”I told you so” on shale oil.

The following blog post will be in English.

Följande blogpost kommer att vara på engelska, men då detta är en svenskspråkig blog vill jag bara passa på att förvarna. Syftet är att jag har en åsikt som just nu anses vara fel, men om en tid kommer att visa sig vara rätt. Syftet med denna blogpost är att kunna peka på den i efterhand och säga ”vad var det jag sa”.

Now back to the english blog post.

It is friday, August the 9:th, 2013. I am writing this blog post to be able to point back to this again in the future. I want to be able to prove this was my position back in 2013 some years into the future.

Back in 2008 ”peak oil” was the big thing discussed around the world, at least when it comes to energy interested people. Much missunderstanding circulates about this, but the point with this post is not to discuss the observation (it is a historical observation of an event in the past, not a ”theory” as its critics say) as it were in 2008, but what is going on now.

In short, peak oil is an observation that conventional crude oil is a non renewable finite resource subject to depletion. Since ”production” is increasing ever since the 1850ies, it must sometime in the future hit a peak, and then decline. This observation was labled the ”field replacement problem” among oil geologists in the 1970ies, and is nothing new.

Peak oil occurred in somewhere between 2005 and 2008.

What is new now is the development of so called ”shale oil”. This is a misnomer, since shale is not oil. Shale is the substance in rocks that becomes oil if subjected to pressure and heat over long times. A better name is ”tight oil”. Tight oil is extracted by drilling a long horizontal hole and then fracturing it with hydraulic pressure. This will connect the hole with naturally occurring cracks wich have some oil in it. By marrying hydraulic fracturing with horizontal drilling, we have been technically able to extract this oil. However this is very expensive, but with the high oil prices of the latests years, this can now be done economically.

Now, because of this development nearly everything you read on blogs and web pages suggest that peak oil is dead, and we will soon be able to produce all oil we ever need. Over in America the dream of energy independence is considered as well as achieved. A large proportion of the US population even believe the US is a net exporter of liquid fuels, when in reality the US is the worlds largest net importer.

Some of us are not impressed with the ”shale revolution”, but this minority of people are considered dead wrong and lots of articles are written to muck us. I am writing this blog post to be able to say I belonged to this scorned minority when the shale oil frenzy was at its worst.

The ”shale oilers” believe there are now a river of cheap oil. However, prices at the pumps are not going down. They explain this with speculaters driving up prices, regulators putting a lid on the production (although no such regulations exist by law) and other excuses. I (and many others) are suggesting another idea: there are no river of cheap oil, but a creek of expensive oil.

”Shale oil” wells have a dramatic decline curve and this can not be maintained for very long. Also, for us who does not live in one of the 33 oil exporting nations, what happens in the world in total is much more interesting than a short lived local (to the US) shale boost.

About a decade ago, the same people who is now preaching the shale oil gospel predicted oil prices would stay below 25 US$. The shale oil message will be put in the same category in just a few years.

I make no prediction about what will happen in the future. But I am predicting what will not happen: ”shale oil” will not save our energy supplies, nor the economy.

Wait three years and then come back and talk to me. Today is august 9, 2013.

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