SMART Letter #66
Oil Literacy
January 16, 2002
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SMART Letter #66 -- January 16, 2002
Copyright 2002 by David S. Isenberg
isen.com -- "Enran"
isen@isen.com -- http://isen.com/ -- 1-888-isen-com
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CONTENTS
> Hubbert's Peak: A Guide to Oil Literacy
> Advt: Seminar on Network Reliability & September 11
> Opera: An Alternative Web Browser
> Quote of Note -- U.S. Representative John Dingell
> Privacy as Competitive Advantage
> Erratum, Apologia, Antidisembarrassmentarianism
> Conference on my Calendar
> Copyright Notice, Administrivia
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HUBBERT'S PEAK: A GUIDE TO OIL LITERACY
by David S. Isenberg
If you like to think about infrastructure, _Hubbert's_Peak_
(by Kenneth S. Deffeyes, Princeton University Press, 2001)
is an important book. If you're an investor, the book will
offer guiding perspective. If you appreciate the
relationship between telecom and energy, and you'd like the
world to stay out of the two-cans-and-a-string zone, the
concluding chapters of the book will bother you.
_Hubbert's_Peak_ is a short course in oil literacy and an
easy, enjoyable read. Oil, like telecom, is a critical
infrastructure of modern society. Like telecom, oil
technology makes a chunky gumbo when mixed with economics,
politics and business. Understanding oil is a prerequisite
to understanding how petrodollars and petropolitics swirl
around the world's power centers. But unlike telecom,
humans do not create the oil supply, and the oil supply is
not -- emphatically not -- doubling every 18 months.
The book is equal parts Okie and Ivy. To author Deffeyes,
oil is personal. He is the son of an Oklahoma oilman who,
"went to nine different grade schools in the first eight
grades", but found consistency each summer with an oil-
related job. Then he went to the Colorado School of Mines
with the family business in his heart, began his career at
Shell research and wound up as Professor of Geology at
Princeton. Despite Princeton, oil remained in Deffeyes'
blood. "As I drive by those smelly refineries on the New
Jersey Turnpike," Deffeyes writes, "I want to roll down my
windows and breathe deeply."
_Hubbert's_Peak_ is more than a memoir. It is a natural
history of oil. It begins with how oil is formed. Before
reading the book, I knew that oil came from organic matter.
Now I know something about how organic matter accumulates
in pools and how it gets buried to the depth of "the oil
window" a region between 7500 feet and 15,000 feet below
the surface of Earth, the place where temperature and
pressure are high enough to crack organic molecules, but
not so high that the molecules are cracked into such small
pieces that only natural gas results.
There are chapters on why and how discoverable oil deposits
form, how people find these pools and how oil drilling
works. As I was pulled along willingly by Deffeyes'
personal anecdotes, I learned about anticlines, salt domes
and angular unconformities. I learned about source rock,
reservoir rock and cap rock. I learned about porosity and
permeability. I learned about the 'downhole logging
instruments' invented by Pierre and Marcel Schlumberger,
about the drilling methods of Erle Halliburton, and about
the 'tricone' drill bit invented by Howard Hughes the
first. I learned about seismology, gas-liquid
chromatography and the study of local gravity variations.
I learned about the very first oil wells, drilled with
'spring poles', and I learned about pumping mud, how to
drill sideways and what happens in a 'blowout'. All of
these facts are basic to oil literacy, and Huppert's Peak
is a painless, effective short course.
But the book is more than that. Deffeyes not only looks
back, he also provides a prospectus for the future. The
book's namesake, M. King Hubbert, was another Shell
research geologist. For a time he was Deffeyes' mentor.
In the 1950s, Hubbert took a careful look at known U.S. oil
reserves, at the rate of production of these reserves and
at the discovery rate of new reserves. Hubbert then made a
couple of educated assumptions about statistical
distribution shapes, and he concluded that U.S. oil
production would peak in 1972 and decline thereafter. The
orthodox geological community, having projected a more
optimistic oil future, reacted with vilification and
denial. The actual year U.S. oil production peaked was
1970.
Deffeyes tuned up Hubbert's methodology and applied it to
world oil production. He looked at world reserves,
production rates, and discovery rates. A key principle
here is that oil discovery is not random. Big oil fields
are discovered sooner. Even if there is a huge
undiscovered oil field somewhere on Earth, it is possible
to estimate its size and its probability of discovery.
Deffeyes refined some of Hubbert's statistical assumptions.
He concludes that world oil production peaks in 2003. Then
he turned his attention to the question of when oil
production begins to decline -- his answer, a bit tongue-
in-cheek, is 2004.7. But he sternly warns, "There is
nothing plausible that could postpone the peak until 2009.
Get used to it."
