GEOG 6 – Resources and Energy Professor: Dr. Jean-Paul Rodrigue Hofstra University, Department of...

GEOG 6 – Resources and Energy

Professor: Dr. Jean-Paul Rodrigue

Hofstra University, Department of Global Studies & Geography





Topic 4 – Fossil Fuels

A – Energy TransitionsB – CoalC – PetroleumD – Natural Gas

© Dr. Jean-Paul Rodrigue© Dr. Jean-Paul Rodrigue© Dr. Jean-Paul Rodrigue© Dr. Jean-Paul Rodrigue

A. ENERGY TRANSITIONS

1. Factors Behind Energy Transitions2. Peak Oil3. Energy Markets


1. Factors Behind Energy Transitions

■ Energy transition• Shift from one dominant source of energy to another.

• Fossil fuels resources remain abundant.• Transition linked with three factors:• Demand:

• Growth in the amount of energy used incites finding more abundant energy sources.

• Price:• Function of availability and demand.• Higher prices incite finders alternative sources.

• Technology:• Which types of energy forms are harnessed, processed, and delivered to

the final consumers as well as where these activities take place.• Better technology enables access to a wider variety of energy sources.


1. Factors Behind Energy Transitions

■ Energy Quality• Difference in the ability of a unit of energy to produce goods and

services for people.• One joule of electricity is not the same than one joule of coal.

• Combination of physical, chemical, technical, economic, environmental and social attributes that are unique to each form of energy.


1. Determinants of Energy Quality

Energy Density Quantity of energy contained per unit mass or volume.

Power Density Rate of energy production per unit of the earth’s area. Usually expressed in watts per square meter (W/m2).

Energy Surplus Difference between energy spent for procurement (extraction, transformation and delivery) and energy provided.

Intermittency Time availability of the energy source.

Spatial distribution Spatial availability of the energy source


1. Evolution of Energy Sources

15th Century

Mid 19th Cen-tury

Early 20th Cen-tury

Late 20th Cen-tury

Mid 21st Cen-tury

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

AnimalBiomassCoalOilNatural GasNuclearHydrogen


1. Total World Electricity Generation by Type of Fuel, 2002

40

19

16

16

7 2

CoalNatural GasNuclearHydroOilOther


1. Primary Energy Production by Source, United States, 1750-2009

1750 1800 1850 1900 1950 20000

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

CoalBiomassPetroleumNatural GasHydroelectricNuclear

Billi

on B

TU


1. Global Energy Systems Transition, (% of market)

20001850 21502050 210019501900

100

80

60

40

20

0

Solids

Liquids

Gases

Wood Coal

Oil

Natural Gas

Hydrogen


2. Peak Oil

■ Hubbert’s peak• Geologist who predicted in the 1950s that oil production in the

United States would peak in the early 1970s:• US oil production peaked in 1973.

• Assumption of finite resource.• Production starts at zero. • Production then rises to a peak which can never be surpassed.• Once the peak has been passed, production declines until the

resource is depleted.• Peak was estimated to be around 2004-2008:

• One estimate placed it symbolically at Thanksgiving 2005.• Kuwait announced around Thanksgiving 2005 that the world’s second

largest oil field (Burgan) has reached its peak.• As of 2010, peak oil remains unconfirmed.


2. World Annual Oil Production (1900-2009) and Peak Oil (2010)

1900190119021903190419051906190719081909191019111912191319141915191619171918191919201921192219231924192519261927192819291930193119321933193419351936193719381939194019411942194319441945194619471948194919501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044204520462047204820492050205120522053205420552056205720582059206020612062206320642065206620672068206920702071207220732074207520762077207820792080208120822083208420852086208720882089209020912092209320942095209620972098209921000

5

10

15

20

25

30

2010 Peak

Actual

Bill

ions

of b

arre

ls


2. Peak Oil

■ The case for Peak Oil• Largest oil fields discovered more than 50 years ago.• The peak of oil discovery year was 1965.• Some large discoveries in the 1970s (Alaska, North Sea), but

none since then.• The last year when more oil was discovered than consumed was

1980.■ Tar sands

• Large supplies, particularly in Canada (Alberta).• A bottleneck in extraction and distribution.• Require a lot of energy to extract and transform into a usable

form.


