In our last poll on 16 APR (and here's the old accompanying comment thread), 42% of you predicted that CL would hit $127 in the front month before it hit $103. Yep, we've passed it today, though we closed below it. Oil has risen from $115 to $127 (~10%) in a month.

This is the comment thread for the poll, offer your conjecture and reasoning here...the poll is in the post below.

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This is a guest post by Alexis Ziegler. Alexis is a communitarian, builder, orchardist and environmental activist living in central Virginia. He is the author of a recently published book, Culture Change: Civil Liberty, Peak Oil, and the End of Empire. More information can be found at conev.org.

Abstract

The rapid expansion of biofuel production worldwide has paralleled a dramatic rise in food prices. The expansion of biofuels has been supported by a wide spectrum of people, from environmentalists looking for "sustainable" energy to conservatives wanting to reduce U.S. dependency on foreign oil. With food riots spreading, the U.S. remains committed to an expansion of biofuel.

Biofuels are part of a larger movement toward green capitalism, the idea that we can scale down our energy use through technologies that improve the efficiency of the consumer society. Biofuels are emblematic of the dark side of green capitalism, which is focused almost entirely on the well being of the global upper class. Biofuels are a form of nationalistic environmentalism that is creating a foundation on which more extreme nationalists will try to wed the racist tools of yesterday with a version of "sustainability" that will include the destruction of the global poor.

Real solutions are both impossibly difficult and simple. The cooperative societies in which most humans have always lived are capable of supporting a high standard of living with far less resources than the individualized, consumer society. Enlightened political leadership would be helpful, but we can create a sustainable society without it. Indeed, we have to.

[break]

The current food crisis was terribly predictable, and has been anticipated for several years now. Starting about seven years ago, the world started using more food than it was producing, steadily eating into stored supplies. As grain stores have shrunk year by year, the biofuel movement has taken off like a virus. Rapid biofuel expansion has been propelled by a concern over American dependence on imported oil, as well as concerns about "sustainable" energy supplies and carbon emissions.

Meanwhile, environmentalists concerned about our future food supply were sounding the alarm, and being ignored. For some, it was terribly obvious that a disaster was brewing. While there has been considerable debate about the energy returns from various biofuels, no one debates the basic math. It takes about 10 acres to feed a car on ethanol for a year.[1] The world supply of grainland is about three-tenths of an acre per person, and is expected to shrink to less than a quarter acre by 2020. [2] Clearly, direct market competition between rich and poor for land to feed cars or people could be disastrous. Given the relentless fall in holdover stocks – grain in storage – over the last few years, price spikes were inevitable.

Although other factors have driven food prices up, biofuel expansion is the tipping factor, the real driver of price hikes of the scale we are seeing. Other factors, such as drought and increased meat consumption, would have caused an incremental increase in prices. Markets respond smoothly as long as there is an adequate buffer between supply and demand. When that buffer gets too tight, then the markets start oscillating much more severely. To go from almost no biofuel to 5% of the world's food going into biofuel in a few years can have only one impact on the market. Biofuel is not the only factor influencing food prices, but it is the decisive factor between moderate market escalation and dangerous oscillation.

As an environmental activist, I was wary when my friends started enthusiastically grabbing used cooking oil from behind restaurants. I did not think they were aware of the political Frankenstein they were creating. American consumers are both enormously powerful and very disconnected from the natural world or any consideration of the limits of the Earth on which we all reside. Now that a movement has been created to expand biofuel production rapidly, with support from everyone from President Bush to a large fraction of the environmental movement, it will be difficult to stop.

The growth of the biofuel craze has been very rapid. For those that would argue that biofuel does not compete with food supplies, the actual behavior of the market, even at this early stage, belies such contentions. Radical increases in food prices caused in large part by biofuel expansion have triggered food riots in Haiti, Guinea, Mauritania, Morocco, Senegal, Uzbekistan, Yemen, Somalia, and Mexico. (That list is likely to be longer by the time you read this.) Even in Italy consumers have caused public disturbances over the rising price of food. Biodiesel plants built in Malaysia now lie idle, never having been put into production, because those odd Malaysian peasants are demanding the right to eat their palm oil. Meanwhile, in Swaziland, a small impoverished nation in South Africa where forty percent of its people are facing food shortages, the government decided last year to start exporting biofuel. [3] The World Bank has stated that 33 countries may be at risk from destabilization because of skyrocketing food prices. [4]

When I first started writing about this issue several years ago, global grain stocks were at their lowest point in over 30 years. Grain stocks have continued to fall. We are perched on a precipice where a drought or other disruption of production in grain-producing regions could cause severe instability in both food and energy prices. Such instability could trigger widespread famine. Such concerns are not restricted to fringe critics. Goldman Sachs is predicting that "vulnerable regions of the world face the risk of famine over the next three years as rising energy costs spill over into a food crunch..."[5] The number of people in the world suffering severe undernourishment was declining until the late 1990s. Now it is rising.

Currently, 5% of the global food supply is going into biofuels, and that fraction is growing very rapidly – some would say virally. [6] If the current rate of expansion of biofuel continues, ethanol plants will be using almost all of the U.S. corn crop within 5-7 years. In response to this growth rate and the dangerous potential outcomes it implies, the United Nations Rapporteur on Food has called for a moratorium on biofuels expansion. The European Union is drafting legislation so that they will only import biofuels that are produced "sustainably," but the definition of that term is still up for debate.

The carbon-saving aspect of biofuels has turned out to be an illusion as well. Millions of acres of forest, including enormous areas of tropical rainforests in Malaysia and Brazil, are being destroyed to produce biofuels. On average, biofuels add more carbon to the atmosphere than fossil fuels. [7]

And how is the U.S. responding? In the fall of 2004, Congress passed a tax relief bill supporting biodiesel, and the new energy bill passed by Congress in 2007 supports a rapid expansion of ethanol production.[8] President Bush has spoken openly in favor of biofuel, and has visited biofuel plants to show his support.[9] Liberal campaigner, musician and activist Willie Nelson has been advocating the use of biofuel. Conservative governor Arnold Schwarzenegger has been promoting biofuel Hummers in California. At the 2007 North American International Auto Show in Detroit, General Motors released their new ethanol Hummer. Virgin Atlantic, one of the world's major airlines, announced in January 2008 that it is going to conduct the first commercial flight using biofuels on board a Boeing 747 (one of the world's largest airliners). [10]

It is no surprise that conservatives are in favor of biofuel, given their traditional nationalistic focus. The number of liberally minded, educated environmentalists who favor biofuels expansion is more surprising. I have had many arguments trying to decipher how so many smart people could fail to see the obvious connections. Cars are very hungry, consuming the grain that would feed 25-30 people. The global market is highly integrated, one big pond where commodities move fluidly and markets ratchet upwards any time the supply tightens relative to demand. Are these facts not painfully obvious?

They are, and the solution to the question of why so many people would be so foolish is sobering. American environmentalism has become increasingly nationalistic. If one takes a step back from biofuels and looks at the broader environmental movement, the dominant trends are towards "green capitalism," or "Natural Capitalism," to use the title of a book by Paul Hawkens and Amory Lovins. According to this theory, the new green technologies are going to create "green" jobs, and the economy will continue to prosper as workers construct windmills and insulate sophisticated energy-sipping homes and offices. Consumers will buy compact fluorescent bulbs and efficient cars, and we will steadily reduce our energy use. This "green capitalism" is by far the dominant trend in environmentalism today, with luminary conservatives like George Shultz being among its more prominent advocates.

It sounds great. But there is a side to this movement, of which biofuel is emblematic, which is far darker than any of its current advocates dare recognize. Everyone, save a few wingnuts, acknowledges that oil is a finite resource. A few years ago, some oil geologists started suggesting that the peak of global oil production might be very soon, now or in the next few years, rather than decades away, as had been assumed. At first they were ridiculed. But global oil production has remained nearly flat for several years, demand pressures have continued to increase, and prices have spiked.

It now seems very likely that we are at or near a peak in global oil production. The global industrial economy is facing limits and depletions of many other resources as well, prompting the prominent peak oil theorist Richard Heinberg to title his most recent book Peak Everything. (The idea that industrialism could face multiple limits of resource availability has been around since at least the 1972 publication of The Limits to Growth. Though that book sold millions of copies, enormous efforts were subsequently expended in suppressing the distressing conclusions reached therein. That in itself is an instructive story.[11])

Some of the advocates of green capitalism – of which there are many at this point – are aware of the likely pending limits of oil and other resources. They paint a scenario of continued growth and prosperity even as we downscale our energy use and pollution, using more efficient technologies and design. Some are more optimistic than others about exactly how much oil we might have left, and how resource limitations might impact future economic growth. The green capitalist model, as espoused by a number of its most prominent adherents, suggests that we can feed 9 to 12 billion people in the coming decades even with falling oil supplies and significant biofuel development by applying green technologies.[12] So why are we facing a "risk of famine," to use Goldman Sachs' words, over forty years earlier and with 3 to 6 billion fewer people?

Because numbers on paper do not equal reality on the ground, and because nationalistic environmentalism focuses almost entirely on the well-being of the global upper class. It is probably true that it is possible for a limited number of people to transition to a highly efficient, consumer society, but only if a couple billion of our fellow humans suffer deprivation, or perhaps even outright destruction, to make way.

The industrial economy is intimately, terribly dependent on oil. So much so that we can hardly conceive how much of it we use. Richard Heinberg maintains that a single teaspoon of oil contains as much energy as eight hours of human labor. In practical application, that is probably a slight exaggeration. Nonetheless, we have gotten accustomed to using extraordinary energy. We have god-like powers at our fingertips when we turn the key to drive down to the corner store for a pack of chewing gum.

