Peak Shale Will Send Oil Prices Sky High

[BenFranklin'sSpectacles + 762]

On 2/29/2020 at 4:39 PM, 0R0 said:

I don't have an incentive. I reason through the process with what I do know and look at the projections from an engineering point of view. I go and look at conditions in the various segments related to known technology. I can't model unknown technology, just to predict that efficiencies are incurred over time. 

It is not difficult to go and check out the components of the supply chain that does exist and do a cursory analysis of how it scales. You can rest assured that the world will get scoured for minerals again and some new deposits will be found. But in the case of copper and energy materials, this would be a second time round so new finds will be fewer and most likely would be of lower quality and thus proportionally more expensive to produce and consume larger amounts of diesel. I can go and scale mining's share of energy consumption, and consider how far renewables will go to displace diesel. Since there had been an effort to do so in the mining industry for a long time, it is fairly easy to see where the process is getting stuck. Diesel presumably can be displaced by LNG for heavy equipment with only a minor weight penalty. But the transition takes time. 

Mine diesel consumption is scaled to the number of haul trucks (150 ton) for open surface mining as the excavator and other equipment that can't be electrified go. About 1 mil liters of diesel/yr per truck.  or 6500 oil Bbl/yr per truck, about 2/3 of the trucks are used to remove overburden to reach the ore at the start of mining operations, the tail end of the mine life uses 1/3 as many trucks. 5:1 overburden to ore is a "good" case, 10:1 is still considered good enough. The tonnage haul is scaled to the ore quality e.g. 3 PPM for a nice gold or PGM mine (that average includes ore grades from 1/4 of the average - the cutoff - upwards). About 2 mil tonnes/yr per truck. 6000 hauled tonnes per kg/(ppm concentration) or 22 BBl/kg/(ppm concentration).

Neodymium in existing known resource ore bodies are 28 ppm, for example. So you should expect 22/28 ~0.8 Bbl/kg.

For Tellurium you have 1.1 ppm so about 20 Bbl/kg if anyone bothered to do it, the one redeeming quality of Te is that it is a byproduct of copper refining. The FirstSolar mine and its neighbor Bambolla are 2500 ppm, but the normal leach extraction process is not applicable to it as it loses ALL of the Te in the ore. I don't know if they solved the problem for that. 

All of this is for rough estimates. 

A decent discussion is provided in this somewhat dated USGS report chapter for Tellurium. 

https://pubs.usgs.gov/pp/1802/r/pp1802r.pdf

Downhole mining can be electrified entirely but for the haulage at top hole. 

The compressed timescale you propose for transition does not allow for the time necessary to transition at the ground level, The industries can not apply equipment from the development stage for current production and expansion. Those new more renewable or cheaper to operate parts of the minescape will only be there 3-5 years ahead, by which time the compressed schedule requires you to be far ahead in scale of throughput, meaning that the new technologies will be excluded from the scale up phase of the process. Eliminate your politically driven time constraint and you have everything you are predicting. 

In many mining districts in Africa and S. America and SE Asia, the diesel tanker trucks are routinely stolen or hijacked, so anything that saves on diesel is pure bliss to miners. Whatever else they do, reducing diesel use is top of mind. Hopefully, LNG pods on trucks would be a less enticing target for the thieves. 

Only new high grade discoveries will improve prospects, otherwise, incremental production is from LOWER GRADE ORES, and the more you need, the lower the grade you will have to mine. Typically, doubling the volume takes you down to 1/4 in ore grade (ppm concentration) relative to current average so quadruples the diesel demand. 

Mining of energy metals, other than copper is not quantified separately anywhere. You can go by production and ore grade by metal (see BP report below) and get a rough estimate. At the moment it is probably on the order of 1-2% if you include copper and PGMs. Practically all the non-REE energy materials are byproducts obtained by refining of copper gold nickel, Platinum and Palladium. So they have no metric of their own. 

However, if you are talking about forcing consumption rates up then you are talking about producing a copper glut, a gold glut and a PGM glut and $200 Te, $3000 Ir etc. and the industries using lower grade ores. Since you are increasing demand by a factor of 10 from current levels, then expect a 50 fold increase in ore and overburden volumes (I am giving you a 50% discount) and you have 20-30% potential increase in oil demand. It could be much less, and it could be much more. I don't have the time to do the data gathering of individual projects - not that it is available for most projects, as the 60% that is related to China owned strategic minerals don't provide any information at all. 

 

You might find this useful

https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report.pdf

I'm having an exceptionally busy week, but I'll try to return to this later.