3. Energy Markets

■ Importance• Used to be informal and locally oriented (e.g. wood).• The growth in the use of fossil fuels created large and lucrative

energy markets:• Became national and global.• Increasingly capital intensive.

• Contracts between suppliers and customers:• Price, quantity and time of delivery (location).

• Permitted the emergence of large multinational corporations.• Large financial markets:

• Financing activities such as exploration, exploitation, transportation and refining.


3. The World’s 20 Largest Corporations by Market Value, 2009 ($US millions)

Exxon Mobil

PetroChina

Wal-Mart

Industrial & Commerical Bank of China

China Mobile

Microsoft

AT&T

Johnson & Johnson

Royal Dutch Shell

Procter & Gamble

Chevron

Berkshire Hathaway

China Construction Bank

IBM

Nestle

BP

Petrobas

Roche

BHP Billiton

Total

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000


The Breaking of Standard Oil (1908)


3. West Texas Intermediate, Monthly Nominal Spot Oil Price (1970-2010)

Jan-

70

Jan-

71

Jan-

72

Jan-

73

Jan-

74

Jan-

75

Jan-

76

Jan-

77

Jan-

78

Jan-

79

Jan-

80

Jan-

81

Jan-

82

Jan-

83

Jan-

84

Jan-

85

Jan-

86

Jan-

87

Jan-

88

Jan-

89

Jan-

90

Jan-

91

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

0

20

40

60

80

100

120

140

First Oil Shock

Second Oil Shock

Third Oil Shock

A B

C

21

D


3. Major Oil Price Fluctuations

Price Change Event Price Change Time Frame Cause Nominal Price Change

First Oil Shock October 1973 to March 1974 Yom Kippur War / OPEC oil embargo

From $4.31 to $10.11 (+134.5%)

Second Oil Shock April 1979 to July 1980 Iranian revolution (1978) / Iran-Iraq war (1980)

From $15.85 to $39.50 (+149.2%)

Oil counter shock (A) November 1985 to July 1986 OPEC oversupply / Lower demand

From $30.81 to $11.57 (-62.4%)

First Gulf War (1) July 1990 to November 1990 Iraqi invasion of Kuwait From $18.63 to $32.30 (+73.4%)

Asian Financial Crisis (B) January 1997 to December1998

Debt defaults / Non-USD currency devaluations / Reduced demand

From $25.17 to $11.28 (-55.1%)

"Asian Demand Contagion" (2)

January 1999 to September 2000

Rising demand / OPEC output cutbacks

From $11.28 to $33.88 (+200.3%)

"September 11 Effect" (C) August 2001 to December 2001 Oversupply / American recession From $27.47 to $19.33 (-

29.6%)

Third Oil Shock December 2003 to June 2008Peak oil / Rising demand / Monetary debasement / Speculation

From $32.15 to $133.95 (+316.6%)

Financial Crisis of 2008 (D) July 2008 to February 2009Collapse of asset bubbles / Demand destruction / Global recession

From $133.95 to $39.16 (-70.7%; Dec 2008)


3. Energy Markets

■ Challenges to energy markets• Supply sources:

• Low diversity of energy sources. Foreign sources. Dependence on oil. Keeping natural resources for future use. Low oil prices instead of an energy policy.

• Affordability:• Economies of scale. Waste involves less profits. Market forces and profit

margins.• Environmental impacts:

• Lobbying against environmental legislation.


B. COAL

1. Characteristics2. Coal Use3. Challenges


1. Characteristics

■ Nature• Formed from decayed swamp plant matter that cannot

decompose in the low-oxygen underwater environment.• Coal was the major fuel of the early Industrial Revolution.• High correlation between the location of coal resources and early

industrial centers:• The Midlands of Britain.• Parts of Wales.• Pennsylvania.• Silesia (Poland).• German Ruhr Valley.

• Three grades of coal.