Under conditions of expansion, the market economy appears benign, even progressive. It is no coincidence that the peak of democratic development in the ancient Greek and Roman civilizations occurred at the peak of the colonial development and prosperity. As the traders gained power in these societies, the market expanded, and it was economically important for civil liberty to expand as well. So, too, in modern times. The expansion of democracy and civil liberty has followed on the heels of the expansion of colonialism and the growth of markets. There is not a simple linear relationship between the economy and democracy, but over time there are powerful forces that make certain kinds of social change more likely at particular times. Ecology sets the stage for economy, and economy favors different social movements at different times.

Nearly all academic, political and religious leaders try to make their own ideas sound more important than the supply of oil, topsoil, or the health of the forest. The end result is that while there is a direct relationship between ecology and democracy, knowledge of that connection is suppressed by leftist and rightist alike as they strive to make their ideas and policies seem more important than nasty things like dirt and oil.

As a result of this odd historical conspiracy, we are suffering a terrible illusion. We imagine that we have constructed our democracy, expanded our civil liberty, and built an industrial economy in defiance of gravity, without regard for topsoil, clean water, or the parts of the world that we label as natural "resources." The truth is that fossil fuels have financed a breakneck expansion of industrial development and trade that has powerfully favored social movements that seek to expand our civil liberties. Just as the democracy of Greek and Roman civilizations collapsed when their colonialism became more embattled and their economies struggled, so will ours.

As much as we may sing the praises of the open, democratic society, that kind of society is very well suited to the position of the winner in the competition for growth and dominion. What is the relative strength of authoritarian governments? They command effectively and efficiently. They bring people together to undertake more aggressive foreign policy, be it military or economic warfare, that would otherwise divide a more civil society. We may demonize particular individuals in the current American leadership that seek to stuff our civil liberties into the closet with the Patriot Act and other related legislation even while they engage in ever escalating oil warfare, but the underlying transition is not about personal evil. There is no way the United States and the global consumer class can maintain its dominion without powerful military pressure, and that martial stance will favor authoritarian political development. Biofuel is environmental nationalism, and it is the cutting edge of this process.

As radical as it may sound to suggest that democracy as we know it will soon fall at the feet of a nationalistic environmentalism, a movement that may include the destruction of the global poor among its methods of achieving "sustainability," it seems fairly obvious if one simply examines current trends. The facts are plain, if we choose to see them:

1) Oil is a finite resource. We are very likely near or at peak production.

2) The Earth itself is finite. Economic growth as we currently define it cannot continue forever.

3) Ecological limits have impacts on our economy, and our economy has powerful impacts on our politics.

4) The constricting of global economic growth will not favor a continued expansion of democracy and civil liberty, and will likely favor the growth of more powerful centralized authority among the dominant powers.

5) The wealthy and powerful classes of the world are going to try to maintain their position of privilege in consumer societies into the future. The attempt to do so while the energy pie was expanding appeared benign. As the energy pie shrinks, the only way the consumer society can continue to grow, regardless of the development of more efficient technologies, is by taking an ever greater fraction of a shrinking supply of energy and other resources. If the pie is getting smaller, we can continue to eat gluttonously only if we take a larger share of what's left.

6) The consumer society will be sustained only at the cost of a very aggressive foreign policy on the part of the industrial powers. The people whose resources we are taking will fight back, albeit haltingly and uncertainly. The resulting tensions will favor authoritarian rule in the poorer nations as well.

As a result of the aforementioned, conservatives will embrace nationalistic environmentalism, and will do so in the coming years with a greater fervor than liberals ever could have imagined. We will see the rise of a passionate, chest-thumping environmentalism, built on the foundation of green capitalism, that dwarfs the current movement.

The nationalism of the future will not be like the nationalism of the past. Superficially, it may look the same. Past fascistic movements were often highly populists, espousing the highest ideals and employing glorious symbolism of a brighter future. Similarly, the modern nationalistic environmentalists will not paint bloody pictures of death and destruction. Rather, we will, as in Swaziland, be bringing development at last to the poor, even as we drive them off of their land and replace their "inefficient" farming methods with modern "sustainable" biofuel production. On April 29, 2008, President Bush made a speech in which he ardently declared that biofuel expansion is not related to the rise in food prices, regardless of all the evidence to the contrary.[13] This is the new face of environmental nationalism. It is endorsed by a broad spectrum of the body politic. It denies the plainly obvious, hides behind the moral neutrality of the market, and is likely sowing the seeds of authoritarian rule and global-scale mass starvation of the poor.

Nationalistic environmentalism will differ from past nationalisms by covertly benefiting the elite across national boundaries. The power of the market economy is not ultimately efficiency, it is rather the hiding of the oppressor. If one race takes land and energy from another, then there is a target against which the poor can focus their organizing energy. But who is to blame for hunger in a global market economy? That is the real power of the market. It utterly defeats revolutionary impulses before they can bloom. The global economy has become a maze of non-racial, non-national, nominally non-class-based commerce with no one in particular to blame for any evil that should befall any particular individual or group.

In this case, "nationalism" as we have known it in the past becomes something of a misnomer. The global elite, however loosely defined, have more in common with each other than with their fellow national citizens. Civil liberty has always been largely defined by class. We developed a very black-and-white mythology of fascism as we exited World War II that does not well define our future.

As the elite of the ancient empires had no shortage of civil liberty, neither will the elite of any of the modern authoritarian movements. Powerful institutions adapt, and the global corporate economy is not going to lie down and die. Rather, we will see the distress creeping up from the bottom, as it is now. Those at the top will more aggressively label anyone who challenges their privilege, or their right to turn food into fuel via the sanctity of the market economy, as a "terrorist," a modern day "barbarian at the gate."

At what point one chooses to use such loaded words as fascism, authoritarianism, imperialism or the like will depend largely on where one finds oneself in the grand hierarchy of the market. The noteworthy point here and now is that western liberalism, however much it may once have held pan-human ideals, is quickly being drawn into the conceptual framework of environmental nationalism. This in turn will leave liberalism absolutely toothless to oppose more aggressive nationalists in the future. Are any current prominent democrats opposed to biofuel? What does that tell us about the future?

There is already an unholy alliance brewing between some radical ecologists, anti-immigration organizations, and those who see limiting population as a very high priority. (I put myself in this latter category.) The history of fascistic movements scapegoating minorities and immigrants need not be elaborated upon. As we face ever increasing oil prices, it is highly likely that the far right will wed the tools of old (racist scapegoating) with a version of "ecology" that seeks to "Save the Earth" at the expense of the global poor. We see the lace of this wedding being spun in the global warming debate, in which the right is already trying to hold the global poor accountable for climate change. Biofuel is more urgent, a much sharper sword cutting down the hungry of the world in the name of green capitalism even as you read these words.

The current environmental movement is taking the easy road, telling people what they want to hear. They are telling the public that we can continue the current consumer society if only we do it with more efficient cars, "sustainable" biofuels, and compact fluorescent light bulbs. By taking the easy road today, we may gain a few points of efficiency of energy use. But because we are failing to speak the truth, we are delivering the future to a potentially murderous ecofascist movement. Were it not for the current state of the biofuels movement, that would sound absurd. Given that many of the global poor are facing famine in 2008, when oil is still quite plentiful, is it not clear the foundation we are building? The truth is that we have a choice between a substantial change in our lifestyle or a global war between rich and poor of monumental scale. Anyone who believes we can fight such a war in a nice, civil, democratic society knows little about history.

It is humiliating, it is offensive, and we do not want to see it: we do not want to admit that our democratic consumer society is not the glorious invention of great minds impervious to the pressures of history. We have no more conscious awareness of the greater processes of cultural change than did the members of past civilizations. This is the real problem that we face. Simply repairing the problem of ecological sustainability, from a technological standpoint, has been solved many times over.

It would be simple indeed to feed and house our citizens with a tenth of the resources that we are currently using in the wealthy nations, if that were our goal. That is more than literary grandstanding. I have built houses heated and powered with sunshine. I have studied the results, seen the failures and successes. Nationalistic environmentalism says we can create a solar suburbia, the green consumer society. That will come only at the price of murder on a global scale to finance our consumption.

The reality is that if we undertake to choose how we live, to purposefully change the structure of our society so that we are not living alone in large houses, not commuting to work, then the technological side of sustainability is very simple indeed. I have built houses that use 90% less energy per inhabitant than the American average, and done so at very low expense. But they are not suburban tract homes. Far from it. They are urban and rural cooperatives. Cooperatively based societies, the kind in which most of humanity has always lived, can achieve high standards of living with a tenth of the resources that Americans currently use without any new technologies. If we are talking about global solutions, is it even possibly to apply expensive alternative energy systems on an individual or single-family basis on a global scale? The answer, very clearly, is no. Social design – how and where we choose to live – and cooperative use are far more important the new technological gadgets

The truth is that fossil fuel machines are well suited, from an economic perspective, to individual use. They are cheap up front, though their long-term running costs are high. Machines used by individuals are not used intensively, so the cheap up-front cost dominates consumers' concern. But for machines that are used more intensively, as when they are used cooperatively, the higher up-front costs of efficiency and alternative energy are more than offset by the savings resulting from intensity of use. What if each city block had a community laundry instead of every individual or small American family living in a large house with their own washer and dryer? You would not need to persuade people to do the right thing. The people who ran the community laundry would take the obvious path. They would install solar water heaters, and possibly other energy-saving technologies, because it was economically rewarding to do so. Regardless of law or ideology, simple economics would favor efficiency and alternative energy.

