GEOG 6 – Resources and Energy
Professor: Dr. Jean-Paul Rodrigue
Topic 4 – Fossil Fuels
A – Energy Transitions
B – Coal
C – Petroleum
D – Natural Gas
Hofstra University, Department of Global Studies & Geography
A. ENERGY TRANSITIONS
1.
2.
3.
Factors Behind Energy Transitions
Peak Oil
Energy Markets
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
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
© Dr. Jean-Paul Rodrigue
1. Evolution of Energy Sources
Mid 21st
Century
Late 20th
Century
Animal
Biomass
Coal
Oil
Natural Gas
Nuclear
Hydrogen
Early 20th
Century
Mid 19th
Century
15th Century
0%
20%
40%
60%
80%
100%
© Dr. Jean-Paul Rodrigue
1. Total World Electricity Generation by Type of Fuel,
2002
7
2
16
40
16
Coal
Natural Gas
Nuclear
Hydro
Oil
Other
19
© Dr. Jean-Paul Rodrigue
1. Primary Energy Production by Source, United States,
1750-2009
45,000,000
40,000,000
35,000,000
Billion BTU
30,000,000
25,000,000
Coal
Biomass
Petroleum
Natural Gas
Hydroelectric
Nuclear
20,000,000
15,000,000
10,000,000
5,000,000
0
1750
1800
1850
1900
1950
2000
© Dr. Jean-Paul Rodrigue
1. Global Energy Systems Transition, (% of market)
100
Wood
Coal
80
Gases
Solids
60
Hydrogen
40
Liquids
20
0
Oil
Natural Gas
1850
1900
1950
2000
2050
2100
2150
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
2. World Annual Oil Production (1900-2009) and Peak
Oil (2010)
30
2010 Peak
Billions of barrels
25
Actual
20
15
10
5
0
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
3. The World’s 20 Largest Corporations by Market Value,
2009 ($US millions)
Total
BHP Billiton
Roche
Petrobas
BP
Nestle
IBM
China Construction Bank
Berkshire Hathaway
Chevron
Procter & Gamble
Royal Dutch Shell
Johnson & Johnson
AT&T
Microsoft
China Mobile
Industrial & Commerical Bank of…
Wal-Mart
PetroChina
Exxon Mobil
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
© Dr. Jean-Paul Rodrigue
The Breaking of Standard Oil (1908)
© Dr. Jean-Paul Rodrigue
60
20
0
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
3. West Texas Intermediate, Monthly Nominal Spot Oil
Price (1970-2010)
140
120
Third Oil Shock
100
80
Second Oil Shock
1
40
A
2
B
D
First Oil Shock
C
© Dr. Jean-Paul Rodrigue
3. Major Oil Price Fluctuations
Price Change Event
Price Change Time Frame
Cause
Nominal Price Change
From $4.31 to $10.11
(+134.5%)
From $15.85 to $39.50
Second Oil Shock
April 1979 to July 1980
(+149.2%)
From $30.81 to $11.57 (Oil counter shock (A)
November 1985 to July 1986
62.4%)
From $18.63 to $32.30
First Gulf War (1)
July 1990 to November 1990 Iraqi invasion of Kuwait
(+73.4%)
January 1997 to
Debt defaults / Non-USD currency From $25.17 to $11.28 (Asian Financial Crisis (B)
December1998
devaluations / Reduced demand 55.1%)
"Asian Demand Contagion" January 1999 to September
Rising demand / OPEC output
From $11.28 to $33.88
(2)
2000
cutbacks
(+200.3%)
August 2001 to December
From $27.47 to $19.33 ("September 11 Effect" (C)
Oversupply / American recession
2001
29.6%)
Peak oil / Rising demand /
From $32.15 to $133.95
Third Oil Shock
December 2003 to June 2008 Monetary debasement /
(+316.6%)
Speculation
Collapse of asset bubbles /
From $133.95 to $39.16 (Financial Crisis of 2008 (D) July 2008 to February 2009
Demand destruction / Global
70.7%; Dec 2008)
recession
First Oil Shock
October 1973 to March 1974
Yom Kippur War / OPEC oil
embargo
Iranian revolution (1978) / IranIraq war (1980)
OPEC oversupply / Lower
demand
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
B. COAL
1.
2.
3.
Characteristics
Coal Use
Challenges
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
1. Characteristics
0
Carbon content (%)
50
100
Lignite
Bituminous
Energy
Carbon
■ 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 5075% carbon content.
• Higher sulfur content and is less
fuel-efficient.
• Most abundant coal in the USA.
■ Lignite (18%)
Anthracite
0
1000
2000
Burned energy (1,000 calories per kg)
• Lowest grade of coal, with about
40% carbon content.
• Low energy content.
• Most sulfurous and most
polluting.
© Dr. Jean-Paul Rodrigue
1. Main Coal Regions of the United States
Lignite
Powder River Basin
(40%)
Bituminous
Bituminous
Lignite
© Dr. Jean-Paul Rodrigue
1. Global Coal Production, 2002 (M short tons)
760
Production
Not significant
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
2. Coal Consumption, 1965-2009 (in millions of tons of
oil equivalent)
3500
Rest of the world
India
China
USA
3000
2500
2000
1500
1000
500
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
0
© Dr. Jean-Paul Rodrigue
2. Coal as % of Energy Use and Electricity Generation,
1998
United States
Germany
Denmark
Slovakia
Ukraine
South Korea
Australia
Electricity (%)
Energy (%)
Czech Rep.
Kazakhstan
India
Poland
China
South Africa
0
20
40
60
80
100
© Dr. Jean-Paul Rodrigue
2. Coal Costs per Ton (USD), Selected Markets
160
140
120
Northwest Europe market price
Appalachian spot
Japan CIF
100
80
60
40
20
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
C. PETROLEUM
1.
