CCXG global forum, April 2024, Marta Torres-Gunfaus
2015 UPDATE: PEAK OIL
1. “Peak Oil”
The End of Cheap Oil
A Public Service Note
By
Harry Zanedin
Kuala Lumpur, Malaysia
E-mail: zanedin@gmail.com
Twitter: zanedin
Facebook: zanedin
First Published: 02-Jun-2009 | Updated: 31-Jan-2015
NO COPYRIGHT – PLEASE FEEL FREE TO PUBLISH AS WIDELY AS POSSIBLE
2. OIL & GAS INDUSTRY
STATUS
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3. OPEC Statement
The world lives on oil. Oil is the foundation for the plastics
and petrochemical industries. Oil is fundamental to the
welfare of the industrialised world and it is a major
component of the farming industry.
The price of oil is reflected in most of the things we do. It
impacts on the price of transport, the cost of goods and
services, and the availability of many products, including
food, water and shelter.
We would all suffer without steady supplies of oil at stable,
reasonable prices.
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9. EAST ASIA OIL SUPPLY CHAIN
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10. ENERGY PRICE IN HISTORY
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11. OIL & GAS INDUSTRY
FUTURE SCENARIOS
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12. The end of cheap oil
“The Age of Oil — 100-plus years of astonishing economic growth made possible by
cheap, abundant oil — could be ending without our really being aware of it. Oil is a
finite commodity. At some point even the vast reservoirs of Saudi Arabia will run dry.
But before that happens there will come a day when oil production ‘peaks,’ when
demand overtakes supply (and never looks back), resulting in large and possibly
catastrophic price increases that could make today's $60-a-barrel oil look like chump
change. Unless, of course, we begin to develop substitutes for oil. Or begin to live
more abstemiously. Or both. The concept of peak oil has not been widely written
about. But people are talking about it now. It deserves a careful look — largely
because it is almost certainly correct.”
Robert B. Semple, Jr., associate editor of the New York Times, March 1, 2006:
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13. PEAK OIL SCENARIO
Dr Colin Campbell 2005
To-day!
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16. WHAT IS PEAK OIL?
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17. “Peak Oil”
Peak Oil is also called
"Hubbert's Peak," named for
the Shell geologist Dr. Marion
King Hubbert.
In 1956, Hubbert accurately
predicted that US domestic oil
production would peak in 1970.
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18. Production Profile
‘Peak oil’ refers to the moment at
which global oil production will reach
its maximum level, and then go into
sustained decline.
This is expected to happen at the
‘midpoint of depletion’ – when roughly
half the oil that will ever be produced
has been consumed, and the other
half is still underground.
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20. Other “peaks”
This is a pattern which has
already been observed in over
60 of the world’s 98 oil
producing countries.
According to analysis by the oil
consultancy Energyfiles.com,
another 14 countries could
peak within the next decade.
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21. Decline in Supply
Oil production in a given country tends to go into decline at about the halfway point because of falling pressure in the
underground reservoirs, and because oil companies usually discover and exploit the largest oil fields first.
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22. Demand
Dick Cheney, in a 1999 speech while CEO of Halliburton, stated:
…there will be an average of 2% annual growth in global oil demand over the years ahead, along with, conservatively, a 3% natural decline
in production from existing reserves.
That means by 2010 we will need an additional 50 million barrels per day.
Estimates from the oil industry indicate that this drop in production has already begun.
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23. Public Statements
“ Underpinning the long-term price of oil is the fact that the world is consuming over 30
billion barrels a year and replacing only a fraction of this with new discoveries.”
Dr. James Schlesinger, former US Energy Secretary, 16 November 2005
“ Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer
keep up with demand.”
Jeroen van de Veer, CEO of Shell, 22 January 2008
“The easy, cheap oil is over. Peak oil is looming.”
Shokri Ghanem, Head of Libya’s National Oil Corporation, 8 June 2008
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24. IEA
“If by 2015 Iraqi production does not increase exponentially, we have a very big
problem, even if Saudi Arabia fulfils its promises...the gap between supply and
demand will widen significantly.”
Fatih Birol, Chief Economist, International Energy Agency, June 2007
“ We should not cling to crude down to the last drop – we should leave oil before it
leaves us. That means new approaches must be found soon....The really important
thing is that even though we are not yet running out of oil, we are running out of
time.”
Fatih Birol, Chief Economist, International Energy Agency, 2 March 2008
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26. Estimates of Oil Recovery
This graph shows estimates of world oil resources made since 1942 ranging from 600 billion to 3,896
billion barrels.
There’s an overall increasing trend of ultimate recovery estimates over time. This trend is primarily due
to increases in the quantity and quality of geological, geophysical, and reservoir engineering information,
and to the development of more rigorous estimation methodologies.
The largest world oil ultimate recovery estimates are the newly released USGS estimates. The USGS
95% probable value is 2,248 billion barrels (meaning there is a 19 out of 20 chance that the value will be
greater than 2,248 billion barrels). Similarly, the USGS says there is a 5% probability (1 in 20 chance)
that the value will exceed 3,896 billion barrels. The USGS mean estimate (the expected value) is 3,003
billion barrels.
There are a number of basins, especially in the Arctic and Antarctica, that were not included in the
USGS world resource assessment because they were judged unlikely to add proved reserves during the
next 30 years. Therefore, there is still some potential for even higher resource assessments.