Solar water heating in a community laundry does not relate to biofuels directly, but the same logic applies. The real solution to the liquid fuel issue is not efficient cars or biofuel. It's design. The real solution is to live close enough to where you work and play so you do not have to drive. That kind of logic on a global scale will work. Biofuels will not, not without mass market murder as its companion.

The problem is that no one has an answer to the end of growth. The expansion of civil liberty has been built on economic growth. Every movement from Aryan Nationalist to Marxist has built movements based on telling their constituents they can face an ever-brighter future of industrial wealth. And now nationalistic environmentalism is assuming that growth is unstoppable and making deals with the devil.

The problem with nationalistic environmentalism, even beyond its potential for some very ugly political outcomes, is that it will not work even from an ecological perspective. Long after the current wave of industrial growth has come to an end, whatever the fallout may be, there will still be humans living on the Earth. Those humans will still face the problem of organizing themselves in a manner that does not serve to suppress social awareness. Biofuels and other “sustainable” technologies seek only to put a thin layer of green paint over a consumer society that is by the day growing more economically polarized. That polarized society will never be sustainable. A polarized society actively seeks to repress the social awareness of its citizens, to engage in endless witch hunts against communists, drug dealers, and terrorists of all sorts. It is a blind social system that cannot wisely adapt to the future.

The ecological problems we are facing seem so enormous that we feel compelled to look for shortcuts. Every thread of our political fabric is woven from expectations of growth. The end of growth is so inconceivable that we can’t imagine a response to it. The truth is that the answers are both nearly impossible and terribly easy.

The first solution is simply truth-telling. When those educated about the issues consistently hide the truth and tell the public what it wants to hear, we enter a never-never land where compromises get compromised and mass-marketed ecological niceties become the building blocks of ecofascism and biofueled mass murder. The truth is that our lifestyle is going to change, whether we like it or not. The only choice we get to make is whether we lead the curve or are led by it, whether we create history or are forced by history into circumstances we haven’t chosen.

The changes we need to make are difficult because getting large groups of people to do anything is difficult, and industrial civilization as a whole is currently in a state of collective psychosis in regards to growth. Almost every word uttered on the evening news assumes continued growth for years and decades to come. It is no wonder that so many people have so little understanding of the scale of change we need to undertake. The very fabric of our cultural reality has become divorced from the basic fact that the world on which we live is finite.

The necessary changes are easy because they do not demand a mass movement at first. Movements always start at the fringes. Wise policy at the top would be helpful. But it is not likely, and we do not need it. The process of economic localization, of building a sustainable and democratic society from the ground up is already being undertaken in many corners of the world, among the least privileged of people.

It is a near certainty that the dominant powers in the U.S. and Europe will shift politically to the right in the coming years as the oil belt tightens. That is the only way these privileged nations will be able to maintain their privilege. The same is true for the eastern powers as well. The struggles of the next few decades will be top to bottom, not east to west.

Instead of lying about the outcomes of the green capitalist economy, instead of putting the food of the world into the gas tanks of American SUVs, instead of telling American consumers they can rest easy on organic cotton linens for decades to come, should we not speak the truth? We are going to have to downscale our consumption and our economy drastically, or face a global war over resources, with all the political fallout that will bring.

We as citizens can localize our economies, develop more cooperative means of living and using resources, and live more rewarding lives in greater connection to the people around us. We do not need the president or Congress to give us permission. Our children are going to live cooperatively in a hundred years whether we like it or not. The choices we make now will determine whether they do so under conditions of peace and freedom, or under an ecofascist boot inciting unending war. The current trend of nationalistic environmentalism, with biofuel as its cutting edge, is leading us very much in the wrong direction.

An earlier version of this article appeared at Reality Sandwich.

NOTES

[1] Pimentel, David, Energy and Dollar Costs of Ethanol Production With Corn, M. King Hubbert Center, Petroleum Engineering Department, Colorado School of Mines, Golden CO 80401-1887 at hubbert.mines.edu/news/Pimentel_98-2.pdf

[2] Gardner, Gary, Shrinking Fields, Cropland Loss in a World of Eight Billion, Worldwatch Paper 131, Worldwatch Institute, Washington D.C., 1996, and Brown, Lester, World Watch Institute, The State of the World 1997, A Worldwatch Report on Progress Toward a Sustainable Society, W.W. Norton, New York, 1997

[3] http://www.monbiot.com/archives/2007/11/06/an-agricultural-crime-against...

[4] http://www.bloomberg.com/apps/news?pid=20601070&sid=a.FB89jDnZzs&refer=h...

[5] http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/07/cnoil1...

[6] http://www.theoildrum.com/node/2431

[7] Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change, Timothy Searchinger, Ralph Heimlich, R. A. Houghton, Fengxia Dong, Amani Elobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, and Tun-Hsiang Yu, Science 29 February 2008: 1238-1240. See also Land Clearing and the Biofuel Carbon Debt, Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, and Peter Hawthorne, Science 29 February 2008: 1235-1238. Published online 7 February 2008 [DOI: 10.1126/science.1152747] (in Science Express Reports)

[8] http://www.biodiesel.org/news/taxincentive/

[9] http://www.renewableenergyaccess.com/rea/news/story?id=29931

[10] http://www.nytimes.com/2008/01/15/business/15virgin.html

[11] http://europe.theoildrum.com/node/3551

[12] Hawken, Paul, and Lovins, Amory, and Lovins, Hunter L., Natural Capitalism, Creating the Next Industrial Revolution,Little Brown and Co., Boston, 1999, p.2. See also http://www.theoildrum.com/node/3702

[13] http://www.reuters.com/article/topNews/idUSWBT00888720080429

High Steel Prices: A Preview of Peak Oil I use the phrase “Crunch Time” to denote the period after Peak Oil during which oil prices are so high due to production shortfalls that the normal functioning of economic activity is curtailed. Not only are the poor - and eventually the middle class - kept from buying the oil products they need, but industry’s capacity to ameliorate the problem by making what is needed to free society from the grip of oil is also greatly slowed, thereby extending the Crunch Time.

Such necessary products fall in two categories. First are those consumers can use to free themselves of oil: cars, trucks, and trains that operate on electricity instead of gasoline or diesel. Second is the capital equipment needed to make both such consumer items and to obtain more oil and other energy sources. Steel is one of the inputs to those products. [break]

Are there just too many people in the world? This is a column I don't want to write. Its subject is ugly; it makes me instinctively recoil. I have chastised people who bring it up at environmentalist meetings. The people who talk about it obsessively have often been callous about human life, and consistently proved wrong throughout history. And yet... there is a grain of insight in what they say.

The subject is overpopulation. Is our planet over-stuffed with human beings? Are we breeding to excess? These questions are increasingly poking into public debate, and from odd directions. Phillip Mountbatten – husband of the British monarch Elizabeth Windsor – said in a documentary screened this week: "The food prices are going up, and everyone thinks it's to do with not enough food, but it's really [that there are] too many people. It's a little embarrassing for everybody, nobody knows how to handle it." He is not alone. A strange range of people have voiced the same sentiments over the past few months, from the Dalai Lama to Hu Jintao, from Conservative mayor Boris Johnson to Democratic Governor Bill Richardson.

Oil could reach $200 before demand gets hit LONDON (Reuters) - The price of oil could rise to $200 a barrel in the next two years before it starts to seriously hit demand, fund manager Tim Guinness said on Tuesday.

"I am increasingly comfortable with the analysis which says the oil price is going to have to go to $200 before demand is dampened enough," Guinness, who is the chief investment officer of Guinness Atkinson Funds, told Reuters in an interview.

The new realities of record oil Emerging economies are fighting soaring prices with subsidies and price controls. But are their methods part of the problem?

Is the world’s food system collapsing? The global food market fosters both scarcity and overconsumption, while imperilling the planet’s ability to produce food in the future.

Conspiracy Theory Climate-change litigation is heating up. Will the legal strategy that brought down Big Tobacco work against Big Oil?

Richard Heinberg: Oil and Politics On Tuesday, Senate Democrats introduced legislation that would halt a US arms sale to Saudi Arabia worth $1.4 billion. The implication is clear: no more war toys for the Saudis unless they agree to up their oil output.

The same day, the House approved a Senate plan to suspend oil deliveries to the Strategic Petroleum Reserve in hopes of diverting that oil to the market, thus lowering the pump price a tiny amount.

A week earlier, a handful of senators proposed a bill threatening a trade dispute with members of OPEC if the organization doesn't stop its "anti-competitive practices and illegal export quotas on oil."

It's understandable that our elected leaders would want to do something about the meteoric rise of gasoline, diesel and heating oil prices that are now bankrupting independent truckers and forcing many folks in colder states to choose between being able to stay warm and being able to drive to work. Yet, efforts like the ones just mentioned are based on a profound misperception of why oil prices are rising.

Richard Heinberg: Saying Goodbye to Air Travel The airline industry has no future. The same is true for airfreight. No air carrier has a viable plan to make a profit with oil at current prices—much less in years to come as the petroleum available to world markets dwindles rapidly.

That’s not to say that jetliners will disappear overnight, but rather that the cheap flights we’ve seen in the past will soon be fading memories. In a few years jet service will be available only to the wealthy, or to the government and military.

