What connects the reservoir, the oil price and the heat pump fallacy?

Editor Neil McNaughton looks at the phenomenon of ‘drawdown.’ Reservoir pressure is drawn down by production as are local oil and gas prices. Drawdown also nails the fallacy of the heat pump as an energy source despite its support from the International Energy Agency!

When you produce oil (or gas) from a reservoir the pressure in the reservoir goes down. This phenomenon is called ‘drawdown.’ How much drawdown there is depends on lots of things, like the size and geometry of the reservoir and how much oil or gas is flowing into the well.

The way pressure goes down following a period of production is used to estimate how much oil is in the reservoir and how much the well is capable of delivering in the longer term. If you have a very productive well in a smallish reservoir then drawdown (pressure drop) will be immediate and large. A poor well in a large reservoir may not have any discernible effect on pressure at all.

Often, the results of such tests are kept rather secret. In the event of a good test result, a company may not want to attract too much interest before it grabs available acreage nearby or before the insiders have bought lots of shares (only kidding). A poor result may not be communicated before shares in the venture are dumped (there you go again!).

But that is not all that is ‘drawn down’ when you produce oil from a well. When you start producing oil from a well, the oil (or gas, especially gas) price goes down too! How much does the commodity price go down? It is just like reservoir pressure
—produce a lot of oil or gas from a restricted economic zone and the price will go down a lot. Produce a little from a large area and price will be relatively unaffected.

What is an economic ‘reservoir’ in this context? The USA’s gas market is a good example of such a restricted economic zone where gas production has ‘drawn down’ the market price to just over $3/mmbtu. In contrast, this month, CEO Christophe de Margerie revealed that Total’s evaluation of US shale gas was performed at $6.

In the US, oil production is experiencing the same drawdown—with a $15 gap between the US WTI price and the ‘international’ Brent benchmark. This is created by the restrictions of geography. Oil is in the middle of the country and the users are on the coasts. There was a great report in Bloomberg Business Week recently about how pipelines and storage are being re-jigged in Cushing, Oklahoma to adjust to the new situation.

Musing on drawdown made me think of my March 2008 editorial ‘Heat pumps, phlogiston and the world wide web’ which discussed heat pumps as an energy source. You may like to reread this if you want to understand what follows.

I was skeptical at the time as to the possibility of getting energy from ambient air, but stumped by the ‘heatpumpists’ argument that the cooling of the exterior unit demonstrated that calories were in fact being extracted for free. I described this at the time as a kind of Monty Hall problem—something of a puzzler. In fact it is a complete fallacy as I will now explain.

Think of the analogy of a regular pump being used to raise water from say, a lake. In the vicinity of the pump’s intake, the lake’s surface is drawn down. But rather than adding energy to the system, it actually costs more to raise the water the extra distance! The same reasoning explains the cooling of the outside unit of a heat pump where thermal ‘drawdown’ can be so great that it actually freezes up.

Notwithstanding the fallacy, heat pumps continue to be manufactured as sold as ‘green’ devices that will reduce your energy bill. Since I wrote my editorial I was surprised to find that these fanciful devices have backing from no less than the International Energy Agency (IEA), a unit of the OECD which has sponsored the Heat pump centre portal. Here you can read that although ‘heat flows naturally from a higher to a lower temperature,’ heat pumps are able to ‘force heat to flow in the other direction.’ This is achieved by inter alia ‘reversible air-to-air heat pumps.’ The mind boggles at such nonsense. But after all, the OECD/IEA is run, not by physicists, but by economists. Perhaps encouraging deployment of these curious devices is doing the world economy some good through some sort of ‘green’ economic stimulus.

Thinking about the air-air heat pumps (some are available as bolt-ons to your central heating boiler—and ‘extract’ calories from your cellar’s air!) made me wonder about other ‘geothermal’ systems like the serpentines that you can install under your lawn. Such systems, unlike air-air, are at least theoretically sound in that there is a heat source and a heat sink. They rely on a temperature difference between the air outside and the serpentine in the subsoil. That is OK for the theory, but what installers may fail to explain, and what purchasers may fail to understand is that such systems rely on an ‘impedance’ match between the source and sink. If you live on Vesuvius and have a zillion calories per second coming through the lawn, then you are going to need a very big fan and an extremely strong cold wind blowing constantly to make the system work.

Most times I imagine that such systems just chunter along producing, if not heat, then at least a warm feeling. I speak with conviction as a couple of years ago we had the outside of the house insulated. This has transformed the ugly old rendering into a Versailles-like façade.

But I am incapable of telling you whether it has saved us any money. To do so would require a search back through our accounts to find out how much we were spending on fuel over the last few years. And back through weather records to see how cold the winters were. And then through the fuel price tables to figure how many liters of fuel our bills represented.

I suspect that most folks can’t be bothered with such hard work and that, having spent a fortune on insulation, or, heaven forbid, a heat pump, are happy to tell themselves that it was a good investment and leave it at that. Perhaps that was the OECD’s idea.


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