Jean Laherrère 12 March Comments on the data of the Hill s Group ETP model

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1 Jean Laherrère 12 March 217 Comments on the data of the Hill s Group ETP model When I heard for the first time about the ETP model by the Hill s Group, I found that it was based on exergy, but without quoting Robert Ayres who was the only one (with B. Warr) reporting historical series on exergy (useful energy) See my comments on Ayres article pages 2 to 28 Laherrere J.H. 214 «Oil and gas perspectives in the 21st century» ESCP London debate 17 Feb. The US exergy (green) follows the primary energy supply (red). Starting at 1 from 19, US, UK and Japan exergy have grown differently 1

2 Starting from 19 the exergy of UK grows less, starting from a high level, when Japan exergy growth is larger starting from a low level. There are many problems to get reliable data on exergy, as for EROI. The best example is the many articles on corn ethanol EROI which cannot decide if the EROI is above or below 1, as quoted recently by Charlie Hall (the first one to introduce EROI) So, without more detailed data the ETP model was for me unreliable but difficult to comment except that any report based on exergy should refer to the world historical exergy values and I do not know any such data. But recently I found a more detailed 215 Hill s Group paper on the site On the Thermodynamic Model of Oil Extraction by the Hill s Group by Dennis Coyne Posted on 2/24/217 A Guest Post by SK The report reviewed here claims to rely on thermodynamics arguments to predict oil s price-volume trajectory going forward. 2

My comments on this 215 paper argue not about the theory, but about the data they use: most of the

-page 3 The Hill s Group confuses Darcy and Darsie: they know very little the oil industry and the

All heavy oils are below 3 API and condensate above 45 API. https://www.researchgate.

3 My comments on this 215 paper argue not about the theory, but about the data they use: most of the data is badly defined and mostly wrong! -page 3 The Hill s Group confuses Darcy and Darsie: they know very little the oil industry and the measure of permeability! Conventional crude oil is not restricted to the range 3-45 API. All heavy oils are below 3 API and condensate above 45 API. E_OILS/links/572a65b8aef7c7e2c4ede8.pdf?origin=publication_list 3

4 EIA reports US condensate (>45 API) with crude oil production and reports crude oil production by type only since 211 (the States do not provide such data). LTO production is lighter, in particular Eagle Ford 4

definition excludes 37% of the USL48 oil production http://www.eia.

5 Hill s definition 3-45 API of crude oil excludes 15% of US L48 oil production below 3 API and 22% above 45 API: in total Hill s definition excludes 37% of the USL48 oil production Most of California oil production is below 3 API 5

6 It is worse including oil imports: The average crude oil input to refinery 1985 to 215 is just above 3 API, meaning that about 5% is below 3 API The percentage of 3-45 API in the US imported crude oil was 84% in 1978 but only 35% in 216 6

7 9 8 US percentage of imported crude oil by API gravity from EIA Jean Laherrere March <2 API API API API 35;1-4 API API >45 API 3-45 API It means that Hill s definition of petroleum does not agree with the petroleum production values they used! There is no consensus on the definition of conventional, outside that the extra-heavy (including the tarsands) are obviously unconventional because their trapping is different (no water contact being heavier than water) World crude oil production and cumulative production from EIA 3 15 crude oil less extra-heavy production Gb source: =T11.1B#/?f=A&start=1973&end=215&charted= crude oil Gb EIA crude-xh crude-xh-lto CP crude oil cumulative production Gb Jean Laherrere Jan 217 year IEA reports conventional oil production for the world as OPEC and NOPEC in their WEO from 28 to 216 (see table 3.11) 7

The plot shows that world conventional crude oil as defined by IEA peaked about 25 (no detail for 24 and 26) 8 7 6 world OPEC NOPEC world conventional crude oil production from IEA/WEO 21 to

8 The plot shows that world conventional crude oil as defined by IEA peaked about 25 (no detail for 24 and 26) world OPEC NOPEC world conventional crude oil production from IEA/WEO 21 to Mb/d Jean Laherrere March 217 year WEO21 page 48 said that the conventional crude oil peaked in 26 (in fact a bumpy plateau at 7 Mb/d) as shown in this graph 8

