Greatest Challenge

8/2/2019 Greatest Challenge

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Peak Oil: The Worlds Greatest Challenge

Presented by

Community SolutionsYellow Springs, Ohiowww.communitysolution.org
http://www.communitysolution.org/http://www.communitysolution.org/


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What Is Peak Oil?

The date an areas oil production reaches its maximum

Means that about half the oil has been produced Does not mean running out of oil Does mean a continuous decline in production

When oil half gone, the flow of oil begins to fall Not like a gas tank Oil in the ground is not in a pool but in tiny droplets Droplets move slowly through the earth due to pressure At halfway point pressure drops flow decreases


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Peak Oil Discoverer: Dr. King Hubbert1903-1989

Shell Oil Geologist/ Petroleum Scientist 1949 projected short historical oil period

Triggered by 1930 U.S. discovery peak

1956 predicted 1970 as U.S. Peak Oil year

Came as predicted

1969 predicted World Peak Oil year 2000 1970-80 demand decline delayed it


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Dr. Colin CampbellKing Hubbert 2006

Geologist/ Petroleum Scientist

Worked for most major oil companies

Founder, Association for Study of Peak Oil Wrote The Coming Oil Crisis in 1997

Estimates World Peak for regular oil in 2010

Published two other books Essence of Oil and Gas Depletion Oil Crisis


5/25

Matthew Simmons

Oil Investment Banker Backed many oil and gas drillingprojects

Advisor to President Bush

Challenges Saudi Reserve Estimates Thinks Saudi oil may soon peak

Author, Twilight in the Desert: TheComing Saudi Oil Shock and the WorldEconomy

Given 100s of talks to government andbusiness


6/25

ASPO: Association for the Study of Peak Oil

European scientists & oilgeologists from 12 countries

Formed to address worldleaders lack of concern forpeak oil

Five Peak Oil conferenceshave been held Sweden (2002) Paris (2003) Berlin (2004) Lisbon (2005) Pisa (2006)

Source of the most objectivedepletion data

ASPO meeting 2003 May 28, Paris, France


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ASPO View

Note plateau of conventional oil and U.S. Peak Heavy, deepwater, polar oil very expensive


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Oil Discovery/Production PeaksU.S.

1930U.S. lower 48 OilDiscovery Peak year

1970U.S. lower 48 OilProduction Peak year

Peak discovery/peakproduction lag time of 40years


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Oil Discovery/Production PeaksWorld

1965 the World OilDiscoveryPeak year

What do oil experts think Dr. Ken Deffeyes:

author Hubberts

Peak 2005 Dr. Colin Campbell:

founder of ASPO 2010 PFC Consulting 2015

The argument is not if

but when and howfast?

1 barrel of oil is found forevery 5 barrels consumed.

0

10

20

30

40

50

60

1930 1950 1970 1990 2010 2030 2050

Gb

0

10

20

30

40

50

60

Past

Future

Production


10/25

When Do We Run Out?The Reserves

We know the world discovery rate

We know the consumption rate is 5 times the discovery rate

We have a buffer the reserves Popular misleading viewWe have reserves for 40 years

Reserves estimates by different people with differentmethods

Published reserve information is inaccurate Political and financial reason exists to state high or low OPEC quotas are set at a % of reserves

Kuwaits suddenly increased in 1985 others followed


11/25

Middle East Oil Jump

No changes made to reserves since jump

Source: Oil and Gas Journal


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Misleading Reserves Recent Events

In 2002 Canada reserves increased from 4.8 Gb to 178 Gb

Defined tar sands as conventional oil But tar sands is not oilmust be mined and cooked

Jan. 12, 2004 Shell Oil reduced their reserves 20% Reduced three more times in 2004 Aug 25, 2004 Shell Oil fined $151,000,000 Feb. 3, 2005 Shell Oil reduced reserves for fifth time

Feb. 2004 Russia declared all oil data a state secret

Oil companies (and countries) hold reserve data confidential

Feb. 2005 G7 Meetingwe need to know! Saudi ArabiaWere not partners were suppliers

The shockerno one knows!!! Its all guesswork


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Why Not Pump Faster to Offset Declines?