1. Characteristics

Anthracite

Bituminous

Lignite

0 500 1000 1500 2000

0 20 40 60 80 100

CarbonEnergy

Burned energy (1,000 calories per kg)

Carbon content

(%)

■ Anthracite (7%)• Highest grade; over 85% carbon.• Most efficient to burn.• Lowest sulfur content; the least

polluting.• The most exploited and most

rapidly depleted.■ Bituminous (75%)

• Medium grade coal, about 50-75% carbon content.

• Higher sulfur content and is less fuel-efficient.

• Most abundant coal in the USA.■ Lignite (18%)

• Lowest grade of coal, with about 40% carbon content.

• Low energy content.• Most sulfurous and most

polluting.


1. Main Coal Regions of the United States

Bituminous

Lignite

Lignite

Bituminous

Powder River Basin(40%)


1. Global Coal Production, 2002 (M short tons)

760

Production

Not significant


2. Coal Use

■ Coal use• Thermal coal (about 90% use):

• Used mainly in power stations to produce high pressure steam, which then drives turbines to generate electricity.

• Also used to fire cement and lime kilns.• Until the middle of the 20th Century used in steam engines (“Steam Coal”).

• Coking coal:• Specific type of metallurgical coal derived from bituminous coal.• Used as a source of carbon, for converting a metal ore to metal.• Removing the oxygen in the ore by forcing it to combine with the carbon in

the coal to form CO2.• Used for making iron in blast furnaces (without smoke).

• New redevelopment of the coal industry:• In view of rising energy prices.• “Clean Coal” technologies, less ashes but same CO2.


2. Coal Consumption, 1965-2009 (in millions of tons of oil equivalent)

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0

500

1000

1500

2000

2500

3000

3500Rest of the worldIndiaChinaUSA


2. Coal as % of Energy Use and Electricity Generation, 1998

South Africa

China

Poland

India

Kazakhstan

Czech Rep.

Australia

South Korea

Ukraine

Slovakia

Denmark

Germany

United States

0 10 20 30 40 50 60 70 80 90 100

Electricity (%)Energy (%)


2. Coal Costs per Ton (USD), Selected Markets

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

20

40

60

80

100

120

140

160

Northwest Europe market price

Appalachian spot

Japan CIF


3. Challenges

■ Advantages of coal use• Easily combustible.• Easy to store and transport.• Relatively inexpensive.• Wide availability of sources.• Technologically simpler to use for energy generation.

■ Disadvantages of coal use• Non-renewable resource.• Combustion by-products (e.g. SO2 and sooth).• Coal mining is generally environmentally damaging.


C. PETROLEUM

1. The Economic Importance of Petroleum2. Oil Reserves3. The Geopolitics of Petroleum


1. The Economic Importance of Petroleum

■ Nature• Formation of oil deposits (biotic perspective):

• Decay under pressure of billions of microscopic plants in sedimentary rocks.

• “Oil window”; 7,000 to 15,000 feet.• Created over the last 600 million years.

• A-biotic perspective.• Exploration of new sources of petroleum:

• Related to the geologic history of an area.• Located in sedimentary basins.• About 90% of all petroleum resources have been discovered.

• Production vs. consumption:• Geographical differences.• Contributed to the political problems linked with oil supply.


1. The Economic Importance of Petroleum

■ Use• Transportation:

• The share of transportation has increased in the total oil consumption.• Accounts for more the 55% of the oil used.• In the US, this share is 70%.• Limited possibility at substitution.

• Other uses (30%):• Lubricant.• Plastics.• Fertilizers.

• Choice of an energy source:• Depend on a number of utility factors.• Favoring the usage of fossil fuels, notably petroleum.


1. Petroleum Production and Consumption, 2002 (M barrels per day)

9,900

Production

Consumption

Not Included


1. World Oil Consumption, 1965-2009 (1000s of barrels per day)

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

North America South and Central America Europe & EurasiaMiddle East Africa Asia Pacific


1. Factors of Oil Dependency

Occurrence Localized large deposits (decades)Transportability Liquid that can be easily transported. Economies of scaleEnergy content High mass / energy released ratioReliability Continuous supply; geopolitically unstableStorability Easily storedFlexibility Many uses (petrochemical industry; plastics)Safety Relatively safe; some risks (transport)Environment Little wastes, CO2 emissionsPrice Relatively low costs


2. Oil Reserves

■ “Scarce Abundance”• The world oil production is currently running at capacity:

• Limited opportunities to expand production.• 20% of the world’s output comes from 14 fields.

