst for energy and matter. This thirst is now impossible to quench because there are too many of us. Unfortunately, our superorganism just cannot stop.
By now, the myriads of humans have been reduced to under 100 square meters of practical range, have little meanigful labor, and technology might eliminate what remaining labor there is. Humans are then even more stressed and need more happiness. Alas, how?
With the superior communication technology, we have developed social media and created massive happiness in the form of virtual tribes, each with their own, shared narrative. Now, that’s being happy!
But the present electronic money and credit have become disassociated with the underlying energy and matter exchanges, and both must fail.
Will the virtual human tribes be able to overcome their towering global superstructure and reset their many narratives of more to a narrative of less?
Well, today has arrived. Now my story becomes a prediction and it splits:
Alternative 1 (and an epitaph): Humans will not be capable of drastically changing. Thus, Kaboom!
Together, the human tribes have written a few good stories while we lasted. Not to worry though, many humans will survive the global Kaboom, and we will write the new, perhaps quite different stories. Unless we won’t.
Alternative 2 (and my best wishes): Given the global dangers we are facing, we will stumble into a different narrative that will appeal to enough humans. We will prepare the governments and societies to live with less and realize the being happy requires a lot more than stuff. It requires us to be what we truly are: the super-social large animals that live in families and small groups (our neighborhoods), and feel warmth of other humans.
Hey, you, unpredictable wonderful humans! You have surprised me again. I wish you a long happy life, humanity.
Why, for example, President Donald J. Trump, who swore to defend the laws of my United States and to protect our Constitution, is glowing about two Confederate generals?
During the bloody civil war of 1861-1865, the Union of northern states declared loyalty to the U.S. Constitution, while the southern Confederacy fought to destroy my country and keep the savage slavery going. So how can a U.S. president praise the two major traitors, who fought against everything we stand for and against the U.S. Constitution?
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| Donald J. Trump |
Humans are large omnivores, whose ecological niche is to reset (remove mass from) the environment in which they roam. A human requires about 4 square km to roam freely in small egalitarian bands in their natural settings.
 |
| Natural ranges of animals vs their body mass. Each human in his/her natural habitat requires about 4 square kilometers, (1000 acres) to roam and feed. Today, most humans live in big cities that reduce their ranges to about 100 square meters. Such confinement makes humans restless and unhappy. Data source: Douglas A. Kelt and Dirk H. van Vuren, Ecological Archives E096-155, 2015. |
Humans are ultra-social animals, like bees or ants, and together they form a superorganism. However, unlike the social insects, humans told stories, and wrote and read records (later books). These qualities made humans super-successful. They started multiplying and burned through their natural habitats.
And so humans became sedentary, and most had to work very hard in exchange for unhealthy food, and short and sickly lives.
Hence humans invented science and technology to free themselves from the boring labor and make more time for what they really like: do nothing but play.
Mostly northern humans invented technology and science because of their latitudinal misfortune: To stay alive, they had to work 3-4 times harder than their southern cousins.
With the superior technology, these northern humans have always had better weapons and armies, so they conquered the world.
Technology quickly exchanges energy and matter flows into things we like, so domesticated humans invented money and credit to speed up these exchanges.
More humans and more exchanges meant more fossil energy acquired, and mass mined as raw materials, water and food. The human superorganism has acquired an insatiable thirst for energy and matter. This thirst is now impossible to quench because there are too many of us. Unfortunately, our superorganism just cannot stop.
By now, the myriads of humans have been reduced to under 100 square meters of practical range, have little meanigful labor, and technology might eliminate what remaining labor there is. Humans are then even more stressed and need more happiness. Alas, how?
With the superior communication technology, we have developed social media and created massive happiness in the form of virtual tribes, each with their own, shared narrative. Now, that’s being happy!
But the present electronic money and credit have become disassociated with the underlying energy and matter exchanges, and both must fail.
Will the virtual human tribes be able to overcome their towering global superstructure and reset their many narratives of more to a narrative of less?
Well, today has arrived. Now my story becomes a prediction and it splits:
Alternative 1 (and an epitaph): Humans will not be capable of drastically changing. Thus, Kaboom!
Together, the human tribes have written a few good stories while we lasted. Not to worry though, many humans will survive the global Kaboom, and we will write the new, perhaps quite different stories. Unless we won’t.
Alternative 2 (and my best wishes): Given the global dangers we are facing, we will stumble into a different narrative that will appeal to enough humans. We will prepare the governments and societies to live with less and realize the being happy requires a lot more than stuff. It requires us to be what we truly are: the super-social large animals that live in families and small groups (our neighborhoods), and feel warmth of other humans.