9 The Hill s Group lacks a precise knowledge about oil production and lacks the wish to improve his knowledge! Why gross and net exergy? Most papers report only exergy: -Wikipedia has another definition of exergy: In thermodynamics, the exergy (in older usage, available work and/or availability) of a system is the maximum useful work possible during a process that brings the system into equilibrium with a heat reservoir. -Goran Wall 1977 ( Exergy is that part of energy that is convertible into all other forms of energy. -Robert Ayres 1997: Exergy is defined as the potential work that can be extracted from a system by reversible processes as the system equilibrates with its surroundings. It is, in fact, the useful part of energy and is what most people mean when they use the term energy carelessly (as in economics). There are four components of exergy. They are: (i) kinetic exergy associated with relative motion; (ii) potential field exergy associated with gravitational or electro-magnetic field differentials; (iii) physical exergy (from pressure & temperature differentials); and (iv) chemical exergy (arising from differences in chemical composition). Exergy is reported in terajoules TJ or in petajoules PJ -Quora Exergy is the maximum useful work which can be obtained in a process in which system obtains dead state. -IEA reports page 2 that gross caloric value includes all the heat released from the fuel, when net calorific value excludes the latent heat of the water formed during the combustion: it is not the definition above where work at the wellhead is excluded from the gross! Exergy is the usable energy, the useful energy, the available energy (Gibbs 1878), the quality of energy: there is no gross or net as defined by the Hill s Group! 9

10 Oil production is counted by barrels and not gallons! -page 5 The Hill s Group is unable to write correctly my name with Leharrère instead of Laherrère when it is correctly written in their reference 7 -page 8 Why 537 R? -page 9 Why is the reserve temperature given in R = degree Rankine? Degree Rankine is tied with F (Fahrenheit) and K = degree Kelvin R = F R = K* R = 77 F = 25 C (omitted by the Hill s Group) The US National Institute of Standards and Technology recommends against using it: it is an obsolete unit! The Hill s Group ignores the SI units, which are the rules in everywhere in the world outside Liberia, Myanmar and the US nonfederal (US federal agencies are obliged to use the SI since 1993: in 1998 Mars Climate Orbiter crashed on March because NASA sent the instructions in newton SI when the builder 1

11 Lockheed built it in pound!), but they quote in reference 14 the IPCC data, which reports only temperature in C! They quote the heat content of a gallon (oil production is measured in barrel!) of 35.7 API but they forget to mention that the density of the oil has changed with time and the world average oil gravity is not 35.7 API Oil is getting lighter and the ratio barrel per tonne oil equivalent increases 11 world oil b/t from BP and b/toe from EIA b/toe, b/t EIA prod NGPL b/toe BP prod US oil b/t BP cons inc biofuels b/t BP prod oil exc biofuels b/t EIA consumption b/toe EIA prod C+C b/toe Jean Laherrere June 215 year -page 1 This graph below displays the lack of rigor of the Hill s Group papers with Gb and GB: why Gb and GB? Why 6 significant digits for an estimate of an ultimate, which is widely uncertain: from my side, I use only two significant digits! The horizontal scale is called year, but in fact the number is the year less 19! Why not to plot year since 19 as some other Hill s graphs. API reported world oil production since 1857 and the cumulative oil production in 19 is.4 Gb a: this data should have been mentioned! Why to show in their graphs 19 as zero and not 19: it is confusing! 11

The Hill s Group said that our data has reached an inflexion point of 161.

12 The Hill s Group said that our data has reached an inflexion point of Gb in April of 1995, but our data say quite differently: in 1995, the cumulative production was 82 Gb for all liquids, 8 Gb for oil and NGL and 76 Gb for crude oil less extra-heavy. This value of Gb is ridiculous and completely wrong! 12

cumulative production Gb 3 27 24 21 18 15 12 9 world cumulative oil production all liquids U = 3 Gb

13 cumulative production Gb world cumulative oil production all liquids U = 3 Gb crude+ngl U = 22 Gb crude-xh Jean Laherrere Jan 217 year -page 12 13

14 Again, reporting ultimates with 4 and 6 significant digits! Why is the purpose of using 6 digits? To show that they know better, in fact they show that they do not know. Their inflection point is wrong! _page 13 mass of crude in barrels: confusion of mass and volume -page 14 why to start the cumulative production from 196 (being about 12 Gb)? Why in a paper of 215 to stop the data in 29 and to start only at 196? Furthermore graph 9 displays oil price until 211, more than graph 5 Why to delete the second oil shock of 198 and to keep the price peak of 28? 14

