Alternative Energy Sources
Bill Pyke
Hilbre Consulting Limited
October 2012
Delivered on Behalf of:
Limitations of Fossil Fuels
1
Outline
• Definitions
• Relative Energy Values
• Global Statistics Remaining Reserves
• Costs
• Environmental Impact
2
What are Fossil Fuels?
Energy sources created by the decomposition of
animal and plant life over millions of years and their
transformation into hydrocarbon energy sources
3
Types
Solid, Liquids and Gases
• Solids-coals and lignite, bitumen
• Liquids- crude oil, condensates
• Gases- natural gas and gas liquids
4
The Global Primary Energy Mix in 2011
Nuclear
5%
Hydro Renewable
2%
6%
Oil
33%
Coal
30%
Gas
24%
5
Source: BP Statistical Review of World Energy, June 2012
The Global Primary Energy Mix by 2035
New Policies Scenario
Hydro
3%
Renewable
13%
Oil
29%
Nuclear
8%
Coal
25%
6
Source: IEA, WEO November 2011
Gas
22%
Headlines
• Fossil Fuels are not sustainable!
Geopolitically insecure
Increasingly expensive
• The biggest challenges
Significant decarbonising energy by 2050 ??
Developing renewables on a commercially competitive basis
7
The Issues
• Fossil Fuels are depleting, limited and
unsustainable in the longer-term
• Limits of Fossil Fuel Reserves and Resources
• Limitations of Production Capabilities
• Cost Implications
• Global Distribution of Remaining Reserves
Energy Security
• Environmental Issues Fossil Fuels Emissions
8
Limitations
Non-renewable Resource
Crude oil is a non-renewable resource
Fossil fuels take millions of years to develop under extreme
conditions
Once they are gone, they can no longer be part of the energy mix
9
Limitations of Fossil Fuel Technologies
• In many areas technologies are becoming more costly
• Fossil fuels-oil, gas, coal used as the key source (>70%) in global
electrical power generation
• Emission of pollutants/ greenhouse gases
• Cost of Carbon Sequestration increases costs and prices
10
Fossil Fuel Supply;
Present & Future
• Oil
Increasing taxes to host countries-government take
Deepwater resources costs
Non-Conventional resources
Remote Locations
• Natural Gas
Remote locations
Investments required for new infrastructure
Transportation and tariff costs
• Coal
More imports from remote sources
Specification for environmental compliance favours high btu clean coals
with low sulphur, chlorides
11
Remaining Proven Global
Fossil Fuel Reserves, 2011
Fossil Fuel
% of
Proven Reserves
Global energy
consumption
109 tonnes
in 2009
Solid
Coal, Anthracite, Lignite
26%
847
34%
205
20%
188
Liquid
Crude Oil, Condensate
Natural Gas Liquids
Natural Gas
12
Sources: BP Statistical Review 2012 & IEA, 2011
Remaining Time
at Current Rates of Consumption
Fossil Fuel
Solid
Years
332
Coal, Anthracite, Lignite
Liquid (Conventional)
37
Crude Oil, Condensate
Natural Gas Liquids
Natural Gas (Conventional)
13
62
The Uneven Distribution Of Oil And Gas Reserves
W. Europe
North America
Crude oil
73
Natural
gas
323
Crude oil
12
Natural
gas
132
Central & South
America
Crude oil
= % of crude oil
reserves
Crude oil
125
Natural
gas
2,09
6
Middle East
Crude oil
Key
E. Europe and
Central Asia
Natural
gas
754
Natural gas 2,69
0
Asia
199
285
Africa
Crude oil
128
Natural gas
521
Crude oil
42
Natural
gas
574
= % of natural
gas reserves
14
Distribution of proven reserves of crude oil (billion barrels) and natural gas (trillion cubic feet), 2011
Source: BP Statistical Review of World Energy 2012
Crude Oil Resources and Reserves
• Proven Reserves Published
1,652 billion barrels
• Probable Reserves
1,300 billion barrels
• Possible Reserves
2,700 billion barrels
•
Total: 5,652 billion barrels
• Global consumption at 87mb/d
(32 billion barrels/year)
• Global consumption at 107 mb/d (39 billion barrels/year)
• 3P Global Reserves Life Index
15
145 years!
International Coal Transportation
16
Current and Future Costs of Fossil Fuel Supply
• The easy resources have been developed!