• Ghawar:• The world’s largest oil field; been on production since 1951.• Produces approximately 4.5 million barrels of oil per day.• 55 to 60% of Saudi Arabia’s production.• Expected to decline sharply (use of water injection).• Could be 90% depleted.

• OPEC countries may have overstated their reserves:• Production quotas are based upon estimated reserves.• The larger the reserves, the more an OPEC country can export.• In the 1980s, most OPEC reserves doubled “on paper”.• Extraction continues while reserves remain the same(?).


2. Proven Oil Reserves, 1980-2009 (thousand million barrels)

1980198

1198

2198

3198

4198

5198

6198

7198

8198

9199

0199

1199

2199

3199

4199

5199

6199

7199

8199

9200

0200

1200

2200

3200

4200

5200

6200

7200

8200

90

200

400

600

800

1000

1200

1400

North America South and Central America Europe & EurasiaMiddle East Africa Asia Pacific


2. Cost of Finding Oil, 1981-2006

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

0

1

2

3

4

5

6

7

8

9

DomesticForeign

Cost

s of

find

ing

oil (

$ pe

r bar

rel)


2. The World’s Largest Oil Fields, 2005

Oil Field Output (MBD) % of national output

Status

Ghawar (Saudi Arabia) 4.5 40% Possibly decliningCantarell (Mexico) 2.0 (1.7; 2007,

1.04; 2008)60% Declining

Burgan (Kuwait) 1.7 68% Declining

DaQing (China) 1.0 40% Possibly declining


2. Oil Production of Some Declining Regions, 1973-2009

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

North Sea

United States

Mexico

Cantarell Oil Field

Thou

sand

s of

bar

rels

per

day


2. Major Crude Oil Reserves, 2009 (Thousand Million Barrels)

Saudi ArabiaVenezuela

IranIraq

KuwaitUnited Arab Emirates

Russian FederationLibya

KazakhstanNigeria

CanadaUS

QatarChina

AngolaBrazil

AlgeriaMexicoNorway

Azerbaijan

0 50 100 150 200 250 300

264.6

172.3

137.6

115.0

101.5

97.8

74.2

44.3

39.8

37.2

33.2

28.4

26.8

14.8

13.5

12.9

12.2

11.7

7.1

7.0


2. Estimated Oil Reserves, Selected OPEC Countries, 1980-1991 (billions of barrels)

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 19910

20406080

100120140160180200220240260

Iran

Iraq

Kuwait

Saudi Arabia

Venezuela


2. Remaining Proven Oil Reserves for “Middle Eastern Five” According to Major Assessors, 2005

Iran

Iraq

Kuwait

S. Arabia

UAE

0 50 100 150 200 250 300

Bakhtiari's Estimate

Colin Campbell

BP Statistical Review

Oil & Gas Journal

Billions of barrels


2. Global Oil Reserves, 2003

Less than 10 billion barrels

10 to 30 billion barrels

30 to 100 billion barrels

More than 100 billion barrels


2. Export Land Theory

0 1 2 3 4 5 6 7 8 90.0

0.5

1.0

1.5

2.0

2.5

Production (-5% per year)

Consumption (+2.5% per year)

Exports

Time (years)

Mill

ions

of b

arre

ls p

er d

ay


2. Crude Oil Production and Consumption, China, 1980-2009 (in 1,000 of barrels per day)

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

ProductionConsumption


2. Petroleum Production, Consumption and Imports, United States, 1949-2009

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

0

10

20

30

40

50

60

70

80

90

100ProductionConsumptionImportsReal oil price

Mill

ions

of b

arre

ls

Dol

lars

per

bar

rel


3. The Geopolitics of Petroleum

■ The Seven Sisters• Petroleum has for long been the object of geopolitical

confrontations.• The ability to fix the price and the production of oil was first

established in 1928 by the Achnacarry Agreements.• Between the “seven sisters” forming an oil oligopoly.• Major oil multinationals (Exxon, Texaco, British Petroleum, Shell, Gulf,

Standard Oil and Mobil Oil).• Invested massively in extraction infrastructures, especially in the Middle

East.• Several producing countries, most of them in the Third World,

wanted to have a more important share of the incomes of this lucrative market.



