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Welcome. I am the author of Universal Time, a sci-fi urban comedy;
Beaufort 1849, an historical novel set in antebellum South Carolina;
and Pearl City Control Theory, a comedy of manners set in present-day San Francisco.

Friday, March 29, 2013

Behind the Spin--US Oil Production Energy Reality


There's lots of hype lately in the press about all the oil the United States is producing. Why, we’re pumping and fracking so much, soon we’ll be energy-independent and exporting oil worldwide! But it’s useful to look behind the spin and examine the true numbers of US oil production.

First off, what’s important about oil is the energy it possesses. Especially the energy available to power our transportation. (77% of all crude oil in the US goes into making fuel specifically for transportation.) Remember that word “energy.” All oil is not created equal in the energy department. Counting oil and all the various substances we classify as “oil” these days in terms of gallons and barrels tells us nothing about its energy content. In fact, talking about our oil supply in terms of volume conveniently hides the energy content. In addition, we need to consider net energy. That is, how much energy is available after the oil is drilled, pumped and refined (or after the corn is grown, transported and processed into ethanol.) If an energy source has zero net energy, then we can’t count it as additional energy available to society. It is a method of energy transfer, perhaps, but not an actual source.

Let’s look at US “oil” production. “Oil” these days includes crude oil, condensate, natural gas liquids, ethanol and refinery gains. They all have varying energy contents and are not entirely substitutable for each other. Their common denominator seems to be that they can be used to power cars. (In this respect, some day soon we may well count electricity as “oil”—after all it can make an electric car go down the block!)

This is what our total US “oil” production from 1949 to 2012 looks like:


Not bad.  We had a peak in 1970, but now we have quite a strong upward trend. OPEC watch out! But let’s consider that not all “oil” is equal in terms of energy.  Natural gas liquids have only 70% of the energy content of oil and ethanol has only 66%. Last year NGLs were 22% of our total domestic “oil” supply and ethanol was 9%. Let’s correct our energy picture for the lower energy content of these two items.  We get:


Just a little diminished, but nothing much to worry about.  Still strong. Now let’s adjust for the energy it takes to refine this oil into something we can use. It takes more energy to refine oil than we get from refinery gains, so net refinery gains don’t exist in energy terms. However, refiners have been improving the efficiency of their processes, so while refining used to use up the equivalent of 10% of all the oil energy, now it uses up only 9.1%. In addition, refineries are using more purchased steam, natural gas and electricity for power rather than their own oil products. This allows more total oil products to be produced, factoring into the higher refinery “gains.” (But still not higher than refinery losses.) Interestingly, the US counts refinery gains on imported oil as domestic production, so we have to back out the energy we spend processing foreign oil as well to get a true picture of the energy leftover after refining. We get:


Now let’s consider that it takes energy to make or capture energy. Long ago oil was so easy to drill and pump, with one barrel’s worth of energy you could get 99 out of the ground. That oil had an EROEI (Energy Returned on Energy Invested) of 99. You put in 1 and got 99 back. But the one you put in is gone, lost. You have to subtract it out of the energy picture in order to determine of how much energy is left for society (all 315 million US citizens) to use.

EROEI for oil has been shrinking since the first easy oil days. In 1949, EROEI for domestic oil was 20. By 1974 it was 18. By 1982, it had sunk down to 8, but then Alaska’s North Slope oil fields arrived on the scene and our oil EROEI popped back up to 17 for most of the 90s. But lately it’s been dropping again, and now it’s back down to almost 10. This means we have to invest one barrel of oil to get 10 out. This means we have to subtract from our total energy count one barrel’s worth of energy for every ten we get out of the ground.  

Now in the case of ethanol from corn, it takes roughly as much energy to grow, transport and process the corn into ethanol as the energy we get out of ethanol. So there is no net energy gain. Rather, ethanol is a complicated way to turn the diesel of farm equipment and trucking and the natural gas used to create fertilizer into equivalent energy that will run our cars. (And use up water and valuable farmland while we’re at it.)

In addition, even our reported crude oil is not all crude oil. Some of it is condensate that is lighter and has less energy--on average 91% of the energy of crude. In addition condensate cannot be used to make diesel or jet fuel. While condensate used to account for only 5% of our crude oil supply, now it is up to 14% of it. Adjusting for EROEI losses and condensate reduced energy content, we get this:


Not quite so bright a forecast.  But we have a few more issues to consider.  The first is that not all “oil” is used or can be turned into diesel, gasoline, or jet fuel, what we need for transportation.  We used to use less of our oil for transportation—in 1949 only 61%. (Heating oil, for instance, was a popular oil product back then.) But once oil became expensive, more and more was dedicated to transportation fuels, until today 77% of our oil (this includes imports) goes to this purpose, pretty close to the refining maximum.