Hey, you, unpredictable wonderful humans! You have surprised me again. I wish you a long happy life, humanity.
http://www.energyeconomist.com/a6257783p/NaturalGas/monthly/ng_prod/graphs/us.gif
ReplyDeleteIn the last ten years, natural gas production is up about 50%. This has happened while price dropped to about 1/3 of 2007 levels.
Amazing supply story. And very few rigs needed to do this (less than 200 gas directed and supply flat at high level). Although shale has large decline rate, those wells really are monsters.
One thing about being mathematical and scientific is being able to compare different factors and understand multivariable equations (calc 3, and PDEs). Peak oilers had huge hype on the shale decline curve, but they did not adequately consider the initial production. (Or the massive repeatability of shale...almost no dry holes.)
An objective, detached, mathematical perspective would have considered both factors and been open to the idea that one thing could overwhelm the other. After all, don't we see that all the time in math class? But instead of detched analysis, we got political slanted analysis and confirmation bias. Not the way of science or math.
This comment has been removed by the author.
DeleteYes, but not your confirmation bias. You are such a strong voice for the global fossil superorganism that wants more. Thus you are Alternative 1.
DeleteYou seem to be obsessed with shale gas production. My objective mathematical calculations show that the current shale gas cycle in the U.S. will be completed with 95,000 horizontal wells, some 70,000 have already been drilled. If we want to continue and expand, at least 100,000 new monster wells will have to be drilled. That's another trillion dollars in capital expenditures and more frac sand than all sand mines in the U.S. can deliver for all uses. Did the Economist article tell you this little dirty fact? How would they know?
Why is BHP Biliton pulling out of shale in the U.S.? I have an explanation; they discovered the laws of cash flow.
Financial Times: https://www.ft.com/content/f78550c8-86d1-11e7-8bb1-5ba57d47eff7
For most oil companies the shale revolution is described as the future of energy markets, but for BHP it is a “curse” they want to be rid of, write Henry Sanderson and David Sheppard.
On Tuesday, BHP announced it is actively looking to sell its onshore US oil assets. This followed months of pressure from activist hedge fund Elliott Advisors. BHP said it would consider all options, including an initial public offering, demerger, asset swap, but its favoured outcome is a sale.
BHP’s shale production has been falling as the company has sold acreage, down from 108m barrels of oil equivalent in 2016, to an expected range of 61m to 67m for the next fiscal year.
Part of its issue is the need for continued reinvestment in drilling to keep shale production going. BHP spent $600m on the business in the year ending June 30, but generated only $300m in cash. It plans to spend $1.2bn on its shale assets this year ahead of any sale.
End here is another comment. In the Financial Times article cited above the BHP Biliton CEO also stated that
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https://www.ft.com/content/f78550c8-86d1-11e7-8bb1-5ba57d47eff7
“One of the features of shale, which we’ve grown to like a bit less with time and see it a bit more of a curse, is that the investments that are demanded there are quite pro-cyclical,” said chief executive Andrew Mackenzie. “You have to continue to invest to actually maintain the value of those businesses.”
In translation, it was great to produce all that shale oil, but we cannot operate at a 100% net loss.
The official journal of the global superorganism, Journal of Petroleum Engineering, has this optimistic message: "Unconventional Resources: Will Shale Oil Ever Make Money? Quite Possibly Next Decade."
Of course, technology will come to rescue of the consistently money-losing shale oil & gas industry: "When predicting the future, technology is “a big wild card.” While Wood Mackenzie expects that productivity gains could be “more limited than in the recent past,” a breakthrough, like proving that natural gas injections can increase ultimate recovery rates well past 10%, could have a large impact on the economics of the business."
1. Of course you are right. That I like oil and gas production and free enterprise and growth. Sure, I am biased. But facts are facts. Even if I favor or hate a certain factor or event, I still have to confront reality. This is how one does science. How one solves engineering problems. You have to be willing to look at things that go in a direction, you don't like.
Delete2. If US natgas production had dropped 40% instead of going up 40% in the last 10 years, wouldn't the peakers be pointing that out? If price was $15/mcf instead of $3/mcf, wouldn't that be noted by the shale critics and peakers? I mean I hate Brady and the Patriots. But you can't deny that he won that Super Bowl!
3. An individual example is not dispositive (BHP), but I agree that there have been many others that lost money in shale--not denying the overall factor. Just...life is statistical.
4. BHP bought high and sold low. Happens. And actually that price dropped is a testament to shale. Consumers say thank you. If some company goes out of business or takes a loss because they overpaid for land, big deal. The asset remains. (And there are many ompanies that underpaid for land because they bought early and on the sly.)
5. The solution to low prices is low prices. If the ENTIRE industry is running at a loss, than eventually they will go out of business and stop. That is how free markets work.
6. But I would not ignore the issue of investment and learning by doing. Lots of companies in computers and biotech have lost money for years before becoming very profitable. Places like the Permian, Appalachia (for gas), or Anadarko have the potential for production for decades, if you assume that operational skill continues to improve in the industry.