15 It appears that what is called actual $/b is the nominal price, when the real price is quite different as shown in the next graph from BP oil price from BP $ money of the day $ $/b Jean Laherrere July 216 year The peak of nominal oil price is 11 $/b in 211 & 212 when it is less than 1 $/b in graph 5. It seems queer to model the price with an exponential curve with no limit The plot of the real oil price ($215) versus the crude oil + condensate production display a ceiling of about 12 $214/b and a wall of 8 Mb/d 15

oil price $214/b 12 11 1 9 8 7 6 5 4 3 2 oil price ($214) versus world crude production 1861-215 whale oil (Starbuck 1878) 182 3 $/b 16 b/d 185 8 $/b 71 b/d 1859 44 $/b 2 b/d 186 26 $/b 14 b/d 1861

16 oil price $214/b oil price ($214) versus world crude production whale oil (Starbuck 1878) $/b 16 b/d $/b 71 b/d $/b 2 b/d $/b 14 b/d $/b 58 b/d $/b 63 b/d $/b.1 Mb/d ceiling? BP S215 EIA first purchase seven sisters = posted price wall? $/b 3.7 Mb/d Jean Laherrere March crude + condensate production Mb/d from EIA -page 16 & 17 The Hill s Group claims that the US is a good proxy for the world well depth. They are wrong, as shown by the graphs below using IHS data. They are also wrong: confusing the depth of the reservoir with the total depth of the well reported by EIA IHS reports the temperature and the depth of the reservoir (more than 5 fields for 21) for the period : it shows that the North America is obviously different from the other continents, which display similar curves. 16

17 average depth m world average annual reservoir depth from IHS compared to EIA total deph NAm frontier ME LatAm Far East Europe CIS Australasia Africa Hill's chart 1 EIA develop. oilwell TD EIA explo. oilwell TD Jean Laherrere March 217 year source IHS 21 & EIA 217 The US reservoir average depth is much larger in 21 with 5 m than the other continents with 25 m EIA average development oilwell is about 15 m in 21 when the exploratory oil well is deeper with 25 m The depth value of chart 1 page 18 is plotted on the graph above and agrees with EIA development oilwell total depth, when EIA exploratory oil well depth fairly agrees with IHS continents excluding North America. EIA annual development oilwell are strongly disturbed by the large infilling of wells in old fields, when EIA exploratory oilwell are new discoveries The detail of IHS continent reservoir depth and number of discoveries versus time is reported for few ones (I have all of them for those interested) For North America frontier reservoir depth increases steadily, when the number of discoveries peaked around 2 17

18 North America frontier reservoir average annual depth 6 12 average depth m average depth m annual number of fields total = 155 fields number of annual discoveries Jean Laherrere March 217 year source IHS 21 Fort Europe regular depth increase from 192 to 199 and plateau beyond. Peak of discoveries around 1985 Europe reservoir average annual depth 3 25 average depth m average depth m annual number of fields total = 8468 fields number of annual discoveries Jean Laherrere March 217 year source IHS 21 For Africa increase of depth from 194 to 197 and plateau after, but peak of annual number of discoveries 1981 and 28 18

19 average depth m Africa reservoir average annual depth average depth m annual number of fields total = 5228 fields number of annual discoveries Jean Laherrere March 217 year source IHS 21 Middle East reservoir depth is oscillating between 2 and 25 m since 195 when the number of discoveries peaked around 198 Middle East reservoir average annual depth average depth m average depth m annual number of fields total = 269 fields number of annual discoveries Jean Laherrere March 217 year source IHS 21 19

20 The temperature of the reservoir (21329 fields) is plotted versus the depth of the reservoir The plot for North America (NAm) frontier displays two trends, the upper one with a trend line of 27 C/km and the lower one with a trend line of 14 C/km. 22 North America frontier reservoirs : temperature versus depth temperature data out of 155 fields 16 temperature C gradient 27 C/km gradient 13 C/km Temp Max Val Deg C Jean Laherrere March 217 depth meter source: IHS21 The upper trend is close to the trends of the other continents The lower trend is not seen in the other continents Same graph with the other continents linear trend lines, which display similar trends. The earth gradient of 25 C/km is close to the Europe/CIS linear trends. 2 reservoirs : temperature versus depth NAm compared to other continents trend lines temperature C NAm ME LatAm Far East Europe 4 2 source: IHS Jean Laherrere March 217 depth meter CIS Australasia Africa gradient 3 C/km gradient 25 C/km The plot for Europe displays a fairly well grouped trend line 2