■ OPEC• Venezuela, Iran, Iraq, Saudi Arabia and Kuwait founded the

Organization of Petroleum Exporting Countries (OPEC) in 1960 at the Baghdad conference.

• Several other oil-producing nations joined thereafter the organization:• Qatar (1961), Indonesia (1962), Libya (1969), Algeria (1970), Nigeria

(1971), Ecuador (1973-1992, left the organization in order to avoid production quotas), The United Arab Emirates (1973) and Gabon (1973-1994).

• From its foundation until the beginning of the 1970s, OPEC was unable to increase oil prices.

• Production was very important in non-member countries.• Difficulty of OPEC members to agree on a common policy.


3. OPEC Members and Countries with more than 10 Billion Barrels of Oil Reserves


3. Major Oil Flows and Chokepoints, 2005-6



■ A perfect storm?• Booming oil prices after 2004.• Prior oil spikes linked with short lived geopolitical events.• The situation has changed at the beginning of the 21st century.• A production issue:

• Petroleum extraction appears to be running at capacity.• Demand, especially new consumers (China), is going up.

• A distribution issue:• Limited additional tanker and pipeline capacity.

• A refining issue:• Limited additional refining capacity.• No refineries were built in the US since 1974.


3. United States Strategic Petroleum Reserves, 1977-2009

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

100

200

300

400

500

600

700

-40

-20

0

20

40

60

80

100

120

140

160

Stor

age

(in m

illio

ns o

f bar

rels

)

Fill

Rat

e (in

mill

ions

of b

arre

ls p

er y

ear)


D. NATURAL GAS

1. Nature and Use2. Availability and Distribution


1. Nature and Use

■ Natural gas formation• Thermogenic: converted organic material into natural gas due to

high pressure.• Deeper window than oil.

• Biogenic: transformation by microorganisms.■ Composition

• Composed primarily of methane and other light hydrocarbons.• Mixture of 50 to 90% by volume of methane, propane and butane.• “Dry” and “wet” (methane content); “sweet” and “sour” (sulfur

content).• Usually found in association with oil:

• Formation of oil is likely to have natural gas as a by-product.• Often a layer over the petroleum.


1. Nature and Use

■ Use• Mostly used for energy generation.• Previously, it was often wasted - burned off. • It is now more frequently conserved and used.• Considered the cleanest fossil fuel to use.• The major problem is transporting natural gas, which requires

pipelines.• Gas turbine technology enables to use natural gas to produce

electricity more cheaply than using coal.


2. Availability and Distribution

■ Reserves• Substantial reserves likely to satisfy energy needs for the next

100 years.• High level of concentration:

• 45% of the world’s reserves are in Russia and Iran.• Regional concentration of gas resources is more diverse:

• As opposed to oil.• Only 36% of the reserves are in the Middle East.


2. Proved Reserves of Natural Gas, 2009

Russian Federation

Iran

Qatar

Turkmenistan

Saudi Arabia

US

United Arab Emirates

Venezuela

Nigeria

Algeria

Indonesia

Iraq

Australia

0 5 10 15 20 25 30 35 40 45 50


2. Global Natural Gas Reserves, 2003

Trillion Cubic Feet (2003)

Less than 10 trillion

10 to 50 trillion

50 to 100 trillion

100 to 200 trillion

More than 200 trillion


2. Natural Gas

■ Liquefied natural gas (LNG)• Growth of the global demand has created needs to move natural

gas over long distances.• Liquid form of natural gas; easier to transport.• Cryogenic process (-256oF): gas loses 610 times its volume.• Value chain:

• Extraction.• Liquefaction.• Shipping.• Storage and re-gasification.

GEOG 6 – Resources and Energy Professor: Dr. Jean-Paul Rodrigue Hofstra University, Department of...

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