Oil production has peaked as demand soars In 1998, oil cost $10 per barrel and experts said the price would return to $5 per barrel, but it never happened. Many people believed we had huge oil fields that would never run dry, and that new fields would meet our growing demands. Ten years later, the evidence is beginning to align to tell a much different story -- one that we are just beginning to read.

I serve as a member of the Minnesota House of Representatives Energy Committee. This year our committee held hearings on "peak oil."

US will stop sending oil into strategic reserves WASHINGTON -- The Energy Department says it has canceled oil shipments into the Strategic Petroleum Reserve beginning in July when the current purchase contract expires.

In Colorado, an unlikely alliance against drilling Plans to open up a swath of wilderness are bringing hunters and environmentalists together – and reshaping state politics.

What Michael Pollan Hasn't Told You About Food As both obesity and hunger are on the rise, a new book shows why we shouldn't feel guilty about our food choices but angry with a corrupt food system.

Manufacturing a Food Crisis The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn-importing economy by "free market" policies promoted by the International Monetary Fund (IMF), the World Bank and Washington. The process began with the early 1980s debt crisis. One of the two largest developing-country debtors, Mexico was forced to beg for money from the Bank and IMF to service its debt to international commercial banks. The quid pro quo for a multibillion-dollar bailout was what a member of the World Bank executive board described as "unprecedented thoroughgoing interventionism" designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency.

Oil sets record near $128; pump price at high, too NEW YORK - Oil prices surged more than $3 Friday, shattering a previous record in a spike near $128 a barrel, as prices at the pump pushed to new highs of their own.

The gains come 10 days before the Memorial Day holiday, the traditional start of the peak U.S. summer driving season, suggesting that retail gas prices have further to rise.

Americans are now paying a national average of $3.787 a gallon for regular gasoline, up nearly a penny from the previous day, according to AAA and the Oil Price Information Service.

Diesel prices also have risen to record levels, meaning that even Americans who don't drive will likely face even higher prices on all sorts of goods because of increased shipping costs. A gallon of diesel now sells for $4.482 a gallon.

Light, sweet crude for June delivery rose as high as $127.82 a barrel on the New York Mercantile Exchange, before easing somewhat to trade up $2.64 to $126.76 . The contract settled at $124.12 Thursday.

Saudi Arabia Declines Bush Request to Supply More Oil (Bloomberg) -- Saudi Arabia, the world's largest oil exporter, rebuffed a call by U.S. President George W. Bush to pump more crude for a second time this year, saying it would only boost supplies to meet customer needs.

UBS Now Sees Oil Marching to $156 Yearly Average by 2012 Crude oil prices are set to steadily rise over the next four years and will take the earnings of major oil companies along for the ride, UBS told investors Thursday.

The firm now sees crude oil prices averaging $115 a barrel this year and reaching an average of $156 a barrel in 2012. This will benefit major oil companies including Chevron Corp. (CVX), which it upgraded to buy, as well as oil service and drilling companies, several at which UBS started coverage Thursday also with buy ratings.

Does not a doubling of oil prices need a fitting response? If the price of beans doubles, most shoppers at the local vegetable market will have no hesitation to switch to the cheaper green vegetable and will tell the vendor so in no uncertain terms. If the price of staples such as potato or onion doubles, they may be as unequivocal; nevertheless they will buy smaller quantities.

Vegetable market economics do not seem to apply that easily to crude oil. Over the past year the price of crude oil in the international market has doubled. This should have evoked either of two responses. One, consumers would have tried their best to reduce consumption or two, producers would have stepped up their production to cash in on rising prices. In this rapid run up in crude prices, neither has occurred in any significant sense. Petroleum products are demonstrating their price inelasticity.

Oil prices: Wall Street's game Big fund money is flowing into oil markets sending prices to levels never seen before. Is it profiteering or an essential way to ensure supply?

Time to convene a summit on oil The inexorable rise in the oil price, from below $20 to $126 in less than a decade, makes governments look powerless. But governments can ease the economic harm of a high oil price – if they act together. In order to do so they should put oil at the heart of the next Group of Eight summit, or even better, organise a wider summit to bring together industrialised countries, big emerging market oil consumers and large oil producers.

MMS Prepares for 2008 Hurricane Season In preparation for Hurricane Season 2008, which begins June 1, the U.S. Department of the Interior's Minerals Management Service (MMS) today discussed actions to reduce risk of severe damage to oil and gas infrastructure in the Gulf of Mexico in the event of hurricanes this season. Key goals of the preparations are to enhance the nation's energy security, provide environmental protection, and continue the emphasis on personnel safety.

The Food Crisis and Latin America 'Control the oil and you'll control the nations; control the food and you'll control the people.' -- Henry Kissinger (1970)

I've known that phrase from Kissinger for a good many years. I confess that until now I had not given it much importance. It is an absolute truth, almost an axiom, that could become a terrible reality.

Concern over small biomass option Small-scale biomass power plants can have a greater environmental impact than other renewables, a study says.

UK researchers found that although the facilities offered carbon savings, they produced more pollutants per unit of electricity than larger biomass plants.

They suggested the way the feedstock was transported produced proportionally more pollutants than larger sites.

Paul Roberts: Tapped Out In 2000 a Saudi oil geologist named Sadad I. Al Husseini made a startling discovery. Husseini, then head of exploration and production for the state-owned oil company, Saudi Aramco, had long been skeptical of the oil industry's upbeat forecasts for future production. Since the mid-1990s he had been studying data from the 250 or so major oil fields that produce most of the world's oil. He looked at how much crude remained in each one and how rapidly it was being depleted, then added all the new fields that oil companies hoped to bring on line in coming decades. When he tallied the numbers, Husseini says he realized that many oil experts "were either misreading the global reserves and oil-production data or obfuscating it."

Time Running Out for Energy in Mexico WASHINGTON -- Mexican Energy Secretary Georgina Kessel's warning to the Mexican Congress last week sounded ominous: If legislators did not approve reforms within the oil sector, the country would suffer a "severe energy crisis" within a decade.

That's probably an understatement.

Why investors are so worshipful of Old King Coal Oil attracts the anger and the ink, but coal, mined here in the U.S., has joined the club of rudimentary resources blessed by the energy crisis.

What we are paying up for is the dirtiest fossil fuel in the ground, infamous for wielding a heavy hand in the planet’s warming. In Beijing they wear surgical masks to ward off the soot from coal-fired plants, which then drifts across the Pacific to further foul the air over Los Angeles. That’s not all. Black lung disease, mercury and sulfur emissions and the ravaging of Appalachian mountaintops are part of the legacy that keeps our lights on.

Airline fuel cuts concern pilots WASHINGTON — Airlines have reduced the amount of spare fuel on airplanes in a money-saving effort that is raising concerns among some pilots and a government watchdog.

Gas costs push commuters to park and pedal More commuters are turning to bicycles today for national Bike-to-Work Day as gas prices continue to reach record highs.

"It's going to be the biggest yet," says Bill Nesper of the League of American Bicyclists, which promotes May as national Bike Month. "Our phone is ringing off the hook. We're getting lots of calls from around the country. People are doing this because of gas prices."

Oil Traders Draw Congress' Ire When it comes to high energy prices, OPEC is quickly losing its status as Public Enemy No. 1. Alongside Big Oil, where profits are fattening as gas prices rise, a new bogeyman has emerged: the oil speculator. With the stock market in retreat so far this year and the dollar crumbling, these investors have flooded the commodities markets in hopes of cashing in on rising prices [BusinessWeek.com, 1/17/07]. High oil prices are creating a ripple effect of inflation that's angering consumers; gasoline prices topped yet another new record on May 14, an average of $3.76 per gallon.

"GasHole" Movie Review The continued rise in prices of gasoline has the great majority of Americans brimming with frustration and anger. The makers of the documentary film "Gas Hole" have provided a movie that demands the attention of anyone who curses quietly under their breathe every time they pull into the gas station after looking to see what the price is now.

The Oil-Addiction Fallacy Watch any talking head, and when the subject comes to energy, one can expect to hear the mantra, Americans are “addicted” to oil, and especially “foreign oil.” This is repeated as though the repetition is proof that the premise is true.

Thus, American taxpayers are currently being forced to contribute billions of dollars – and will be dunned many billions more in the future – for a number of measures that supposedly will “secure” the United States’s energy use and supplies in the coming years. What’s more, the debate about whether or not these energy programs are even necessary is considered passé. The major question on energy today, unfortunately, is this: How much will government central planning replace relatively free markets in determining America’s energy future?

Wildlife populations 'plummeting' Between a quarter and a third of the world's wildlife has been lost since 1970, according to data compiled by the Zoological Society of London.

Populations of land-based species fell by 25%, marine by 28% and freshwater by 29%, it says.

The Peak Oil Crisis: Diesel The evidence is mounting that the U.S. might just encounter the first real crisis of the oil depletion age before the year is out.

The crisis at first will be one of spiraling prices for diesel and heating oil, followed by actual shortages here in the United States. In the last two weeks, the wholesale price of heating oil has moved up by nearly 70 cents a gallon and no end is in sight. Many observers are starting to note that what they call “a tight market for distillates” –- the industry’s term for diesel and heating oil – may be what is driving up the price of crude and consequently gasoline.

US-Saudi oil axis faces day of truth When President George Bush went to see Saudi Arabia's King Abdullah in January to plead for higher oil output, he was politely rebuffed.

The rematch today is likely to be a great deal more strained.

If the Saudis deny help once again, they risk incalculable damage to their strategic alliance with Washington. The price of crude has rocketed by over $30 a barrel since that last fruitless meeting, briefly touching the once unthinkable level of $127.