Deffeyes is unequivocal -- his predictions are not
presented as scenarios. He reveals his findings as slow-
motion certainties of physical science guided by hard-core
estimation methods. He says, "This much is certain: no
initiative put in place starting today can have a
substantial effect on the peak production year. No Caspian
Sea exploration, no drilling in the South China Sea, no SUV
replacements, no renewable energy projects can be brought
on at a sufficient rate to avoid a bidding war for the
remaining oil."
Deffeyes characterizes the coming energy gap as a "bidding
war" but I fear he understates. In contrast to oil
production, world energy use 1999-2020 is expected to rise
66% (USA Today, 1/10/02). Where will this new energy come
from? Ominously, Deffeyes entreats, "Let's hope that the
war is waged with cash instead of with nuclear warheads."
_Hubbert's_Peak_ concludes with a chapter on the future of
fossil fuels and another on alternative energy. It is a
hard-nosed look -- after all, Deffeyes is an oilman, not an
environmentalist or a slow-growth advocate -- but it leaves
no cause for comfort. To those who believe in the
supremacy of market forces, who believe that more capital
for exploration will yield more oil, he reminds that the
1930s were lean depression years when capital was scarce,
but these years saw the largest increase in oil production
in history -- and, for that matter, for all time. He warns
that alternative energy schemes are too little too late --
that we will necessarily face a decline in our standard of
living. He proposes that nuclear energy is the strongest
future energy alternative, that it has a bum rap for being
so closely linked to nuclear terror, and that it deserves
re-examination and renewed efforts by scientists and
engineers.
I wish it weren't so. I wish Deffeyes had devoted more
than token attention to conservation, to efficiency, to
Buckminster Fuller's principle of 'doing more with less'.
But no matter what I wish, and no matter how hard the world
tries to deny or discredit Deffeyes' message,
_Hubbert's_Peak_ is due to arrive on Earth in 2003 -- next
year! After that, there will be less energy for our
telephones, our computers, our servers, our LANs, our
automobiles, our airplanes, our factories, and the heating
and cooling of the air that surrounds us. We will need to
get used to it. Fast.
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ADVT: NETWORK RELIABILITY & SEPTEMBER 11 -- A SEMINAR
by David S. Isenberg
SMART People Roderick Beck (see SMART Letter #20) and Andy
Snow (see SMART Letter #62) have put together a half-day
seminar that speaks to network reliability in the face of
disaster. Andy Snow, an Assistant Professor at Georgia
State, has been working with FCC reliability guru Whitey
Thayer to understand FCC outage data. The FCC has
collected years of ILEC mandatory outage reports (where
over 30,000 people lose service for over 30 minutes). Snow
has put together evidence that all over the PSTN there are
subtle and not-so-subtle single points of failure where
there shouldn't be, and he draws conclusions aimed at
network remediation and future network design.
Roderick Beck, formerly with AT&T's Office of the Chief
Economist and now independent, has crafted a detailed
analysis of what stayed up and what didn't on September 11,
and why. Beck's photos of dusty daylight shining into
Verizon's West Street (NYC) switching facility speak
loudly. Snow and Beck just presented their findings to a
major Asian PTT. They offer to present their seminar at
your company too. I'm telling you this because isen.com,
inc. is serving as agent for this seminar -- if you think
you'd like the Beck and Snow Show at your company, please
contact isen@isen.com.
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OPERA: AN ALTERNATIVE WEB BROWSER
by David S. Isenberg
I'm a mid-tech kinda guy; software diversity is a Sunday
religion for me. That is, I'm hooked on Windows98 because
I don't want to spend Wednesday evenings at the local Linux
user's group. But I use Eudora because it is easy to get,
easy to use, and it helps control Outlook-spread viruses.
On the other hand I tried Netscape 6, but it was bad -- so
bad that I became an exclusive user of Microsoft's Internet
Explorer -- until I discovered Opera.
Opera is available no-charge at (surprise) www.opera.com.
It installed glitch-free the first time under my Windows 98
system and ran glitch-free from the very first try. It
comes up fast, and operates fast. It has some cool
features, like a search window that is part of the
navigation bar, which defaults to Google, comes with a
bunch of popular search engine alternatives, and lets you
specify new search engines as you wish. As a bonus, one
set of Opera bookmarks automatically point to my previously
established Internet Explorer Favorites. You can operate
Opera with gestures (e.g., hold the right button and sweep
right-to-left to see the previous page) that become
addictive once learned. After a couple of weeks, I ponied
up the optional US$39.00 to become a registered Opera user.
Opera has other features I do not find on Netscape 4 or
Internet Explorer. It tells you how fast your page-snarf
is progressing in a window at the bottom of the screen. It
has a magnification function, so you can enlarge the entire
page -- much more useful than Internet Explorer's "text
size" function. It comes with a set of bookmarks, some of
which I never heard of before, that seem to be selected on
usefulness rather than business payola.