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27. Where are we today?
Based on consensus it is likely that global oil production will ‘peak’ and go into
sustained decline within the next few years if it has not done so already.
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29. What to expect?
In addition to the challenge of climate change, we will soon have to contend with a rapidly
growing deficit in fuels for transport.
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30. Oil price spikes
This will cause big spikes in energy prices – including natural gas and electricity – with potentially devastating economic and social impacts.
“Global production of oil – including biofuels and so-called ‘nonconventional’ sources – has scarcely risen since early 2005, while the price of oil has soared from $10 per barrel
in 1998 to $140 per barrel in June 2008.” (U.S. Energy Information Administration, Argus Media.4)
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?
31. Alternatives?
Alternative fuels help but ….unless we change our lifestyles
these new technologies will come to naught.
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32. Lagging resource capacity
The ability of the oil and gas industry to combat depletion has been weakened by a serious shortage of
workers.
A recent report reveals that in the last 20 years the oil and gas industry has laid off more than 500,000
workers, and that it will take at least 10 years to rectify the problem through recruitment and training.
The report notes that “the oil and gas industry is confronted with a shortage of brawn and brains so
severe that it threatens to stall exploration and production growth around the world...the oil and gas
industry has stretched its resource base to breaking point.”
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33. UK example
As an example of a post peak oil producer, UK is now both a net importer of oil
(2006) and gas (2004).
The British gas supply rely critically on a massive increase in imports of liquefied
natural gas (LNG), delivered by tanker from North Africa and the Middle East.
However there is currently much more regasification capacity in consuming
countries than there is LNG production capacity, and limited supplies naturally flow
to where the price is highest.
Gas already provides 40% of UK’s electricity, and energy experts predict gas shortages will
cause power cuts by early in the next decade.
Even if power cuts can be avoided, because so much gas is burned in electricity generation
the price of electric power will rise in line with gas and oil.
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34. Economic Impact
When oil production starts to decline, the economic impact will be dramatic.
Economic growth is largely dependent upon a growing oil supply. The International Energy Agency has
forecast oil demand to expand at a rate of 1.3% annually over the period 2004-2030.
But after the peak, many forecasters expect global oil production to fall at 2-4% a year, meaning that the
deficit between the oil we want and the oil we get will expand by 3-5% a year. Within 10-15 years of the
onset of decline we could have just half the oil supply that projections say is required to sustain
economic growth.
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35. Multi-spikes!?
This is likely to lead to large spikes in the oil price – along with the price of gas and electricity, which are
closely linked on financial markets. This in turn could cause deep recessions.
The price of oil has already risen twelve-fold in a decade, and analysts Goldman Sachs – the first to
forecast $100 oil – now predict the price could spike to $150-$200 per barrel. ….
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36. 5 Principles for
Post Carbon Cities
1. Deal with transportation and land use now.
2. Tackle private energy consumption.
3. Attack the problems piece-by-piece and from many angles.
4. Plan for fundamental changes and make fundamental changes happen.
5. Build a sense of community.
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37. Required action
Local authorities need to plan for the likelihood of rising oil and energy
prices and shrinking fuel supplies.
First steps should include:
A detailed energy audit including transport and buildings.
Assess the impact of peak oil on the local economy, environment and social services
including food and agriculture, health and medicine, transport, education, waste, water
supply, communications, and energy use.
Develop an emergency plan to respond to sudden interruptions in oil supplies and/or sharply
rising oil prices, with a particular emphasis on ‘at risk’ communities.
Set specific targets for reducing oil and gas consumption in the local government, business
and household sectors, by a significant proportion within a defined period.
Encourage a major shift from private to public transport, cycling and walking, through
investment in public transport and expansion of existing programs such as cycle lanes and
road pricing.
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38. Required action
Reduce overall transport demand
Promote energy efficiency in new and existing buildings.
Promote the use of locally produced, non-fossil transport fuels such as biogas and
renewable electricity
Avoid infrastructure investments that are not viable in a low energy society.
Develop rigorous energy efficiency and energy
conservation programs for reduction of oil
dependency.
Support the growth of businesses that supply renewable and energy efficient
solutions.
Promote public energy awareness
Encourage local food production and processing; facilitate reduction of energy used
in refrigeration and transportation of food.
Adopt an oil depletion protocol and Post Carbon Cities’ ‘five principles’.
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39. Conclusions
Global oil production is at or near a peak and a permanent decline
will follow.
Life and societies will change forever: our transport systems, how we
produce food, where we work and live.
Local government policies need to be changed, if we are to have any
chance of mitigating the economic effects of peak oil.
The continued expansion of road and air infrastructure no longer
makes any sense.
Food supplies should be our primary concern.
In a world of constrained transport, food security will increasingly
depend upon local supply.
Past!
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40. What can we do …?
Actually a lot can be done …
“For the first time in history it is now possible to take
care of everybody at a higher standard of living than
any have ever known.
Only ten years ago the ‘more with less’ technology
reached the point where this could be done. All
humanity now has the option to become enduringly
successful.”
– R. Buckminster Fuller, 1980
http://www.bfi.org/our_programs/who_is_buckminster_fuller
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41. Last word …
The most fundamental change needed is in the way people think.
Local policy will be fundamental to the transition to a lean-energy future.
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