Bush To Prod Saudis Again On Oil Prices Anthony Cordesman, a security analyst for the Center for Strategic and International Studies, said Abdullah may produce something "simply because it's good manners," but nothing that would have a significant effect.

"U.S. influence over OPEC and Gulf oil production is diminished," he said. "It's not clear what the incentive is to Saudi Arabia. We can't deliver on (Mideast) peace. We can't deliver on arms transfers. We can't deliver on the Iraq that Saudi Arabia wants. We are raising problems in terms of Iran. And the reality is the market isn't being driven by us; it's being driven by China, by India, by rising Asian demand."

Who Really Controls the Oil Market? Does OPEC really control the crude markets? Instead of embarking on political rhetoric, Bush needs to comprehend the situation. The combined oil production by all 13 OPEC member countries averaged 31.87 million bpd in April, the OECD Energy watchdog International Energy Agency reported. As compared to the OPEC output, IEA believes the global oil product demand to be 86.8 million barrels of oil equivalent a day for 2008 - some 1.2 percent rise from 2007 levels. Thus OPEC has something like 37 percent of market share at the moment.

And this leads to another deduction. Non-OPEC producers today control 63 percent of the global crude markets. It thus remains unclear how the Saudis have any more power to control the skyrocketing prices than the Americans.

Why America Doesn't Need Foreign Oil The U.S. had reached peak oil long ago. The world resources are now reaching, if not already reached, peak oil. There's nothing more substantially new to drill that will fill the gap. Our economic way of life and security are in imminent danger.

The U.S., however, has coal reserves to last hundreds of years. We have advanced technology now that will enable us to process coal with much less pollution. We can get oil from coal. It will still be more expensive but the government can subsidize the cost and the money doesn't have to come from tax payers.

Australia: Opposition fails to deliver alternative to building fund The Greens, however, want less spent on roads and freeways, with Senator Christine Milne using the Greens budget reply to argue for increased investment in rail projects.

"No government that takes peak oil or climate change seriously would spend only five per cent as much on rail as on road funding in the coming year," she says.

Expert warns climate change will lead to 'barbarisation' Climate change will lead to a "fortress world" in which the rich lock themselves away in gated communities and the poor must fend for themselves in shattered environments, unless governments act quickly to curb greenhouse gas emissions, according to the vice-president of the Intergovernmental Panel on Climate Change (IPCC).

Oil price surges to record high above $127 LONDON (AFP) - The price of oil rocketed to a record high point of 127.43 dollars per barrel on Friday, as US President George W. Bush prepared to urge Saudi Arabia to pump more crude, analysts said.

New York's main oil futures contract, light sweet crude for June delivery, beat the previous all-time peak of 126.98 set on Tuesday owing to worries about tight supplies despite a downgrade to global oil demand growth for 2008.

Some see oil bubble; others see trouble The recent trajectory of oil prices — a fairly steady increase followed by a much more vertical rise — has a familiar look to it. Remember those charts of tech stocks and housing prices? It's hard not to wonder: Are oil prices forming the next big “bubble?"

U.S. says it will help Saudis protect oil RIYADH — The United States said on Friday it had agreed to co-operate to protect Saudi Arabia's oil and will help the world's top crude exporter to develop peaceful nuclear energy.

The White House announced the agreements as President George W. Bush flew into Saudi Arabia on Friday to renew his appeal for the kingdom to help lower record oil prices.

Keep stockpiling oil Legislation to halt deposits to the Strategic Petroleum Reserve may be the most popular initiative from Congress this year. But it's a bad economic bet, bad for national security and gives the American public the false impression that lawmakers are actually doing something about skyrocketing gasoline prices. President Bush should veto the bill -- even though Congress passed legislation by huge margins Tuesday and could actually override his veto.

"Hungry" Nigeria oil hijackers slash ransom demand PORT HARCOURT, Nigeria (Reuters) - Gunmen who hijacked a supply ship working for U.S. energy giant Chevron in Nigeria have drastically reduced their ransom demand to 5 million naira from 30 million naira, security sources said on Friday.

Nigeria pipeline burns for second day after deadly explosion LAGOS (AFP) - Nigerian firefighters battled Friday to put out flames pouring from a burst oil pipeline a day after a huge explosion that Red Cross officials said killed 100 people.

An excavator accidentally pierced the pipeline, creating a lake of petrol that ignited into a huge fireball which engulfed a local school, cars and shoppers in the Lagos suburb of Ijegun around midday on Thursday. The inferno raged through the night.

Oil industry beefing up storm plans The U.S. offshore oil and gas industry is much better prepared to deal with hurricanes than it was in 2005, when major storms whipped through the Gulf of Mexico, damaging many offshore operations, government and industry officials said Thursday.

Not only has the scientific knowledge improved about hurricane behavior in the Gulf, oil companies now are following new regulations designed to keep offshore facilities in place during even the biggest storms. Government and industry groups also have beefed up hurricane response measures, the officials said.

Biofuel bacteria wrecks engines Biofuel is wreaking havoc with car engines. Due to Government rules, all diesel sold in the UK must be blended with the eco-friendly fuel.

But what the authorities didn’t bank on was the filth inside filling station tanks. With no rules forcing forecourt owners to clean them, the reservoirs are rife with bacteria. And when they come into contact with the vegetable or wheat-based fuel, the result is oil clots, which clog up engines.

Duke Energy cutting off service more often this year The newspaper reported Friday that Duke disconnected 14 percent more North Carolina customers in the first four months of the year, compared with the same period in 2007. That's an average of more than 500 disconnections every working day among the company's 1.8 million customers.

Clean-air rules for national parks may be eased The Bush administration is on the verge of implementing new air quality rules that will make it easier to build power plants near national parks and wilderness areas, according to rank-and-file agency scientists and park managers who oppose the plan.

Peruvian 'Switzerland' melting under climate change LIMA (AFP) - Peru's Cordillera Blanca, a snow-topped northern mountain range sometimes called the "Peruvian Switzerland," is slowly disappearing because of climate change, a key issue on the table of a Latin America-EU summit being held in Lima this week.

Obesity contributes to global warming: study GENEVA (Reuters) - Obesity contributes to global warming, too.

Obese and overweight people require more fuel to transport them and the food they eat, and the problem will worsen as the population literally swells in size, a team at the London School of Hygiene & Tropical Medicine says.

This adds to food shortages and higher energy prices, the school's researchers Phil Edwards and Ian Roberts wrote in the journal Lancet on Friday.

'Nitrogen cascade' called threat to ecosystems - Studies cite compounds in fertilizers, fossil fuels with cascading effects WASHINGTON - While carbon dioxide has been getting lots of publicity in climate change, reactive forms of nitrogen are also building up in the environment, scientists warn in two new studies.

"The public does not yet know much about nitrogen, but in many ways it is as big an issue as carbon, and due to the interactions of nitrogen and carbon, makes the challenge of providing food and energy to the world's peoples without harming the global environment a tremendous challenge," University of Virginia environmental sciences professor James Galloway said in a statement.

Introduction

In my last post I suggested that over the next 5 years Australia’s ability to import oil will be severely constrained. We won’t be able to just switch suppliers, because that is what everybody will be trying to do – we need smarter solutions and they need to start now. In this post I look for the responses that we need to make.

There is no better group of people to answer this question than the TOD community. The calamity that we had warned of seems to be occurring, and the words "Peak Oil" now appear in mainstream media news articles on a regular basis. Our warning was heard late - probably too late for some - but it is being heard.

It is now time to turn our minds to defining solutions. This area has been approached by several TOD contributors (with valuable insights ranging from specific technical approaches to the more general ELP approach). I propose that we now need to organise and categorize the full range of actions needed. If we are going to call on politicians and business leaders to act, we need to define what actions are required. It is not enough to scare people - we need to provide a call to arms, not a call to panic.
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Obviously solutions will need to address political, social and economic issues. In addition solutions need to be framed within the context of the environmental problems that we face. Clearly the scope of this question is immense. But a start must be made, so here are some thought-starters:

The First Effects

If oil is constrained, what will be the effect in Australia?

In 2005 the US Department of Energy commissioned a study by the Oak Ridge National Laboratory to look specifically at the impact of high oil prices. In the conclusion this study finds that:

This analysis also confirms that the three components of oil dependence costs (wealth transfer, potential GDP loss, and macroeconomic adjustment costs) are approximately equal in size. Thus, focusing on the costs of oil price shocks alone and ignoring wealth transfer and the persisting effects of high oil prices on potential GDP losses would underestimate the true costs of oil dependence by about a factor of 3.

Constrained oil leads to higher oil prices, and high oil costs have three economic consequences:
1. Impact on GDP
2. Transfer of wealth from importing nations to exporting nations
3. Macroeconomic costs

The first pain that we feel will be economic pain, and it will be felt in those three areas.

The Next Effects

What comes after the economic impacts?

If the economic impact of high oil prices includes a transfer of wealth to the oil producing nations, then there will come a time when large, powerful importing nations will conclude that this transfer of wealth is not in their national interest – and that a military solution is a better option.

Although we are not an oil exporter, we are an energy exporter. Australia exports coal, natural gas and uranium. We have one of the highest ratios of energy resources per capita, (also arable land per capita, mineral resources, etc), so it might be wise for us to watch what happens to oil exporters, as our own situation may have some similarities at a later date.

What Are The Solutions Here in Australia?