• Future resources will take additional costs to ensure
sustainable supply and satisfy supply growth against energy
demand
Environmental considerations add to cost burden
Costly technologies for more difficult primary energy sources
Increasing unit labour costs as living standards rise in developing
countries
17
Fossil Fuel Supply Costs:
Present & Future
• Oil
Increasing taxes to host countries-government take
Deepwater resources costs
Non-Conventional resources
Remote Locations
• Natural Gas
Remote locations
Investments required for new infrastructure
Transportation and tariff costs
• Coal
More imports from remote sources
Specification for environmental compliance favours high btu clean coals
with low sulphur, chlorides
18
Cash Needs To Find, Develop And Produce New Oil and Refined
Products
• The ‘easy’ oil has been found or depleted
• New reserves will be more capital intensive
• Higher proportion of CAPEX will be required to sustain existing (and
declining) production
• New oil likely to be lower viscosity, higher gravity and higher sulphur content
• Upstream Costs for Finding and Developing New Oil (2008-2030) have been
estimated at $17.6trillion*
• Downstream Costs (2008-2030) have been estimated at $6 trillion*
19
* Platts Capital Expenditure Forecast for Global Hydrocarbon Demands through 2030
L.G,Chom, October, 2007
Oil Industry Estimated Annual Capital Spend to 2030
Sources: IEA, Platts, 2007 (Nominal Costs)
1600
1400
1000
800
Downstream
Upstream
600
400
200
200
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
Annual CAPEX $billion
1200
Global Supply
Run-out without new investment
90
80
million barrels/day
70
60
50
Existing Non-OPEC
Existing OPEC
40
30
20
10
0
2006
2010
2015
2020
Years
21
2025
2030
Global Supply
Where Will New Oil Production Come From?
120
million barrels/day
100
80
Where is the ‘new’ oil coming from?
New
Existing Non-OPEC
Existing OPEC
60
40
20
0
2010
2015
2020
Years
22
2025
2030
Future Global Crude Oil Supply To Meet Demand
Oil production rises to 99mb/d by 2035
23
Source: IEA, World Energy Outlook, November, 2011
World Unconventional Liquids Production,
2005-2030 (million barrels per day oil equivalent)
24
Source: EIA , International Energy Outlook, 2007
New Sources of Crude Oil Supply
in this Decade
Country
Additional
production
Comments
Mmb/d
Iraq
+5.4
Field refurbishments, new
developments
Saudi Arabia
+4.0
Empty quarter, new developments
and discoveries
Brazil
+3.2
Santos basin
Kazakhstan
+1.8
Kashagan
Ghana
+ 2.0
Deepwater developments
Uganda
+1.0
New discoveries, developments
U.S Light, tight oil
+1.4
Bakken, Niobrara
TOTAL
25
+18.8
Source: IEA WEO, November 2011 and personal communications
Global Emissions
• 27 billion tonnes carbon released each year
• Emissions have increased at 2% per year
• In 2011 95% emissions due to fossil fuels
• Oil produces 40% more emissions per unit of energy
than gas, and coal 80%
26
26
Carbon Dioxide Levels
CO2 (ppm)
420
CO2 (ppm)
370
320
Muana Loa Readings
CO2 Levels Since 1958
370
350
330
310
40 30 20 10 0
270
220
Dome Concordia
170 600000
27
Vostok Ice Core
400000
200000
Time (YBP)
0
Carbon (109 metric tons)
Worldwide Carbon Emissions
8
7
6
5
Total
Oil
Coal
Natural Gas
4
3
2
1
0
28 1750
1800
1850
1900
Year
1950
2000
Global Carbon Emissions by Sector
Fugitive
other Fuel
Combustion Emissions
1%
10%
Agriculture
14%
Industry
15%
29
Power
Generation
24%
Transportation
18%
Deforestation
18%
World Resources Institute, 2006 et al
29
Transport Carbon Emissions by Sector
note: 18% of all Global Emissions
Aviation
9%
Light Road
Vehicles
40%
Shipping
22%
Rail
2%
Heavy Road
Vehicles
27%
30
World Resources Institute, 2006 et al
30
20000
18000
Renewables
16000
million tonnes oil equiv./yr
Hydro
14000
Nuclear
12000
10000
Coal
8000
6000
Natural Gas
4000
2000
0
1966
31
Crude Oil
1971
1976
1981
1986
1991
1996
2001
2006
Global Energy: Past Consumption & Future Energy Trends,
Sources; various
2011
2016
2021
2036
2041
32
Conclusions (1)
• The era of cheap oil is over
• 75% of major oilfields are now in decline
• Global consumption of 30bn barrels/year are not being
replaced at the same rate. Unsustainable!
• Future global oil supply is under pressure from increasing
global demand
33
Conclusions (2)
• Population growth, rising living standards will accelerate increased energy
demand
• Increasing Purchasing power will enable growth of vehicles 10-fold in Asia
by mid-century
• Investment focusing on energy supply chain will be considerable. Driven
by changes in energy sources.
• Higher capital costs for extraction of remaining fossil fuels combined with
environmental investment requirements
• Development of entirely new technologies –hydrogen economies, clean
coal , ?fusion
34