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Another retiree speaks out

by Starvid Wed Oct 17th, 2007 at 05:27:40 AM EST

Following in the steps Lord Oxburgh of BP, Jim Buckee, the astrophysicist PhD and retired CEO of Talisman Energy has decided to share some of his feelings of our current energy situation, including the oil sands, Peak Oil, climate change, and his greatest regret.

Diary rescue by Migeru

Companies with oil sands exposure have outperformed conventional oil producers such as Talisman in recent years. Why did Talisman avoid the oil sands and do you regret the decision?

Not particularly. The oil sands are flavour of the month and their story is certainly beguiling. But I think the reality is that developing the oil sands is going to be difficult. For example, the thermal processes [the heating of the bitumen to allow it to be pumped to the surface] that work in the laboratory don't always work in real life. There are going to be cost and execution difficulties in the oil sands. The oil sands are not just a big sand box with uniform oil-reserve quality throughout.

The oil sands are not a saving cheapo panacea despite the huge resource base, if anyone still had that faulty idea.

Talisman has always promoted itself as an exploration company as well as a developer and producer. How much oil did you actually find?

I would have preferred our exploration to have been better. But it's a hard row to hoe. The giant fields are largely discovered.

While this is well known to a lot people interested in energy, it's virtually unknown among the public, and also among astoundingly many people who actually know anything about energy issues.

Do you think the world has reached peak oil production?

I do - we're there or close to it. Mexico, the North Sea and possibly Ghawar [in Saudi Arabia, the world's largest conventional oil field] are all in decline. The truth is the world is producing 30 billion-plus barrels of oil a year and is finding less than 10 billion. This is the worry.

It indeed is. It's quite interesting that a former CEO of a big oil company has come out as an early peaker, as even most people in the industry now seem to be accepting Peak Oil, they usually prefer pushing it away, 10 to 20 years out.

And while it is obvious even to the blindest that the North Sea and Cantarell are in decline, the mention of Ghawar sends a chill down my spine. We really don't want Ghawar to start declining for at least another decade.

If we're close to peak oil, what is your price forecast?

The price has to be high enough to hurt demand. It has to be rationed by price. There is no real demand destruction yet [with oil near $80 (U.S.) a barrel]. It'll have to be at $120 a barrel, I think, before you'll see that.

It's very interesting, and scary, that he mentions demand destruction, not substitution by alternative supply, as the thing that will help markets clear.

That is, the big thing won't be that we will replace oil with other stuff but that poor people will have to go without.

You've been called a climate-change denier. Fair label?

I'm not a climate-change denier. The climate changes all the time and the question is what causes it. It could be caused by changes in sun activity - we don't know for sure. It has been warmer in the past. Calgary's hottest year was not in the last decade. It was in 1927.


Now that you've stepped down as CEO, what are your plans?

I've got a lot of interest in energy demand and supply, or lack of supply, which is a big worry to me. I'm a big skeptic of the anthropogenic global warming story.

I'll do some work on all that.

I'll be generous and assume this is just an effect of his contrarian personality.

And finally:

What is your biggest regret?

I have always been a big believer in the oil price going higher. I should have pursued acquisitions more aggressively than I did, because the supply situation is proving just as tight as I thought it would be.

He is not the only one with that regret...

Here is a chart of Saudi oil production from this source:

I did not expect that there was such a big dip in the 80's. The oil crisis was in the 70s, right?

Here are some factoids from there:

[In] large oil fields, the natural pressure of the reservoir forces the oil to the surface. But as more and more oil is pumped out, the only way to keep the pressure up is to inject water back into the reservoir.

After a while, this starts to damage the reservoir... the water starts to contaminate the oil. Author Paul Roberts found that at Ghawar, the amount of water mixed in with the oil is now 30%. That's a dangerously high level.

[Matthew Simmons found] that the water-injection technique that's keeping Ghawar on life support is also being used on every other major oilfield in Saudi Arabia - the fields that supply 10% of the world's oil right now.

[Look again] at that chart of Saudi oil production. It's gone up a lot since 2001. But Saudi oil exports have stayed flat! The Saudis need oil to fuel their growing economy.

[The] increase that started in 2001 was pretty much over by 2003. But since 2003, the number of drilling rigs in Saudi Arabia has tripled. Triple the drilling, triple the output, you'd think. But no...all that new drilling, and the country is still generating between 9-10 million barrels a day. So they've had to triple the number of wells just to keep running in place!

by das monde on Tue Oct 9th, 2007 at 07:01:23 AM EST
The 1973 oil crisis began in earnest on October 17, 1973, when the members of Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced, as a result of the ongoing Yom Kippur War, that they would no longer ship petroleum to nations that had supported Israel in its conflict with Syria and Egypt (the United States, its allies in Western Europe, and Japan).