There are those who tell me that we are doomed by the fact that, with a population rapidly approaching 7 billion, the Earth has already exceeded its carrying capacity. I have this answer: The population of Australia is only 21 million. Yes, we have a shortage of water and oil, but these shortages will only lead to certain disaster if we do nothing.

There are multiple areas where solutions must be found. Below is a list of broad areas that must be addressed and a few points about how to address them. I suspect that the list is far from complete and I have no doubt that the TOD readership is well equipped to add to this list.

Solutions: Technical.

Like it or not, we cannot transition to a renewable energy base in a day. Both non-renewable and renewable energy sources will be required for decades to come.

Environmental issues must be addressed. Power solutions that require large amounts of fresh water are just as crazy as water solutions that use large amounts of high-quality power (such as desalination), and neither can be entertained.

Overcoming the Constraint in Liquid Fuels

Above all, we must remember that this is a liquid fuel emergency. Liquid fuels such as petrol, and diesel are easily transported (no wires required) and very energy dense (45 kg of petrol will take a car about 500 km, while 45 kg of lithium batteries will only take it a fraction of that distance). These capabilities make liquid fuels hard to replace.

However technological solutions are already practicable:

- Battery/electric cars. Removing the requirement for liquid fuel by developing battery-powered cars is a partial answer as it gives us the capacity to move people and goods on short journeys to destinations outside of public transport routes. Some battery cars are already in limited production, and GM claims that it will be bringing out a large-production car (the Chevrolet Volt) in 2010. Hybrid cars and PHEVs also provide a partial solution. Although electric cars offer part of the solution, we will still need the capacity to move large loads for long distances.

- CNG vehicles. Australia has significant gas deposits. LNG and CNG are likely to be part of the Australian solution.

- Synthetic fuels. Producing liquid fuels from our gas and coal deposits (CTL and GTL) is another part of the likely solution, but there will be an environmental cost. We will need to find a way to soak up the CO2, and ways to address the other environmental issues.

- Solar power. Australia is richly endowed with sunlight. Solar Thermal and Photovoltaic (including thin film) technologies are both likely to be part of a solution. Solar generally delivers electricity, not a liquid fuel, but this energy can fill needs that would otherwise be provided by fossil fuels.

- Algae oil. Algae oil is one of my current crusades. In the geological past algae proved to be a great sink for CO2. Australia has enormous potential for growing algae to offset the CO2 produced by GTL and CTL processes. The oil can then be removed from the algae, leaving a significant amount of waste (around 70%) to be sequestered. Sequestering will probably be done by charring the waste (possibly by fast pyrolization) in a solar thermal furnace, then using the char as a soil enhancer.

Which solution do we need? None of the above solutions is a complete answer to the liquid fuel issue. We will need all of them.

Increase energy efficiency to cut energy dependence

Reducing power requirements also reduces water requirements. The quantity of water that is consumed by power generation is rarely appreciated. A single 60 watt bulb can consume nearly 1 liter of water of water per hour if left on.

Increasing energy efficiency will require more than just turning off the light switches. Whole new technologies may be required:

- Improving train infrastructure. There are existing lines that are currently unused. Restoring these lines offers a cost-effective approach to increasing transport efficiency. Unfortunately, this process will take decades, and there will never be a train to everywhere.

- Improved sea/water transport. Water transport (River and ocean) is extremely energy-efficient.

- Air transport by dirigibles is an old technology that is making a comeback. Dirigibles that look like giant wings is an emerging technology that shows great promise.

- Improvements in sail technology make local water transport even more attractive, sail powered river ferries are a possibility wherever winds are reliable.

- Sea transport powered by giant kites is a technology already being implemented

Solutions: Changing The Economic Paradigm

The current Fractional Reserve Banking system requires growth in order to supply the extra money required to service interest on debt. If energy is constrained and growth is not possible, an intolerable strain is placed on this system. A Steady-State economic system may need to be put in place. Once again, this is a big change – it may take time, and is likely to be politically unpalatable.

Solutions: Business

Business is already feeling the pinch, making this a difficult time to be proactive. However action is required. Goldman Sachs has been consistently right with oil price predictions and are now forecasting a “Price Super-spike” of $200/barrel. The events following that are hard to predict, but that there will be effects is not really in doubt. Businesses need to address the issues now, rather than wait for them to reach full impact. Now is not the time to be running lean inventories and a just-in-time supply chain. Agility and resilience will be the key to surviving the associated effects.

- Conduct an inventory to establish vulnerability to a liquid fuel shortfall. The most likely area will be transport. Is your business dependent on transport? To what extent are your staff dependent on transport? Are your business partners dependent on transport? Your supply and distribution?

- Develop redundancies and move to alternatives.
- Increase inventory to allow for supply interruptions
- Locate any single points of failure and assess the vulnerability
- Create scenarios. Workshop if necessary.
- Plan mitigation.

Can your staff work from home? Do you have IT Infrastructure in place to support a large number of staff working from home? Has your HR signed off on working from home as an OH&S option?

Solutions: Government/political.

Links to oil producers will be required. We need to remember that we are a food exporter at a time when a food crisis is emerging across the world. Most of the oil producers are food importers.

If they want our food, then our farmers need their oil.

It might seem that we can just choose one oil importing country and offer them food in exchange for their oil, but unfortunately, many of these countries are quite unstable. For this reason, it would be wise to diversify as much as possible, so that we are not dependent on one source.

Many of our current sources of oil have no requirement for our food, but there are a few logical targets. The logical targets are:

- Iraq. We already have a history of supplying food to Iraq. It might be time to create an explicit link between food and oil, perhaps introducing the concept of a “Most Favored Trading Partner” status, with associated discount wheat in return for guaranteed oil. Sadly, this country is not stable, reinforcing the need to diversify.

- Angola. Angola is not a traditional supplier of oil to Australia. However they have relatively new fields with expanding production. And they have a food problem. Sadly, this is another country with stability problems, so the need for diversification of supply is again underlined.

- The Philippines. This country is one of our current oil suppliers, and they have a current (acute) food problem. Now might be a good time to negotiate a long-term food for oil trade relationship.

- UAE. Another of our usual oil suppliers, UAE currently imports over $145 million/year worth of Australian wheat, meat, fruit, dairy and grains. Once again, it would be relatively easy to link oil with food.

There is one potential flaw in this plan. Several of the oil exporting nations know that food is a significant vulnerability, and they are seeking to address this problem by buying farmland in foreign nations. If this trend becomes widespread, then Australia’s leverage as a food producer would be significantly reduced. The amount of wealth available to Middle Eastern nations is significant. They could certainly buy enough farmland to guarantee food security if they prioritized this as a goal.

This makes negotiations with nations such as Angola and the Philippines even more important.

We also need to form alliances in order to minimize our profile as a resource-rich, sparsely-populated target. In a time when the world is recognizing the emergence of several new super-powers, it is hard to know how to achieve this, and it will undoubtedly require a delicate touch.

Military planning and procurement needs to be considered. If a price of $225/barrel for oil is assumed, what impact will this have?

The current trend towards large, heavy vehicles and the profligate use of fuel to support troops must be reversed. In some cases this may be as simple as replacing steel armour with composites (eg. replacing the steel in the Bushmaster armoured car with Kevlar composites), but in other cases it will require new strategies and tactics (more use of “light fighter” troops, more emphasis on air defense, rather than air support, etc).

Solutions: Environmental

The most pressing environmental problems in Australia include climate change, greenhouse Gas emissions and water scarcity.

Greenhouse gasses

Reducing emissions will not be enough. We need to remove CO2 from the atmosphere and we need to start now. Algae has already been mentioned as a promising way to achieve this goal.

Saving Water

Water is a problem here in Australia. The latest solution is desalination plants. However desalination uses so much power that it has been likened to “bottling electricity”.

If reducing our energy requirements and CO2 footprints is a priority, then we may have to face the reality of recycled water.

Desalination is one of the most glaring examples of solving a problem by making another problem worse, but it is certainly not the only one. The fact that we flush our sewage out into the ocean is another example that will leave future generations speechless in disbelief.

Solutions: Localization

Cheap oil made it possible to move goods immense distances at minimal cost. This allowed economies of scale to outcompete the advantages enjoyed by local producers. This trend will need to be unwound in some areas. In some cases localization of production may even devolve down to individual families.

Localization: A worked example.

“Victory Gardens” is a concept that emerged in response to the resource constraints that the government faced during WWII. Significant resources were freed up simply by removing the necessity to produce and distribute some of the more difficult-to-handle vegetables.

The key to success is to identify which vegetables save the most energy if grown at home, and which benefit more from the economies of scale offered by industrial agriculture. As a simple illustration of the difference, consider grains and leafy vegetables. Should we localize wheat growing? Or lettuce growing? Or both?

Harvesting a home-grown lettuce and preparing it for consumption consists of going out to the back yard, picking it, bringing it in, and washing it. A farm-grown lettuce, on the other hand, requires sophisticated and very energy-intensive processes just to transport it intact. The head of lettuce must be carefully packaged to minimize damage to leaves and then it must be transported rapidly, in temperature-controlled vehicles. Encouraging people to grow lettuce at home offers clear advantages. It is easy to grow, harvest and prepare.

However the reverse is true for grains such as wheat, rice or oats.

It is not very practical to grow your own wheat in an average backyard garden. The amount of land needed to grow enough wheat for a family will usually exceed the amount of land the family has available. In addition, wheat is hard to process. Harvesting, separating wheat from chaff, and grinding are all processes that benefit from economies of scale. But, unlike lettuce, once wheat has been grown and processed it is very easy to transport and store.

