[ExI] eroei forward for kennedy, p.e.

spike spike66 at att.net
Sun Dec 23 05:41:44 UTC 2012

Forwarded message for Robert G. Kennedy III.  The server was rejecting his
messages for some reason.  Working that.  spike

FW: please re-post (my first post to this list bounced)


I've been lurking here a little while since being invited.

Difficult to tell who originally posted what with different, but 
ablainey at aol.com is believed to have responded to "BillK" 
(pharos at gmail.com) about "EROI" (energy return on investment).

Having just proofed two of the chapters (the ones about EROI) in his 
latest textbook on energy by Frank Kreith's (who is one of the 
originators of the concept of EROI, I believe), I will weigh in on the 
matter of the EROI of the petroleum industry.

Now, before I go on, please stipulate one thing - that the revenue 
generated by an activity captures all the costs of that activity. 
Otherwise without a subsidy/bailout, you'd go out of business. This is 
an easy stipulation in an open market economy with stable currency, not 
so much in a command economy or a very corrupt one or an inflationary 
environment (a different form of theft). Nevertheless, please accept 
it for purposes of my favorite sport, back-o'-the-envelope estimation.

Back in the days of Spindletop gushers, crude oil was easy enough to 
get that one could expect 100:1 return on energy/effort (i.e. money) 
invested. BillK got that right.

Today in the Oil Patch, things are no longer so easy as portrayed by 
say, the Beverly Hillbillies ("one day Jed was out shooting at some 
food ... and up thru the ground came a bubblin' crude"). Mr BillK's 
quote of 20:1 for today's oil exploration, development, extraction/ 
production, refining, and transportation activities is way too high. 
Factoring in all this planet *ongoing* oil-related activity (i.e. 
regardless of incept date, and some of these like the Al Ghawar "King 
of Kings" field have been going a very long time), the overall EROI 
has not even been 10:1 for about a decade. It is sinking more.

Worse, according to the Economist a few months ago, the world's 
exploration, drilling and development activity is now a $750 billion 
per year industry just by itself! Note that exploration, drilling, and 
development by definition occur at the front end of *new* projects, 
that is, the energy/financial cost of these activities constitutes 
their *current* *marginal* cost of that *marginal* project, not the 
long-term cost averaged over all projects.
Compare then, these two figures:
the gross revenue from crude oil today, i.e. ~90 MBPD x ($75 to 
$100/bbl) x 365, or $2.5 to 3 trillion per year;
$750B per year today to find and develop marginal new resource.
The ratio of these two is between 3-to-1 and 4-to-1.

Yes, I know that the former figure is a lagging indicator, 
representing a sum over time and space, while the latter figure is a 
leading one, representing the marginal effort. Maybe apples and 
oranges, nevertheless they're both still fruit. So you can see we are 
looking at a problem of diminishing returns after barely a century of 

Professor Kreith wrote that the minimum acceptable figure of merit for 
a technical civilization was about 3. You can show why this is so with 
feedback diagrams. (You can't spend every erg society has looking for 
more energy, you have to eat, go to the doctor, raise kids, etc.) So 
Mr BillK is spot on.

So, for crude oil, we are fast approaching the "EROI cliff".

I find that significant. Anyone can repeat this calculation 
themselves, from open sources. Yet other than specialty textbooks, it 
is almost entirely unremarked on.

Here's the wiki on the subject of EROI: 
http://en.wikipedia.org/wiki/EROEI . The chart is roughly correct, but 
the value for PV is too low, should be more like 8-12. Nuclear's 
all-in EROI about equal to the figure of low teens which I derived. 
However, the chart does not depict trends. If it did, you'd see some 
first-derivative vectors for traditional energy resources pointing to 
the left, a few would be invisible b/c they're stationary, e.g. 
hydro's almost fully built out; and some such as PV would be pointing 
to the right, and the second derivative even more strongly so.

The chart does not display the useful life of the particular 
technologies, a critical assumption in developing EROI. Hydroelectric 
dams last far longer, with far less O&M, than wind turbines, say. 
Again for PV, results from the field suggest that "hard" mono- & 
polycrystalline PV might last a century in service, so an assumption 
of 25 years' economic lifetime would undercut PV's EROI by a factor of 



> Message: 4
> Date: Fri, 21 Dec 2012 09:34:03 -0500 (EST)
> From: ablainey at aol.com
> Yes essentially I am talking about EROEI. -----Original Message-----
> From: BillK <pharos at gmail.com>
>> I think what you are talking about is EROEI (energy return on 
>> energy invested).
>> Unfortunately this leads to the 'Energy Trap' that we are currently
>> experiencing.
>> Quote:
>> In its early days, oil frequently yielded an EROEI in excess of 100:1,
>> meaning that 1% or less of the energy contained in a barrel of oil had
>> to be expended to deliver that barrel of oil. Not a bad bargain. Oil
>> production today more typically has an EROEI around 20:1, while tar
>> sands and oil shale tend to be about 5:1 and 3:1, respectively.
>> -------
>> An EROEI reduction on this scale leads to economic recession.
>> And it is called a trap because our civilisation has to spend more
>> resources to get energy than we get back in return.

Robert G Kennedy III, PE

----- End forwarded message -----rwarded message -----

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