7. I recommend to you to read some of Morris Adelman's writing. He makes the point that the supply curve is benefited by technology and harmed by depletion. That's actually a point that should resonate regardless of being a cornucopian or a Malthusian. You have an output function, S, dependent on two functions of time (technology, depletion). This is the world of PDEs, not ODEs! Saying, depletion depletion depletion and ignoring knowledge (e.g. seismic improvements, drilling technology, deepwater, etc.) is just as wrong as ignoring depletion. You have to look at both. And have to be open to the idea that either factor might win over the next couple decades. A more humble and abstractically mathematical way of thinking about the factors would have limited some of the silly deterministic predictions from all the peak oilers. This isn't just about peak oil, it needs to be something to teach engineers, scientist and analysts. That they need to look at multivariable calculus and partial differential equations, not just single variable calculus and ordinary differential equations. Life is multifactorial!
Tad,
DeletePlease disregard my previous comment. I will stop pestering you.
Please don't stop pestering me. You are making good points aligned with the governing neoclassical economics. So it all makes sense, even if it does not in the bigger picture.
DeleteAs my friend, Professor Bill Rees, points out, the truly depressing thing about these arguments is the fact that hundreds of years of speculation, philosophy and now science on the accelerating liquidation of Earth, Inc. have made virtually no impression on policy wonks and politicians (ordinary citizens--er, consumers--either, for that matter). Society remains in the thrall of defunct economics and its practitioners (apologies to Keynes) abetted by our innate present time/place preference (i.e., social discounting is an inherited trait formalized by economists) and limitless capacity for self-delusion.
In addition, cash flow is a much stronger constraint than buying high. If you bought high, as all major oil companies did, sometimes by a factor of two, you lost capital. However, if in addition the property you bought suffers from a constant negative cash flow, you add bleeding to an insult. This is the story of shale production for many companies: They continue to cut costs and bleed money, and try to cover it up by acquiring new debt, diluting stock, and/or enticing new investors.
DeleteTake a look at the Haynesville. This was touted by peak oilers (e.g. Art Berman, David Hughes) as a typical runup and rundown of a shale play. What we could expect for all the rest of them.
DeleteNow it is true, the play grew very rapidly to 7 BCF/d. And that from May2011 to SEP2013, it dropped fast down to 4 BCF/d. However, since then it has been holding steady on a plateau for 4 years now. And last few months even is up a bit over. And prices are only about $3/mbtu.
Here is the best source: https://www.eia.gov/naturalgas/weekly/
Go to the bottom left, download the Excel datasheet. Plot a line graph of the Haynesville. It is exactly like I said, rapid up (mostly during high prices), rapid down (during low prices, crushed by growth of the Marcellus, not by running out of locations). But for last 4 years, holding steady. And 4 BCF/d is nothing to sneeze at. Remember when the chat 10 years ago about how we couldn't build LNG IMPORT terminals fast enough to keep up with US decline!?
Here is a new story about the Haynesville, hitting highest production for the last 4 years:
https://www.platts.com/latest-news/natural-gas/denver/us-haynesville-gas-production-hits-4-year-high-21971817
In my calculations, Hanyesville is on average the most prolific shale play in the U.S. (it actually consists of a few separate parts). However, its problem has always been that the wells there are too costly compared with the Marcellus wells. As long as producers have access to the good parts of the Marcellus, like its northeastern part, they will not drill in Haynesville.
DeleteApparently, good locations are disappearing fast in the Marcellus, where the best parts are almost completely drilled out. This is the main reason why people are going back to the good old Haynesville. A higher gas price will help a lot.
I am the biggest fan of natural gas and I'll do anything to help prolong its production in the US. Our current work, to be published soon, leads us to believe that there is a considerable upside potential for longer production, if the leases are not over-drilled, or otherwise screwed up (I could give you several examples of the latter in private).
Agreed that production is another multivariable problem (geologic promise, well cost, price). U = f(x, y, z).
DeleteIt is interesting to me how the H has hung in there and even started to grows slightly at prices that are relatively low (~$3). Presumably this is the result of drilling costs going down or of well size going up. Probably both.
I don't think NE Marcellus is really so relevant to the Haynesville. There is not very good connectivity of the Marcellus and the Gulf (still a price differential that is higher than transport costs, shows pipes or lacking). And that's just the SW Marcellus. For the NE Marcellus, it is even more isolated than the SW Marcellus.
Here is the Tennessee Zone 4 price:
http://www.naturalgasintel.com/data/data_products/daily?location_id=NEATENN4MAR
You can see that it is ~1.50 right now (more than a buck less than Henry Hub). The difference drops during winter, but not enough for Henry Hub to flow gas to the NE except on rare occasions. So basically NE Marcellus is disconnected. And it is much more limited by price than locations.