Clearly lettuce is a candidate for home-growing, but wheat benefits from the economies of scale offered by Industrial Agriculture.

The energy cost of producing and delivering food was the subject of a study that occurred after the first “oil shock” of 1973. A significant finding from this study was that massive inputs of energy are necessary to produce and deliver meat.

In addition to growing vegetables at home, if even a small percentage of the energy load associated with meat production could be avoided, the energy savings would be significant. There are obviously three strategies in approaching this goal:

1. Encourage people to eat less meat
2. Encourage people to eat less energy-intensive meat (i.e. move away from beef, to meats that require less energy, such as chicken)
3. Encourage people to go back to traditional practices such as keeping chickens, rabbits or similar animals in their back yard.

Localization: Generalizing the Principle

The example of lettuce and wheat was provided above, but this approach can be applied to all foodstuffs, and indeed all energy using activities. It is worth noting that this approach addresses two problems at once – it reduces CO2 emissions and energy requirements.

When considering if a given activity should be localized in response to energy constraint, the questions to be asked are:

- What resources and energy does a given activity need, and can this activity be further broken down (e.g. breaking energy consumption down by food type reveals that meat and vegetables may benefit from changes, but grains probably would not).

- Is there a need for this activity to be done and is the need a priority when compared to other needs?

- Can the need be met by completely different, more effective processes (e.g. moving some percentage of protein production away from cattle and towards the localized raising of smaller animals).

- If the current process is to continue, can it be done more effectively (by using less material, less energy, reusing or recycling of components, etc)?

- If the activity is heavily centralized then, given that we face an increasingly energy and carbon constrained environment, would it make sense to decentralize the activity?

Fostering Social Solutions at the Local Level

People’s behavior needs to change. In addition we need to deal with the social consequences of economic and environmental difficulties that we face.

We need to educate the public early and enlist them as part of the solution.

We need to encourage people to analyse energy usage and rationalize it. The personal use of energy must be viewed as a social issue. Activities such as walking or cycling to the train station must be viewed as a social obligation.

Local social units must be fostered at every level – for everything from carpooling to swapping seedlings and gardening tips.

Local task forces need to be encouraged. If correctly handled the costs should be minimal. Many people are almost evangelical about their hobbies, and would welcome the chance to set up localized groups that address issues such as:

- Vegetable gardening
- Bicycle building and maintenance
- Modifying your house to reduce energy needs
- Creating a no-dig garden bed
- Backyard permaculture

In general the local knowledge exists and the infrastructure exists. The only intervention needed is organizing and promoting the activities.

As part of a move to localization of production it may be necessary to encourage local councils to do an inventory of local strengths and weaknesses. Are there any goods and services that should be produced locally that are not? This will require identifying activities and deciding on an appropriate level of localization for each activity. For example, it might be appropriate to expect an electronic and computer repair capability at the local level, but it would be inappropriate to expect a computer production facility at the local level.

Local councils should also address related questions: Are there any locally produced goods or services that are vulnerable to a disruption in the supply chain? What would be the impact?

Many local areas have regular “Computer Swap Meets”, or similar organized markets. It would be wise to foster these events and try to broaden the base of locally-produced goods and services available. Doing this should reduce the strain on infrastructure at the wider level, by reducing the necessity to bring in these goods and services.

Summary

Our society has evolved into a "network of systems" and it now faces a corresponding network of problems. The danger is that our tightly-coupled, mutually-dependant society could suffer from a sudden, cascading collapse. This happened, to a limited extent, in the Russian collapse of a decade ago - but Russia's systems were loosely coupled with a lot of built-in resilience. Russia did not have the lean, "just in time" inventories and single-point-of-failure systems that we now depend on.

Our ability to meet the challenge will depend on our ability to do three things:

1. Decouple the dependencies in our system and build in resilience. Resilience has fallen out of favour, we currently favour "efficiency" instead, but there is a danger inherent in this efficiency. Just-in-time inventories and single points of failure offer great economic advantages when they work, but they are not the correct model for the turbulent times ahead.
2. Remodel our society and economy in line with the new situation
3. Solve the technical challenges (probably the easiest of the three to achieve)

Achieving this is not going to be easy. The problem permeates every level of our society, so it is time to take an inventory of the solutions – at every level of our society.

Abqaiq, an aging super giant Saudi Arabian oil field, has yielded over 11 billion barrels of oil since it was discovered in November of 1940. Its past provides us with the poster child for easy oil. The first well flowed at 9720 barrels per day, a far cry from today's land finds where multiple horizontal laterals are necessary to coax lesser quantities from stingier reservoirs. But Abqaiq's more recent past paints a more muddled picture, as efforts to extract the remaining oil have produced mixed results. More advanced recovery methods have been successfully employed in some parts of the field, but these have likewise revealed unexpected geological complexities which have in turn hindered recovery in other areas. Many of the new challenges encountered in Abqaiq are relevant to the future prospects for other fields, particularly Ghawar and Khurais. This article will evaluate the development status of the field using satellite imagery to identify recent drilling in correlation with several recent technical reports on new developments and strategies for maintaining production. [break]

"Wolde you bothe eate your cake, and have your cake?"

       John Heywood, 1536

Abqaiq is situated to the northeast of the Ghawar oil field and to the southwest of Dhahran and the headquarters of Saudi Aramco. It has been producing oil for over 60 years, and although there is still more oil to be had, it has recently become more proclaimed as a supposed harbinger of continued success by Saudi Aramco. The past and predicted future production from Abqaiq was revealed in a Nansen Saleri (formerly of Saudi Aramco) presentation at CERA Week in February 2007 shown below (click for larger version):

There are several features indicated in the above graphic, but of particular note are the Oil Initially In Place (OIIP) for the field (24.7 billion barrels), the marked decline in production since the mid-1990s, and the expected contribution from "Other" reservoirs for future production. The vast majority of Abqaiq oil has been produced from the Arab-D reservoir, an NE-trending anticline with an uplift on the southern end. Lesser amounts have been produced from the lower-lying Hanifa reservoir, separated from the Arab-D by over 300 feet of the Jubaila formation. As indicated, an increasing fraction of the total production is predicted to come from the Hanifa, starting from about 2006. But this is not a new aspiration: intensive efforts to tap the Hanifa began in the early 1990s and these have had, as is apparent from the data, minimal success. The idea was to perform an intensive waterflood of the lower reservoir, with a combination of horizontal injectors and producers (Oil & Gas Journal; Jun 21, 1993), but things clearly have not worked out as expected.

Typical of the spin on Abqaiq is this take by Saleri as reported in the WSJ Environmental Capital Blog:“Abqaiq became a renaissance story for Aramco,” he says, insisting that the field’s pressure remains strong and its water content is going down even after more than 60 years in production. Abqaiq “is doing fantastically,” Of course, part of the disconnect here is that "doing fantastically" means different things to different people. For a reservoir engineer (such as Saleri), this might mean keeping the water cut low and getting the highest possible recovery from the field. However, for a consumer of Saudi oil, the trend of decreasing production in this decade is not a promising development. As for a "renaissance", I suppose one could point to the surge in production in the late 1980s. But if we put this in context of overall Saudi production (below figure), it seems more likely that this increase resulted from a renewed desire to produce fully rather than a renewal of the field itself.

Much has been made of the decreased water cut (from 42% in 2004 to 32% in 2006, see SPE 110979: Technological Applications Redefining Mature Field Economic Limits). While this does improve the economics of keeping things going without needing new equipment for separating oil from water, it does not necessarily lead to more oil. Note the trend in the figure below (red=oil, blue=water).

The final arbiter, however, might the person counting the money. If we consider the revenue from the oil extracted from Abqaiq, in constant 2007 dollars, the picture improves tremendously:

Satellite images of Abqaiq presented herein, as well as recent technical reports and comments by Saleri and others, suggest that Saudi Aramco is still serious about keeping the oil flowing. About half of the Abqaiq OOIP has been produced to date. Their goal of another 20% will not come as easily as the previous 20%, and is certainly not a foregone conclusion that it will happen -- or happen at the rate that they expect. Using a satellite analysis as a backdrop, let's see how some of their recent efforts are doing.

Google Earth View of Abqaiq

As of this writing, Google Earth displays high resolution imagery covering the entire Abqaiq field dating to September 6, 2006. There are also low-resolution previews available, covering 2/3 of the field, which date to November 11, 2007. These will be used to identify additional work in the field subsequent to the 2006 date.

Taking Measurements

In the image at right, the outer and inner polygon overlays denote the original oil/water contacts (OOWC) for the Arab-D and Hanifa Reservoirs, respectively. These were determined using publications described herein in conjunction with actual well locations. Shown below are reservoir size estimations based on the measured areas and literature petrophysical parameters for Abqaiq.

The total OIIP calculated for Abqaiq (29.5 billion barrels) is somewhat high compared to the figure stated by Saudi Aramco (24.7), although there are many uncertainties in some of the assumptions. For one, no allowance was made in the above calculations for edge effects. This will tend to overestimate oil volumes for both reservoirs. Also, initial water saturation values might be different than those assumed; larger values will translate into less OIIP. The calculated distribution of oil between the various reservoirs and zones, however, is probably more accurate than the absolute numbers. Although the area covered by the Hanifa reservoir is considerably smaller than that by the Arab-D, the higher porosity and larger thickness of the Hanifa means that it has roughly 1/4 of the oil of the larger reservoir (if similar values for water saturations are assumed). Of course, in light of the tightness of the rock (1-2 mD), getting the oil out is the challenge (although the permeability in Hanifa is more determined by fractures). Furthermore, this challenge is more daunting because the reservoirs, despite being separated by hundreds of feet of impermeable rock, are not isolated from one another but rather connected through extended fractures. Indeed, they are the same oil. The problems that arise from this connection will be addressed shortly.