21 Europe reservoirs : temperature versus depth temperature C temperature data out of 8468 fields Temp Max Val Deg C depth meter Jean Laherrere March 217 source: IHS21 About the same for CIS (Commonwealth of Independent States = FSU) CIS (FSU) reservoirs : temperature versus depth temperature C temperature data out of fields Temp Max Val Deg C depth meter Jean Laherrere March 217 source: IHS21 There is less data for Africa and the cloud is wider. 21

22 Africa reservoirs : temperature versus depth temperature C temperature data out of 5229 fields Temp Max Val Deg C depth meter Jean Laherrere March 217 source: IHS21 Middle East plot is more concentrated, except for one point = Iran 29 Azadegan with 37 C at 5192 m, being wrong because another reservoir in the same field is at 134 C at 435 m: it seems that the temperature should be 137 and not 37 C (first digit missing) 22 2 Middle East reservoirs : temperature versus depth Temp Max Val Deg C 18 temperature C value wrong by 1 C first digit missing? 45 temperature data out of 269 fields Jean Laherrere March 217 depth meter source: IHS21 22

23 Latin America reservoirs : temperature versus depth 22 2 Temp Max Val Deg C temperature C temperature data out of 828 fields Jean Laherrere March 217 depth meter source: IHS21 -page 17 The temperature of the reservoir is calculated from the earth temperature of 1 F per 7 feet of depth (14) [14] IPCC SCOPING MEETING ON RENEWABLE ENERGY SOURCES page 62: an average thermal gradient of 25-3 C/km, %2gradient Schlumberger: average 25 to 3 C/km [15 F/1 ft] Rankine temperature is not indicated! My above graphs of the temperature are reported in C, as all scientific papers The Hill s Group reports the total depth and not the depth of the reservoir. EIA well depth graph 7 (15) [15] EIA Average Depth of Crude Oil and Natural Gas Wells 23

24 The graph 7 (EIA well total depth) does not represent the depth of the reservoir of new fields and the US is not representative of the world. Chart 1 does not represent the depth of the reservoirs of the world. Usually data are reported for the end of the year (except few as OGJ for the reserves) and not the beginning of the year -page 18 24

Too many useless significant digits in chart 1showing that the authors do not understand accuracy: the reported value should be restricted to a number of significant digits in correlation with

25 Too many useless significant digits in chart 1showing that the authors do not understand accuracy: the reported value should be restricted to a number of significant digits in correlation with accuracy: oil data is usually with an accuracy of about 5% and only two digits are significant. Decimal should be prohibited! -page 19 As a result of the fixed specific exergy of petroleum E G (14, BTU/gal) 14 Btu/gal = 588 kbtu/b when the heat content of crude oil +condensate from EIA varies in 214 from 584 (Sudan) to 6393 (Cuba) 25

26 heat content kbtu/b EIA 214 crude oil +condensate heat content versus production Sudan 584 US 58 constant since 195! average 586 kbtu/b median 588 kbtu/b Cuba 6393 heat content kbtu/b cumulative crude +condensate Mb/d Jean Laherrere 215 The median heat content of the crude oil is about 588 kbtu/b, taken by the Hill s group od of the exergy of petroleum, but the average (weighted by production) is 586 kbtu/b., showing that only 2 significant digits is reliable (59). But reports 1 barrel = 6 kbtu There are few papers reporting the relationship between gravity and heat content. The plot of Canada oil products energy content versus gravity is about linear (not exactly as medium below light) GJ/m3 = API Or kbtu/b = API for 35.7 API = 6436 kbtu for 35.7API = 6484 kbtu 45! Canada oil products energy content vs gravity! asphalt! heavy fuel oil! heat content GJ/m3! 4! 35! lubricant & greases! heavy oil! medium & light oil! light fuel oil! kerosene! diesel! y = -,1581x + 44,314! 214/appendix-appendice1-eng.htm! aviation gasoline! 3! 1! 15! 2! 25! 3! 35! 4! 45! 5! 55! 6! 65! 7! Jean Laherrere March 215! API! 26