I still have not tried many of Opera's features. For
example, it comes with an email client that I haven't fired
up. And there are Opera clients for Linux, BeOS, Mac,
OS/2, etc.
On the downside, occasionally I find a page that Opera does
not render correctly that appears fine in Internet
Explorer. But all in all, I have found that my effort to
download, install and use Opera has been well repaid.
[isen.com, inc. and Opera have no business relationship.
The Opera folks have no knowledge of this review. I just
published it because I like their product. -- David I]
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QUOTE OF NOTE -- U.S. REPRESENTATIVE JOHN DINGELL (D, MI)
"They felt me up and down like a prize steer."
U.S. Representative John Dingell, age 75, co-author of the
Tauzin-Dingell War-on-Telecom-Competition Bill, upon being
strip-searched when his metal hip prosthesis triggered the
metal detector at Washington DC National Airport. Quoted
in Newsday, January 8, 2002. [I wonder how literal his
prize-steer analogy was -- they must have felt his large,
prominent bells. -- David I]
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PRIVACY AS COMPETITIVE ADVANTAGE
by David S. Isenberg
These days you can Find Out Anything About Anybody With
Your PC! Privacy, what's that? Back in 1997, AT&T floated
a draft privacy policy past some of its employees,
including me. I suggested that AT&T would attract
customers with a strong declaration that customer privacy
was absolute. It seemed patent to me that customers would
choose a company that pledges privacy in preference to
competitors that might use personal information
intrusively.
When I saw a recent EarthLink TV commercial, I had to laugh
-- and applaud. The commercial shows a man and a woman
flirting at a bar. In an intimate moment signified by
promising eye contact, the woman writes her telephone
number and gives it to him. The bartender says, "Hey, can
I have that number?" and the customer down the bar says,
"I'd like it too." The lucky guy with the phone number
says, "Sure, five bucks." The woman looks hurt and angry.
The announcer says, approximately, "If you're disgusted
with how other ISPs treat your personal information, try
EarthLink." Go EarthLink!
I am proud to declare that isen.com, inc. inc. has a small,
non-exclusive reciprocal business relationship with
EarthLink. (I'm their customer and they're my client.)
Notwithstanding, the paragraphs above have nothing to do
with that relationship -- I never discussed this story with
anybody at EarthLink. I trust that when my EarthLink
friends read this piece they will understand that I'm
sucking up sincerely.
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ERRATUM, APOLOGIA, ANTIDISEMBARRASSMENTARIANISM
by David S. Isenberg
In SMART Letter #65 I said, "The most important telecom
event in 2001 was that the Incumbent Local Exchange
Carriers lost lines." I was wrong. Not only was I wrong,
anybody reading it would have said, "Gaw! 'Most
important', my elbow. What an idiot." I'm embarrassed.
Undoubtedly I've lost credibility among my most perceptive
readers. A writer who edits his own work edits the writing
of a fool.
So what *was* the most important event of telecom in 2001?
It was this: I invested $100.00 in the stock market, mostly
in telecom services and technologies, and I lost $92.50.
Owa tafu liam. (Say this three times fast.)
The most important event *in*incumbent*telco-land* in 2001
was the loss of second lines. I'm standing by this one.
Scott Moritz was kinder to me (in Moritz Dispatch #91,
1/10/02) than I can be to myself. He said:
"Last year, for the first time in telephone history, there
were fewer local phone lines in operation than the year
before. Astute industry gadfly and former AT&T scientist
David Isenberg, of isen.com, calls it 'the most important
telecom event in 2001'.
"Hyperbole? Perhaps, but then Isenberg tends to see the big
picture rather clearly, while the rest of us muddle through
in the immediate haze. Sometimes it takes a guy like
Isenberg to confront us with the significance of what's
right below our noses."
I'm flattered, because if you think Moritz is a nice guy,
Chambers, Schacht, Armstrong, et al will disagree. But I'm
still blushing.
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CONFERENCE ON MY CALENDAR
April 8-11, 2002, Seattle. VON (Voice on the Net).
On April 10, at 9:35AM, I'll be leading a panel on
"Financing Disruption" that was inspired by SMART Letters
#64 and #65. The panel will feature CIBC analyst Stephen
Kamman, an extremely rare public appearance by Roxane
Googin, some other SMART People as I confirm their
participation, and yours truly. My bottom line is that
voice is a diminishingly tiny deal on The Stupid Network,
but it still accounts for a disproportionate share of
revenues. Come for the Googin-Kamman show, but stay to get
the latest on SIP, the technology that will disrupt telco
voice whether or not we get Fiber-to-the-X. More info at
http://pulver.com/von.
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part of it, is permitted for non-commercial purposes,
provided that the two lines below are reproduced with it:
Copyright 2002 by David S. Isenberg
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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