But First, Tee Time

Before checking out the wells, I will first identify the dark area located in the southwest part of the field in the image above. One surface feature of Abqaiq which is not found in Ghawar (or other more remote oil fields) is a residential area complete with a golf course (alas, not with grass). This is the Abqaiq compound, one of several housing facilities provided by Saudi Aramco for its employees. While this close location does have its benefits, there are also safety issues which do present constraints on oil field development.

Abqaiq Wells in 2006

Shown in the figure at right is the Abqaiq field as seen in the Sept. 2006 satellite image with all oil wells and well sites identified. Red and green placemarks indicate old and new wells respectively, blue indicates water injection wells, and green diamonds indicates drilling rigs. For part of the field, a resource is available for correlation of well locations. A paper by Paul Lawrence entitled Seismic attributes in the characterization of small-scale reservoir faults in Abqaiq Field (The Leading Edge; April 1998; v. 17; no. 4; p. 521-525) includes a map with locations of wells in the South Dome area. This well inventory, probably dating to 1996-1997, will be used later to identify drilling activity subsequent to that time. The published well spacing was found to be quite accurate.

A disparity in the number of wells between the northern and southern halves of the field (the "North Nose" and "South Dome", respectively) is clear. Some of this is due to the wells drilled into the Hanifa reservoir which is present only in the south. Also, the bottleneck in the middle of the field has probably constrained well placement there, given the desire to offset the producers from the peripheral injectors. But there is definitely drilling and/or redrilling occuring in the north, though the depleted state of the field has revealed some geologic differences between the north and the south, and these have led to the need for different approaches to maintain production levels.

Abqaiq in 1993

Now, let's step backwards and consider the state of the Abqaiq field in the early 1990s. The Oil & Gas Journal paper cited above provides data on the remaining oil thickness in the field as of 1993, and this data has been recreated and superimposed on the satellite imagery as shown at left. The color scheme indicates increasing oil layer thickness going from black to yellow. Note that, towards the middle of the South Dome, the oil thickness goes through a maximum and then reverses. This is due to the presence of a gas cap which resulted from the injection of gas into the crest of the Arab-D reservoir, for pressure maintenance purposes, from 1954 to 1978. The remaining oil is squeezed between the advancing waterflood and the gas cap, as is also occuring in the 'Ain Dar area of Ghawar. There is no similar gas cap in the North Nose.

Drilling 1996-2006: South Dome

Using the ca. 1996 well inventory from the Lawrence paper, wells drilled subsequently can be identified. Shown at left is a closeup view of the oil thickness map for the South Dome with the locations of the more recent oil wells indicated. Indeed, most of the subsequent wells have been drilled in the thickest oil layer, including some being developed in 2006. Relatively fewer have been drilled towards the center of the gas cap. Of course, this area is coincidental with the location (hundreds of feet lower, of course) of the Hanifa reservoir as shown by the inner black oval. Distinguishing between oil wells drilled into the two reservoirs based on the satellite imagery is rather problematic, but those drilled well within the gas cap area are most likely targeting the Hanifa.

Two drilling rigs are visible. The one in the lower left is drilling a new well (or, at least newer than 1996), whilst the other is a rework of a pre-2006 well. Eleven new well sites are identified in this part of Abqaiq. Most of these will probably produce oil, but this can usually only be discerned after pipelines are connected. The two located near the bottom of the image, however, are certainly water injectors.

South Dome Drilling in 2007

Using three low-resolution DigitalGlobe (preview) images dating to February 23rd and November (2nd and 20th) in 2007, additional well sites developed subsequent to 2006 are identified as distinct changes (localized color changes) from the high-resolution 2006 image. Tentative sites with no surface infrastructure in 2006 are identified as new wells, while activity at well sites existing in 2006 are identified as reworks. These are indicated in the figure at left as green and red placemarks respectively. Also shown again are the 1993 oil thickness contours and the perimeter of the lower-lying Hanifa reservoir (black oval). It is possible that some rework wells are actually new wells next to existing wells. As was the case in 2006, most wells are being drilled into either the thicker remaining oil layers in the Arab-D reservoir or into the Hanifa. Note that, because of the predominance of horizontal drilling, the actual oil target might be somewhat removed from the wellhead geographic location.

Flooding the Basement: Hanifa Water Injectors

As discussed in the O&GJ article cited above,a serious effort to produce oil from the Hanifa reservoir commenced in the early 1990s. The plan was to employ horizontal water injection wells placed peripherally around the Hanifa reservoir to enhance production from a combination of new horizontal and existing vertical wells drilled updip. A figure indicating the planned positions of wells was included in the article, but a position match of these with wells identified using Google Earth could not be made. Instead, it was found that Hanifa injectors could be identified directly, as shown in the figure at right, by tracing pipelines from other injectors and also by visual identification. A total of 14 wells feeding water into the Hanifa have been identified (most of which were not present in the 1996 Lawrence well inventory cited above). Water use for injection comes from three different sources. Seven injectors on the eastern side of the field draw water from the main trunklines which trasport seawater to Shedgum/Ghawar. On the northwest side, three wells inject produced water coming from a gas-oil separation plant. Finally, four wells are found to be stand-alone injectors, as described below.

Water Hazard

One interesting part of the injection system for Hanifa is the use of stand-alone water injector wells. The oil water contact (OWC) for the southwest part of the Hanifa field underlies a populated area, and there is some danger associated with having high pressure water pipelines crossing these areas. In addition, gravity-fed injection (used for the Arab-D injectors near the Aramco compound) was deemed unsuitable for Hanifa due to the poor flow characteristics. Instead, dual-function wells were employed which both withdraw water from an aquifer and then inject it into the target reservoir assisted by an electric pump (see PROC SPE ANNU TECH CONF EXHIB. Vol. PI, pp. 619-623. 2000). One of these wells is shown at right. It does seem odd that pressurized water would be considered more of a public health hazard than pressurized oil with hydrogen sulfide dissolved in it, but the GOSPs in Abqaiq take in oil at about 400 psi whereas the water is probably being injected at over 2000 psi.

The Coupled Reservoir Problem

Having more than one reservoir from which extract oil without having to leave the field you are in would seem to be a good thing. However, complications arise when the reservoirs are somehow linked. For Abqaiq, this linkage exists in the form of small fracture channels across several hundred feet of the Jubaila formation. This has been suspected for quite some time, as the pressure in the little-produced Hanifa seemed to track that in the Arab-D. It is theorized that a late-Cretatious upwelling, possibly due to salt diapirism, resulted in fracturing of the older Jurassic layers (Hanifa/Jubaila/Arab). This might have occured after oil had collected in the Hanifa such that the fractures then permitted oil to migrate into the Arab-D, although the exact sequence of geologic events is not easy to ascertain. In any event, the situation that developed is one in which a common (with respect to the vertical) Oil Water Contact existed in the two reservoirs prior to production. This is shown in the diagram below.

This represents the equilibrium case. As water is injected peripherially into one of the reservoirs, the restricted flow through the fractures will push the OWC of that reservoir past that of the second. This can lead to water inclusion in pockets in the second reservoir, potentially stranding oil. As oil is produced from Arab-D wells, reduced pressure near the wellbore can cause upward migration of Hanifa oil if fractures are in close proximity. The desire to avoid this scenario has likely constrained production from the Arab-D in recent years, especially so because of the presence of the central gas. These challenges have been described in the following 2007 SPE paper: Development of a Dual Media Full-Field Simulation Model to Optimize Injection/Production Strategy for Two Communicating Mature Carbonate Reservoirs. (SPE 105277)

Status of Hanifa Waterflood

One indication that the Hanifa waterflood has not been successful is the lack of significant production as reported by Saudi Aramco. Also, the 2006 SPE paper Smart Well Completion Uses Natural Reservoir Energy to Produce High-Water-Cut and Low_Productivity_index Well In Abqaiq Field (SPE 104227) details many of the difficulties, including inadequate pressure support by the peripheral injectors, due to the limited rock permeability, and low productivity and early watering for most wells. SPE 104227 also describes a single, well drilled at the field crest through the Arab-D gas cap into the Hanifa reservoir in 1998. This well could only be produced intermittantly as the pressure would decrease below the bubble point. Its output declined 50% from its starting rate by 1999, started producing water and decliend further, and was subjected to acid treatment in 2003. This bumped up production, but began decreasing degenerating rapidly again. In Dec. 1994, the well was worked over to employ gas lift technology to raise the oil out of the Hanifa, making use of the Arab-D gas cap. This has enabled stable production at about 2000 barrels/day with an equal amount of produced water. This is presented as a success story, although the long-term viability is uncertain and there are finite limits on how much gas pressure is available for this.

SPE 105277 also relates problems with uneven waterflooding of the Hanifa, with fractures allowing water to flow preferentially through numerous corridors towards the center. Coupled with the finding that fractures also account for 95% of the productivity from the Hanifa, placing horizontal wells as to avoid them has drawbacks. The solution has been to try to model behavior of the dual-reservoir system and adjust water injection rates accordingly while still trying to keep the Hanifa flood front even with that of the Arab-D. Many more producers were planned as of the writing of the paper.

Implications for Ghawar and Khurais

The dual-reservoir problem discussed above is directly relavent to the development of and production from the Khurais oil field in that the same geolog