Peak Oil and Bakhtiari's 4 Phases of Transition

IN A RECENT ARTICLE entitled "Nothing Like Business as Usual," published Aug. 11, 2006, in Whiskey & Gunpowder, I outlined the views on Peak Oil of a man named Ali Morteza Samsam Bakhtiari. Dr. Bakhtiari is a former senior energy expert who spent his long career, which started in 1971, employed by the National Iranian Oil Co. (NIOC) of Tehran, Iran. During the course of his employment with NIOC, he held many important positions of trust and responsibility.

Dr. Bakhtiari is now fully retired from NIOC, in accordance with a mandatory age requirement. He has no current official link with the company. Still, and fortunately for us in the Western world, Dr. Bakhtiari is an independent energy consultant who writes and speaks to a worldwide audience on the subject of oil depletion in general, and Peak Oil in particular. He is among the pioneers of the global "Peak Oil" theory.

My recent article on Dr. Bakhtiari discussed in general his views and recent comments on Peak Oil and worldwide oil depletion. I noted his predictions of oil costing in the range of $100-150 per barrel in the not-too-distant future. And I referred to what Dr. Bakhtiari characterizes as the "Four Phases of Transition" (which he labels T1, T2, T3, and T4) in a world of declining conventional oil output. I received much e-mail from readers asking me to amplify what Dr. Bakhtiari means by these latter terms. That is, what are the "Four Phases of Transition"?

I asked the good doctor this very question, and his reply was, "As for T1, T2, T3, and T4, they are still very vague concepts, but if you allow me a few days…I shall try to explain to you what I think about these four." And good to his word, within a few days, Dr. Bakhtiari was kind enough to forward some amplifying thoughts on the matter. Here is what he sent to me, to share with the readers of this newsletter.

Dr. Bakhtiari has a background in chemistry. He holds a B.Sc. and Ph.D. in chemical engineering, granted by the Swiss Federal Institute of Technology in Zurich, Switzerland. He has worked in industry and taught at a university level in the fields of both chemistry and chemical engineering for about four decades.

I asked Dr. Bakhtiari if it would be fair to say that he is using the term "Transitions" in a manner similar to what are known as "phase transitions" in physical chemistry? Of course, the analogy need not be an exact chemical description. But I asked him if that concept from chemistry would be a proper way of helping to explain his thinking process.

By way of definition, in physics and physical chemistry, a "phase transition" (or "phase change") is the transformation of a thermodynamic system from one phase to another. The distinguishing characteristic of a phase transition is an abrupt change in one or more physical properties; in particular, the heat capacity of a unit of matter coupled with a small change in a thermodynamic variable, such as the temperature.

Common examples of phase transitions are the solid-to-liquid transition (melting) and liquid-to-solid transition (freezing). Or consider the liquid-to-gas transition (boiling/evaporation) and gas-to-liquid transition (condensation). Or consider the solid-to-gas transition (sublimation) and gas-to-solid transition (deposition). In each case, a small change in the temperature of the system leads to a major transformation of its phase or state of matter.

The reason I asked the question of Dr. Bakhtiari, and used terms from physical chemistry, was his statement, "The major palpable difference between the four Ts is their respective gradient of oil output decline." My interpretation of that comment is that at each "transition" point where the gradient changes, we might view that as the "phase change" analogous to, say, frozen water melting, or hot water boiling.

And as for how much we do not know in a post-Peak Oil world, as Dr. Bakhtiari noted, that could be analogous to the phenomenon known as "flash evaporation." That is, if you raise the temperature of water to something well below its standard boiling point, but then rapidly change some other condition, such as lowering the atmospheric pressure above the water, the water "boils" at a lower temperature and lower pressure regime. This might be considered similar to some abrupt, unanticipated event reducing the supply of oil; for example, warfare, natural disaster, or unexpectedly rapid depletion and decline in a major oil-producing region of the world.

Dr. Bakhtiari's statement that "OPEC died in 2004" is an interesting viewpoint, in light of his idea about the nature of T2, when OPEC production will surpass non-OPEC production. To explain this further, let me refer back to February 2006, in the ASPO-USA newsletter, in which Dr. Bakhtiari wrote:

"It goes without saying that when assaying Middle Eastern oil reserves, one should tread carefully. Because, on the one hand, oil reserves' estimation is both a science and an art; and on the other hand, seen from the point of view of most Middle Eastern countries, oil reserves are more political than geological. Thus, nonscientific views come to prime over science and further enhance the various types of shades that have led to an overall opaque situation in the Middle East."

Dr. Bakhtiari wrote this in the context of a discussion in which he estimated total oil reserves in the Middle Eastern group of major oil-producing nations (Iran, Iraq, Kuwait, Saudi Arabia, and the United Arab Emirates) as about half, or even less, than what the respective national governments claim. Here is a table, prepared by Dr. Bakhtiari, from that article:

Remaining proved oil reserves [in billions of barrels]
for "Middle Eastern Five," according to the major assessors

Country	Oil & Gas Journal (1)	BP Statistical Review (2)	Colin Campbell (3)	Bakhtiari's Estimate (4)
Iran	132.5	132.5	69.0	35-45
Iraq	115.0	115.0	61.0	80-100
Kuwait	101.5	99.0	54.0	45-55
S. Arabia	264.3	262.7	159.0	120-140
UAE	97.7	97.8	44.0	40-50
TOTAL	711.0	707.0	387.0	320-390

In a remarkable comment following this table of information, Dr. Bakhtiari noted in the article that:

Coming from a former senior official of NIOC, this is an utterly astonishing comment with immense implications. It may explain much about the current Iranian government's view of its options for setting future industrial, economic, political, and military policy, although Dr. Bakhtiari certainly did not say this, and I do not want to put words in his mouth.

In February 2006, Dr. Bakhtiari further summarized his thinking on the subject of oil reserve estimates as follows:

In his message to me, Dr. Bakhtiari stated that the "gradation in decline (between T1, T2, T3, and T4) is a genuine blessing for those having to cope and adapt." Indeed, it is a blessing, but only if informed people and the industrial and political policymakers of the world will actually take Peak Oil as a serious matter and set policy accordingly.

In this regard, when it comes to his efforts in explaining Peak Oil to a worldwide audience, Dr. Bakhtiari is a prophet. His efforts, his writings, and his work embody the old saying that "Time takes no holiday." Simply allow me to end by expressing my deepest thanks to Dr. Bakhtiari for sharing his thoughts with me, and recalling the words of Dante Alighieri, who wrote in Purgatorio, Canto III, "It is the wisest who grieve most at the loss of time."

Byron W. King is a practicing attorney in Pittsburgh, Pennsylvania, with real clients and real law books on his shelves. After graduating from Harvard University more years ago than he cares to discuss, Byron worked as a geologist in the exploration and production division of a major international oil company. He has followed developments in the oil and gas industry for almost three decades. However, in the process of seeking more excitement than a man can safely obtain from flaring over-pressurized gas whipping out of a 21,000-foot well, Byron also served for many years in both the active and reserve components of the United States Navy.

While in the sea service, Byron logged more flight time in tactical jet aircraft than George W. Bush, as well as 127 more carrier landings than the recently-re-elected commander in chief. Among other assignments, Byron has served as a field historian with the Navy.

Byron looks at current events, economics, and politics through the lens of history. He brings to the table a unique perspective that incorporates many millions of years of the Earth’s geologic history, and blends its significance into the more recent, man-made kind of tale.