Oil reservoirs can provide oil faster by injecting gas/liquids

Forcing the oil is harmful

Injections may limit ultimate recovery

Depletion occurs suddenly

Saudi Arabia is injecting 7 million barrels sea water daily

Thats why when about half the oil is gone production mustdecrease

This is a major concerncant predict depletion as well


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OilBlack Gold

Provides 40% of our primary energy 95% of all transportation fuel is from oil Huge part of life not just gas in the car

Fossil fuels are the basis of Industrial Agriculture Oil is feedstock for herbicides and pesticides

With natural gas fertilizers, there are 10 calories of fossil fuelinputs for each food calorie output

Raw material for many plastics

Basis of 300,000 manufactured products

Cheap oil makes globalization possible In U.S. average food product travels 1500 miles


15/25

Why Is Peak Oil So Important?

Core assumptions

Our economy runs on oil oil fuels our economy

We measure our material welfare (income) by the economy

To paraphrase our income is based on oil consumption

Economy grows when oil consumption increases

Economy shrinks when oil consumption decreases

Implies major societal change when demand exceeds supply

Oil prices will rise rapidly but shortages will still occur

Could have long-term recessions


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The Money Implications of Peaking

$40-$90+ oil lasted from early 1970s mid-1980s Oil shortfall was approximately 3% North Sea, Alaska & Mexico discoveries increased supply There are no new regions to explore now

Inflation Adjusted Monthly Crude Oil Prices 1946-Present


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World PopulationBillions in 2000 Years

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1

2

3

4

5

6

7

0 250 500 1000 1250 1500 1750 2000

Invention of the steam engine 1698 (Thomas Savery) First oil well 1859 Earliest major fossil fuel was coal


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World PopulationBillions 1900-2000

0

1

2

3

4

5

6

7

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

First half 1.5 Billion to 2.3 Billion 150% increase

Second half 2.5 billion to 6 Billion 240% increase

Spurt in growth correlates with switch from coal to oil


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World Oil UsageBillion Barrels/Year

0

5

10

15

20

25

30

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Popl.

Production vs. Population


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All Energy per Capita Projected Decline

Slide/cliff Declining fossil fuels meet growing population From 10.4 boe/c/yr to 3.3 boe/c/yr is 4.5% decline

3 % source decline, 1.5% population growth

Remember population and fuel in 2030 =~4x 1930Source: Richard C. Duncan, Ph.D. The Olduvai Theory Terminal Decline Imminent,The Social Contract Quarterly, Spring 2007.


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Government View 2005DOE Report

As peaking is approachedthe economic, social, and politicalcosts will be unprecedented.

peaking will be extremely complex, involve literally trillions ofdollars and require many years of intense effort.

Peakingwill cause protracted economic hardship in theUnited States and the world.

the problem of the peaking of world conventional oilproduction is unlike any yet faced by modern industrial society.

Executive Summary from Peaking of World Oil Production: Impacts,Mitigation & Risk Management, Dr. Robert Hirsch, February 2005


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Government View 2005Department of Army

Report

Uncertainty about future oil supply makes it important todevelop a strategy for addressing a peak and decline in oilproduction

Most studies estimate that oil production will peak sometimebetween now and 2040

An imminent peak and sharp decline in oil production couldhave severe consequences, including a worldwide recession

While the consequences of a peak would be felt globally, the

United States, as the largest consumer of oil and one of thenations most heavily dependent on oil for transportation, maybe particularly vulnerable


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Government View 2005GAO Report on

Crude Oil (GAO-07-283) March 29, 2007

Uncertainty about future oil supply makes it important todevelop a strategy for addressing a peak and decline in oilproduction

Most studies estimate that oil production will peak sometimebetween now and 2040

An imminent peak and sharp decline in oil production couldhave severe consequences, including a worldwide recession

While the consequences of a peak would be felt globally, the

United States, as the largest consumer of oil and one of thenations most heavily dependent on oil for transportation, maybe particularly vulnerable


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Recent Comments

President Bush: We have a serious problem: America isaddicted to oil.

Chevron Will You Join Us Ad: Oil production is in decline in 33of the 48 largest oil producing countries, yet energy demand isincreasing around the globe as economies grow and nationsdevelop.

Victor Khristenko, Russias energy minister: One can say withcertainty that the era of cheap hydrocarbons is over.

Chief economist of Chinas state oil company said that heexpects global oil production to peak at 94-100 mb/day during

the next five years.

Bill Clinton: We may be at a point of peak oil production. Youmay see $100 a barrel oil in the next two or three years.


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Peak Oil Summary

Despite technology improvements and major investments,world oil discovery has declined steadily for 40 years

Experts forecast a global oil peak in 515 years

Natural gas will follow a decade or so later

No alternatives are clearly evident

Dozens of options are being evaluated

Huge investments are being made

The essence of the problem There is no ready substitute Representative Roscoe Bartlett ASPO USA Nov. 2005

Greatest Challenge

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