About the same time, OPEC members agreed to use their leverage over the world price-setting mechanism for oil in order to raise world oil prices, after attempts at negotiation with the "Seven Sisters" earlier in the month failed miserably. Because of the dependence of the industrialized world on crude oil and the predominant role of OPEC as a global supplier, these price increases were dramatically inflationary to the economies of the targeted countries, while at the same time suppressive of economic activity. The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency.

The 1979 (or second) oil crisis in the United States occurred in the wake of the Iranian Revolution. Amid massive protests, the Shah of Iran, Mohammad Reza Pahlavi, fled his country in early 1979, allowing Ayatollah Khomeini to gain control. The protests shattered the Iranian oil sector. While the new regime resumed oil exports, it was inconsistent and at a lower volume, forcing prices to go up. Saudi Arabia and other OPEC nations, under the presidency of Dr. Mana Alotaiba increased production to offset the decline, and the overall loss in production was about 4%. However, a widespread panic resulted, driving the price far higher than would be expected under normal circumstances. In the United States, the Carter administration instituted price controls.

In 1980, following the Iraqi invasion of Iran, oil production in Iran nearly stopped, and Iraq's oil production was severely cut as well. In that instance, oil lines only reappeared in the United States in a few isolated incidents.

Wikipedia Oil crisis (disambiguation page)

The fundamental reason for these crisis in the US was that the US was no longer an exporter of oil, but an importer. Then with political backlashes came troubles.

In the 80'ies I think OPEC wanted to run up prices by lowering production, and that being what we see in your chart, but I am not sure of it.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Oct 9th, 2007 at 09:08:10 AM EST
[ Parent ]
Is this another data point that among physicists, high-energy physicists and astrophysicists are the most likely to be climate sceptics?

We have met the enemy, and it is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Oct 17th, 2007 at 05:37:26 AM EST
It's because they both want lots of fundings for cosmic ray observatories. If they claim cosmic rays are critical to the full understanding of global warming, they'll get the funds. And they want big money, after all they are the guys who used to toy with the LEP, LHC, Hubble space telescope, etc...

My guess: they will get their observatories, but not so much money, cos' you can do high-energy physics on counting cosmic rays for pretty cheap actually (just a satellite constellation)

Reminds me of the "particle-beam driven nuclear incinerator" of the Italian nobel, forgot his name. It was indeed a fine way for him to keep his turf running beyond the last wave of pure-science particle accelerators. It didn't make it though.


by Pierre on Wed Oct 17th, 2007 at 07:39:53 AM EST
[ Parent ]
Carlo Rubbia.

We have met the enemy, and it is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Oct 17th, 2007 at 08:03:18 AM EST
[ Parent ]
I think it has more to do with institutional biases. Astrophysicists, after all, have their 'own' theory, and it's easy to become enamoured with a pet theory from your own field and dismiss the expertise in other fields (a point certain economists might want to keep in mind...), while high energy physics is... shall we say, a bit - ah - distanced even from the rest of physics. It would be impolite to mention ivory towers, but...

That being said, I've yet to see data that suggests that climate change denialism is more rampant among physicists, or some subset thereof, than among the general population.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Oct 17th, 2007 at 01:35:44 PM EST
[ Parent ]
I see you pitched into the thread where this idea was floated for the first time here...

A swedish kind of death:


Is it just my impression or are physicists common among climate change opponents?

I have a theory about that. I would today consider physics to be the science with the highest prestige among sciences. I think it is that way because of physics big funding, stemming from a close relationsship with big government and big industry. Physics gives guns and toys. The problem with climate change (from a physicist perspective) is the lack of solutions involving big piles of money to physics reserach. Hence the denial.

The alternative solution is to claim that it is an astronomical effect, where the sun is causing increased heat (nevermind that pouring out ghg should have some effect), because that would get astrophysics institutions more money.

Now, I am not saying that individual physicists are trying to shut down a theory that would hurt them. It is probably not that easy. It is more that a theory that hurt physics (as an institution) gets disliked among physicists and therefore a greater number of physicists then people in general becomes climate change deniers. Add the credibility of physics in general and you get prominent climate change deniers.


Re: Physicists

Eeer... When did climate modeling cease being physics?

The physicists among the AGW denialists probably have higher profiles than the rank-and-file (for much the same reasons that creationist engineers and doctors get more press than creationist pastors), but I very much doubt that scientists of any stripe are over-represented in the denialist community.

There does seem to be a small number of astrophysicists who are sufficiently enamored of the solar-forcing theory that they seem like AGW denialists, but I would not be surprised to find out that the newsies and politicians who reference them exaggerate their claims.

- Jake

"While the truth is always revolutionary, the revolutionary is not always true." - Proverb

BTW, JS, are you at NBI?