27 Xavier Chavanne after his 213 book (Energy Efficiency: what it is, why it is important, and how to assess it) reports (voir Laherrere Nice 215 figure 6 also a linear relationship from Chevron data between gravity and heat content All data above shows the poor accuracy of the heat content of oil production 27

28 -page 2 Graph 9 is based on graph 5 that I call queer above with an exponential model without limit! Graph 9 stops in 211, when graph 5 stops in 29! Graphs are not actualized! -page 24 28

29 Graph 12 covers only the period , when graph 9 covers It is quite heterogeneous! A paper dated 215 should be updated to 214 -page 29 29

30 The fit looks good when removing the period and It is a lack of rigor to remove data to improve the fit The missing oil price of 215 about 5 $/b (instead of 12 $/b) disturbs widely the fit -page 31 3

31 Claiming a 98.5 % confidence intervals must be wrong when adding the missing period , The Hill s Group shows a poor understanding of accuracy -page 33 I do not see why the maximum energy is from a 37.5 API crude -page 34 -page 37 The Hill s Group claims that 37.5 API and 35.7 API have the same energy content: it looks about confusion and the oil price is not defined: the most often used is WTI (graph 31) which has a gravity of 39.9 API, when Brent of 38.6 API and OPEC Reference Basket of about 32.7 API See also my comments page 19. -page 39 31

32 The actual oil price value of about 5 $/b in 215 fits badly with the projected value of 12 $/b! -page 42 graph 24 See my doubts on gross and net energy page 3! 32

33 There is no reference or justification that the conventional crude oil has an average gravity of 35.7 API on the fact that I believe that it is impossible to report a value on such uncertain measure with 3 significant digits: it means that it is a guess -page 43 Graph 25 I assume that the above displays GDP in current dollars! The world GDP in constant dollars ($21) correlates well with the primary energy from 19 to 1979 (second oil shock) as shown in the next graph (see page 3 Laherrere J.H. 216 Croissance ou pas croissance selon les données: PIB, population, énergie Club de Nice 24 novembre but diverges beyond 33

34 PE Gtoe & GDP T$21 log scale 1, 1, 1, GDP T$21 PE x 3.7 PE Gtoe Enerdata PE population growth 4%/a growth 3%/a growth 2%/a growth 1%/a world primary energy, GDP & population in log scale growth rate GDP 2.85 %/a PE 1.85 %/a population 1.5 %/a, Jean Laherrere 19 Sept 216 year But there are three GDP: current, constant and PPP (purchase power parity) and they differ widely: it is why both should be displayed World GDP from WB GDP current T$ WB GDP T$21 WB 5 GDP G$ Jean Laherrere Sept 216 year Plotting the two world GDP versus current and constant dollars gives two different graphs The first one should be compared to graph 25 (197-29), but dealing with a larger range: the exponential trend line is not very good 34

35 8 World GDP versus crude oil production GDP G$ GDP current T$ WB Expon. (GDP current T$ WB) y = 1,5589e,35x R² =, Jean Laherrere March 217 cumulative crude oil production Gb Using GDP in current dollar displays a decline in 215, far from the exponential trend line: modelling with a single function looks difficult, contrary to the plot in constant dollar. The second graph with constant dollar displays a good linear correlation (R 2 =.99). 8 7 World GDP $21 versus crude oil production GDP T$21 WB y =,524x + 4,3727 R² =, Linéaire (GDP T$21 WB) 5 GDP G$ Jean Laherrere March 217 cumulative crude oil production Gb Dealing with constant dollar gives a completely different model than with current dollars -page 47 35

36 The logistic model forecasts 12 $/b for 215, when the actual price is about 5 $/b Modelling oil price is for me impossible because the irrational behavior of consumers (price is settled by the refiners) and not the oil future) -conclusion The Hill s Group uses a wrong definition for the crude production and for the temperature of the reservoir (at total depth), obsolete units and ridiculous number of significant digits. The time series are incomplete, starting in 196, eliminating and stopping in 29 or 211. The data used in this paper is wrong, as the way they write my name: Leharrère. Without any judgment on the theory, only on the data: the ETP model is GIGO: Garbage In, Garbage Out 36

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