In addition these days more and more of our “oil” supply is coming from natural gas liquids. NGLs used to make up 8% of our domestic oil supply; now they are 22%. Only 30% of natural gas liquids can be used to make gasoline, and none of it can be used to make diesel or jet fuel. 

So after we subtract out the oil that wasn’t used for transportation fuel in the past, the parts of crude oil that can’t be used for transportation fuel now, and the percentage of natural gas liquids that can’t be used for transportation fuel either, the energy available from our “oil” production for transportation looks like this:


Again, the gap between the lowest line and the purple line above it is actually less than it used to be because we are dedicating more of our oil to transportation. But the overall shape of the line shows why we’re still importing so much oil. Energy-wise, we only produce domestically 42% of the oil energy we use for transportation. The rest we import. If we overlook ethanol’s lack of net energy and count it as oil energy, we still produce only 45%. If we look at a graph of this over time, it’s a pretty good downward slope with a little bump at the end.


Even if we want to kid ourselves by calling lower-energy ethanol and natural gas liquids “oil,” even if we want to pretend we can count refinery gains without also counting refinery losses, even if we don’t want to recognize that every year it takes more and more energy to get the oil that’s left out of the ground, even if we ignore that ethanol transfers energy but does not provide it, even if we are unaware condensate is an increasingly higher percentage of crude oil, even if we want to believe that everything we call oil can be turned into gasoline, diesel or jet fuel, when all is said and done, reality (and net energy) prevails. It all adds up (or fails to.) The energy isn’t there.
 
Sources:  Data published by the US Energy Information Administration (1949 - 2012)

8 comments:

  1. Very well done and insighful ! :-)

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    1. Yes, I agree, very well done. You have looked into the problem more closely than, like, 99% of the people interested in Peak Oil have done. Only thing left might be transportation barrels per US person--could be interesting.

      --ElmoElmer

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  2. Well done Karen, perhaps the next book should trespass into Danny Yergin territory !!

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  3. Another good post Karen. You were too polite to point out the criminal obfuscation of some agencies, and industry advocates going on the past few years,like Yergin even including the biggies like the IEA and EIA who are the folks who have been lumping silly things like refinery gains, NGLs, biofuels etc
    into the crude oil production pile.This was not done 20 or 30 years ago. Crude was just that:CRUDE! This accounting sleight of hand is new, an attempt to put lipstick on an aging pig, to make things look better than they actually are, a deliberate attempt to conceal the reality of declining net energy production from a public that doesn't want to hear any bad news anyway. I didn't see you attempt to lay out the EROEI of frack oil probably because I haven't seen any credible estimates , nor have I seen any from the new deepwater GOM either. I don't expect any from the offshore Brazil fields when and if they ever reach production. And more to your neighborhood, the Monterey Shale. By the way, I am waiting for your take on that shale oil fiasco and I fully expect you to give us a good post! It is highly folded and discontinuopus stratigraphy as you know and trying to get water from water starved northern and central California will probably be one of the biggest hurdles.

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    1. I am seeing EROEI estimates of 4 - 5 for fracked oil, tar sands, and deepwater oil. But of course there are no official estimate as no government agency seems at all inclined to make them.

      I think water (or lack thereof) will eventually do in both shale/tight oil and tar sands.

      I suppose I was being polite in the article. It really is if not criminal then at least grossly irresponsible to represent "oil" production in terms of volume instead of energy and to pretend that low EROEI energy sources supply the same amount of net energy to society as higher EROEI ones.

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    2. Exactly. BTW, there is a recent article in scientific american which you may have used as research material for your post. Just in case you haven't seen it, here it is:http://www.scientificamerican.com/article.cfm?id=eroi-charles-hall-will-fossil-fuels-maintain-economic-growth&page=3
      Also Howard Odum was a known star at UNC Chapel Hill when I was there.

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  4. Karen,

    An excellent post. You might consider a similar post for worldwide oil production, we may be well beyond peak liquid energy when considering things in the same manner for World "Oil" Supply in Net Barrels of Oil Equivalent. Net Barrels of Oil Equivalent (NBOE) could be defined as the net energy of liquid fuels that contain the same number of BTUs (or Joules) as a barrel of crude after the EROI is accounted for.

    The bump at the end of your charts is mostly due to Bakken and Eagle Ford Output. I have a number of posts about both the Bakken and Eagle Ford at my blog
    http://oilpeakclimate.blogspot.com/

    Thanks.

    DC

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