Dear Professor Tad,
ReplyDeleteMany thanks for this contribution. I believe the collapse won't be uniform but will split into 3 possible scenarios, as proposed in a paper by J. Friederichs [1]:
1) military predation (Japan, 1945)
2) totalitarian retrenchment (North Korea, 1990)
3) socioeconomic adaptation (Cuba, 1990)
The 3 of those experienced a stop in oil supply and reacted differently. 1) and 2) resulted in millions of deaths. Let's hope we'll be in places where 3) scenario happens.
[1] http://joerg-friedrichs.qeh.ox.ac.uk/uploads/pdf/GlobalEnergyCrunch.pdf
Best regards,
That's a very insightful comment, thank you. It is one of the reasons for the unlikely Alternative 2 in my blog.
DeleteThere are two possibilities, in my opinion, when the age of oil ends.
ReplyDelete1.) Collapse, chaos and death of our species.
2.) Controlled depopulation (afterwards: iron boot stamping on a human face — in perpetuity. Aka feudalism improved by modern technology.
Why did the Texas group never publish their Marcellus papers? (Browning and Inakanova or whatever her name is.) Did they run out of funding? Were they too pessimistic and then the data disproved them by showing more production while the papers were held up in review? Internal drama with the co-authors?
ReplyDeleteFunding ended and predictions were deemed to be too pessimistic at the time I left Austin. Further I do not know, but Marcellus is really tricky.
DeleteWas just reading some old posts here from 2016 (two parter shale gas/oil estimates):
ReplyDelete1. Bruno Verwimp crows in comments about how good his Bakken model was (despite production turning on price, not depletion). But if you look at the recent match of his model, you will see that he has ND Bakken at under 800,0000 bpd as of most mid 2017 and under 700,000 bpd as of JAN18. FYI, latest NDIC (AUG17 data) shows ND Bakken at over 1 MM bpd.
https://www.dmr.nd.gov/oilgas/directorscut/directorscut-2017-10-10.pdf
2. US natural gas is breakeven in terms of import/export. And that is at $3 HH. Whodathunk that in 2006?
P.s. Who do you think the two greatest American scientists were?
Franklin, Edison, Pauling, Gibbs, Cooper, Feynman, Bardeen, others? [Don't you dare put Hubbert in there, he does not belong.]
Hubbert most certainly belongs there at the top, as a great geologist and geophysicist. His papers were breakthroughs in earth sciences. Otherwise, my vote goes to Gibbs and Feynman, both my life's favorites.
DeleteI wonder if there was any connection of Hubbert and Rickover. Title of the 1956 Hubbert paper makes me wonder.
ReplyDeleteP.s. Thanks for the scoop on the Texas group. Glad it was not some personal dramas. I felt that group was running low on their predictions (just pointing at price/production shows that), but I really appreciated the approach and the attempt.
This has nothing to do with PO, but shows you how an engineer thinks...
http://ecolo.org/documents/documents_in_english/Rickover.pdf
Gibbs and Feynman both extremely sound mathematical physicists (of the old school type).
A very interesting letter from the future Admiral Rickover, I presume. Hubbert was a big proponent of nuclear power, as far as I know. He was also concerned with the depletion of rich uranium deposits.
DeleteIt is fascinating that even in 1953 there was vigorous opposition to nuclear reactors and Rickover was proposing a slick way of overcoming it.
Fascinated to find your blog. Am reading your book. Looking forward to your next blog post. Kind regards.
ReplyDeleteMr. Haynesville says "I'm baaa...ack!"
ReplyDeletehttps://rbnenergy.com/back-with-a-vengeance-haynesville-natural-gas-production-is-surging-again-but-will-it-last
We're going to need another Gaussian to stuff into that curve! Like modeling orbitals or something. Just keep adding more Guassians to improve the fit:
https://en.wikipedia.org/wiki/Gaussian_(software)
Superb discussion of Hubbert versus USGS. I come from the anti Hubbert school, but this is a much more fair portrayal of the dynamics. Lots of good info on Hotelling and the like. By a real historian. Much more content, detail, and thought than typical in the lightweight articles by either peakers or cornies:
ReplyDeletehttps://typriest.files.wordpress.com/2012/07/hubberts-peak-hsns.pdf
Haynesville is kicking butt.
ReplyDeletehttps://twitter.com/EIAgov/status/1027918238082985986
How will Art Berman and David Hughes respond? They wanted to point it out as an example of shale problems (for the Marcellus, etc.) And here it is coming back. And at sub three dollar prices!
https://www.nytimes.com/2018/09/01/opinion/the-next-financial-crisis-lurks-underground.html
ReplyDeleteThe Next Financial Crisis Lurks Underground
Fueled by debt and years of easy credit, America’s energy boom is on shaky footing.