We have met the enemy, and it is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Oct 17th, 2007 at 01:53:01 PM EST
[ Parent ]
Ah, had not noticed Jakes answer.

It still is an impression of mine, but I agree that I do not have much foundation for it. However, there is  another valid point.

Eeer... When did climate modeling cease being physics?

In my neck of the university woods climate modelling is related to meterology, which is related to earth sciences (geology and such). Why I do not know, but probably some historical reasons. Which means that climate modeling may use physicis but is not in the physics sciences club, it is instead over there with the weathermen and the stone lovers. If this is a general phenomena (as I presumed) or not is an open and possibly interesting question.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Oct 17th, 2007 at 02:32:24 PM EST
[ Parent ]
BTW, JS, are you at NBI?

I'm a student there, yes. Why do you ask?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Oct 18th, 2007 at 08:01:27 PM EST
[ Parent ]
I used to know a number of people there.

We have met the enemy, and it is us — Pogo
by Migeru (migeru at eurotrib dot com) on Sat Oct 20th, 2007 at 06:23:02 PM EST
[ Parent ]
<factlet>once Shell sells the assets they have currently on sale in the North Sea, Talisman will in fact be the biggest oil producer in the North Sea.</factlet>
by PeWi on Wed Oct 17th, 2007 at 07:46:06 AM EST
Sounds like insider dealing to me, PeWi!

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Wed Oct 17th, 2007 at 07:59:36 AM EST
[ Parent ]
hmmmmm.... (-:

Well it was Jim who said it in his goodbye speech the other day, I am sure, I could dig up the figures - or his speech somewhere.

It was scary though seeing the logo on EuroTrib. I thought we (Eurotrib) had been invaded and I had been found out...

by PeWi on Wed Oct 17th, 2007 at 08:14:17 AM EST
[ Parent ]
I found what I had missunderstood.

4th Largest UKCS Company by liquids production
7th Largest UKCS Company by remaining reserves
2nd Largest UKCS Operator by number of oil fields

from a Townhall presentation in February 2007

by PeWi on Wed Oct 17th, 2007 at 08:22:36 AM EST
[ Parent ]
The denier's photo is invasive enough, Starvid, but is the whole, large company logo really necessary (visual contamination)?  Very annoying.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Wed Oct 17th, 2007 at 08:59:22 AM EST
Well, I like pictures in my stories and it felt a little old with just the generic oil rig, especially as the focus was to such a large degree the man in question, and the fact that he had just recently been the CEO of a big oil company.

Hence, the pic shows the man and the company logo.

But the next time I'll do a diary like this I'll leave out the product placement, at least in the preview part. ;)

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Oct 17th, 2007 at 09:16:38 AM EST
[ Parent ]
"I'll be generous and assume this is just an effect of his contrarian personality."

I'll be generous and assume the sand in your eyes... (sound of crazy horse shutting up.)

on second thought I'll just let your statement stand on its own wobbly feet.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Wed Oct 17th, 2007 at 11:39:14 AM EST
[ Parent ]
"I'll be generous and assume this is just an effect of his contrarian personality."

I had not noticed this.

When I heard Mr Buckee  speak I was surprised to have him mention Peak Oil and that he had just come via a APSO meet.

Here is a link to a conference paper he gave

excert from the pdf:

Industry fights declines every day
No opposite of a train wreck
Resource nationalism is rampant

Not wanting to sound to much of a marketista for the company I am working for, but or him Peak Oil is the only reason, Talisman works and can prosper. Only the higher oil costs justify the enourmous investments needed, and in his opinion Talisman is one of the market leader on squeezing out the last drops off oil fields. ...

Because there is Peak Oil and its consequences, Talisman makes money.

by PeWi on Wed Oct 17th, 2007 at 12:01:35 PM EST
[ Parent ]
No opposite of a train wreck


We have met the enemy, and it is us — Pogo

by Migeru (migeru at eurotrib dot com) on Wed Oct 17th, 2007 at 12:02:54 PM EST
[ Parent ]
I am assuming you are questioning
"Because there is Peak Oil and its consequences, Talisman makes money."


I'll answer this when I am back at home...

by PeWi on Wed Oct 17th, 2007 at 12:05:18 PM EST
[ Parent ]
No, I understand that about Talisman. I don't understand what "no opposite of a train wreck" means.

We have met the enemy, and it is us — Pogo
by Migeru (migeru at eurotrib dot com) on Wed Oct 17th, 2007 at 12:11:22 PM EST
[ Parent ]
well, there goes my hermeneutics -- again. Read slow and carefully PeWi - and you would have made the whole thread obsolete.


by PeWi on Wed Oct 17th, 2007 at 12:59:37 PM EST
[ Parent ]

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