2.
3.
The Economic Importance of Petroleum
Oil Reserves
The Geopolitics of Petroleum
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
1. Petroleum Production and Consumption, 2002 (M
barrels per day)
9,900
Production
Consumption
Not Included
© Dr. Jean-Paul Rodrigue
1. World Oil Consumption, 1965-2009 (1000s of barrels
per day)
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
North America
South and Central America
Europe & Eurasia
Middle East
Africa
Asia Pacific
© Dr. Jean-Paul Rodrigue
1. Factors of Oil Dependency
Occurrence
Localized large deposits (decades)
Transportability
Liquid that can be easily transported. Economies of scale
Energy content
High mass / energy released ratio
Reliability
Continuous supply; geopolitically unstable
Storability
Easily stored
Flexibility
Many uses (petrochemical industry; plastics)
Safety
Relatively safe; some risks (transport)
Environment
Little wastes, CO2 emissions
Price
Relatively low costs
© Dr. Jean-Paul Rodrigue
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(?).
© Dr. Jean-Paul Rodrigue
2. Proven Oil Reserves, 1980-2009 (thousand million
barrels)
1400
1200
1000
800
600
400
200
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
North America
Middle East
South and Central America
Africa
Europe & Eurasia
Asia Pacific
© Dr. Jean-Paul Rodrigue
2. Cost of Finding Oil, 1981-2006
9
Costs of finding oil ($ per barrel)
8
7
6
5
4
3
2
1
Domestic
Foreign
0
© Dr. Jean-Paul Rodrigue
2. The World’s Largest Oil Fields, 2005
Oil Field
Output (MBD)
% of national
output
Status
Ghawar (Saudi Arabia)
4.5
40%
Possibly declining
Cantarell (Mexico)
2.0 (1.7; 2007,
1.04; 2008)
60%
Declining
Burgan (Kuwait)
1.7
68%
Declining
DaQing (China)
1.0
40%
Possibly declining
© Dr. Jean-Paul Rodrigue
2. Oil Production of Some Declining Regions, 1973-2009
10,000
North Sea
9,000
Thousands of barrels per day
8,000
United States
Mexico
Cantarell Oil Field
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
© Dr. Jean-Paul Rodrigue
2. Major Crude Oil Reserves, 2009 (Thousand Million
Barrels)
Azerbaijan
Norway
Mexico
Algeria
Brazil
Angola
China
Qatar
US
Canada
Nigeria
Kazakhstan
Libya
Russian Federation
United Arab Emirates
Kuwait
Iraq
Iran
Venezuela
Saudi Arabia
7.0
7.1
11.7
12.2
12.9
13.5
14.8
26.8
28.4
33.2
37.2
39.8
44.3
74.2
97.8
101.5
115.0
137.6
172.3
264.6
0
50
100
150
200
250
300
© Dr. Jean-Paul Rodrigue
2. Estimated Oil Reserves, Selected OPEC Countries,
1980-1991 (billions of barrels)
260
240
220
200
180
160
140
120
100
80
60
40
20
0
Iran
Iraq
Kuwait
Saudi Arabia
Venezuela
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991
© Dr. Jean-Paul Rodrigue
2. Remaining Proven Oil Reserves for “Middle Eastern
Five” According to Major Assessors, 2005
UAE
S. Arabia
Bakhtiari's Estimate
Colin Campbell
Kuwait
BP Statistical Review
Oil & Gas Journal
Iraq
Iran
0
100
200
300
Billions of barrels
© Dr. Jean-Paul Rodrigue
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
© Dr. Jean-Paul Rodrigue
2. Export Land Theory
2.5
Production (-5% per year)
Consumption (+2.5% per year)
Millions of barrels per day
2.0
Exports
1.5
1.0
0.5
0.0
0
1
2
3
4
5
6
7
8
9
Time (years)
© Dr. Jean-Paul Rodrigue
2. Crude Oil Production and Consumption, China, 19802009 (in 1,000 of barrels per day)
10,000
9,000
8,000
Production
Consumption
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
© Dr. Jean-Paul Rodrigue
2. Petroleum Production, Consumption and Imports,
United States, 1949-2009
7
Millions of barrels
6
5
4
3
2
1
0
100
Production
Consumption
Imports
Real oil price
90
80
70
60
50
40
30
Dollars per barrel
8
20
10
0
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
3. The Geopolitics of Petroleum
■ 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 (19731994).
• 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.
© Dr. Jean-Paul Rodrigue
3. OPEC Members and Countries with more than 10
Billion Barrels of Oil Reserves
© Dr. Jean-Paul Rodrigue
3. Major Oil Flows and Chokepoints, 2005-6
© Dr. Jean-Paul Rodrigue
3. The Geopolitics of Petroleum
■ 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.
© Dr. Jean-Paul Rodrigue
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
Storage (in millions of barrels)
700
600
120
500
100
80
400
60
300
40
200
20
100
0
Fill Rate (in millions of barrels per year)
3. United States Strategic Petroleum Reserves, 19772009
160
140
0
-20
-40
© Dr. Jean-Paul Rodrigue
D. NATURAL GAS
1.
2.
Nature and Use
Availability and Distribution
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
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.
•
•
•
•
•
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue
2. Proved Reserves of Natural Gas, 2009
Australia
Iraq
Indonesia
Algeria
Nigeria
Venezuela
United Arab Emirates
US
Saudi Arabia
Turkmenistan
Qatar
Iran
Russian Federation
0
5
10
15
20
25
30
35
40
45
50
© Dr. Jean-Paul Rodrigue
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
© Dr. Jean-Paul Rodrigue
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.
© Dr. Jean-Paul Rodrigue