Peak oil, and other global energy limits

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Open University, April 2014.
Peak Oil,
& Other Limits to Global Energy Supply
R. W. Bentley, Visiting Research Fellow
Dept. of Cybernetics, University of Reading, UK.
(Based in part on a joint presentation with W. G. Zittel, Senior Scientist, Ludwig-BölkowSystemtechnik GmbH, Germany; see: www globalenergysystemsconference.com; ‘videos’.)
Limits to Global Energy Supply
• The planet has very large energy resources.
• We can use much less energy for the same outputs:
heating/cooling; distance travelled; things produced.
But we face some very tough limits –
(a). Conventional fossil fuels:
1. The global maximum in the production of
conventional oil at current prices is probably
about now.
2. The global maximum in the production of
conventional gas is probably in 10 to 15 years.
3. We may be close to the global maximum in the
production of conventional hard coal.
Limits to Global Energy Supply contd.
(b). Alternative fuels:
4. Most of the alternative fuels - fossil as well as
renewable - have lower energy returns.
5. We face rate-limits in moving to these alternatives.
(c). Other limits:
6. High energy cost destroys economies.
7. Greenhouse gas (‘GHG’) emissions.
• We have known about many of these limits for a long
time, but they largely got forgotten.
• Most are not in current models (let alone in the
thinking of industry or government).
• As a result, we do not understand our energy future.
General Remark:
These are a lot of topics – and some strong claims.
I cannot cover in full detail here, so:
- Skim over detail - apologies to those who do not like
this approach in a presentation.
- The slides will be available.
Limit 1: The maximum in the global production of
conventional oil.
To understand this limit you need to know:
i). There is a lot of oil & ‘nearly oil’.
ii). Never use proved (‘1P’) reserves.
iii). Use oil industry proved+probable (‘2P’) data for
oil discovered, and likely to be discovered.
iv). ‘Mid-point’ peaking.
v). Why ‘mainstream’ forecasts were so wrong.
Start by looking at oil production and price.
Global oil production and price, 1965-2012.
- Global all-oil production: weak growth since 2007.
- Real-terms price back to that of the 1978 oil shock.
Global oil production and Price, 1965 - 2012
100
140
Shaky growth ..................
90
Production - Mb/d
100
70
60
80
50
60
40
30
40
Oil price - $(2012) / bbl
120
80
20
20
10
0
0
1965
1970
1975
1980
1985
Global oil prodn.
1990
1995
2000
Real-terms oil price
2005
2010
BP Stats.: E.Mearns
The current high oil price cannot be driven fundamentally only by
demand: from 1861 to 1970 demand grew rapidly but the price fell.
Maximum in global production of conventional oil
i). There is a lot of Oil & ‘Nearly oil’
Conventional oil: Light- and medium-density oil that has generally
migrated to a permeable reservoir, and from which it can be
extracted by own-pressure, or gas and/or liquid drive. (Can include
heavier oil in a permeable reservoir made mobile by steam
heating). Data often includes liquids produced from gas fields
(‘natural gas liquids’, NGLs).
Non-conventional oil:
• Tar sands (Canada), & very heavy oil (e.g., Orinoco)
• Shale oil (pref. ‘tight oil’): Oil in low-permeability source rock
that has not migrated, often shale but can be sandstone, limestone;
usually needs hydraulic fracturing (‘fracking’) to produce.
• Oil from oil shale: Kerogen in source rocks; needs retorting to
turn into oil; produced by mining or in-situ methods.
• Gas to liquids (GTL); Coal to liquids (CTL)
• Biofuels; Other.
As long known, there is a lot of oil: Conv. & Non-conv.
Total recoverable (incl . shale) prob. >10 trillion barrels (Tb).
Source: IEA (production costs since revised upward).
ii). Never use proved reserves (‘1P’) data
These data are:
• Understated, particularly early in a field’s development.
• Overstated in some Middle East countries.
• Not stated: often static for countries for long periods.
iii). For forecasting must use oil industry proved +
probable (‘2P’) backdated data.
The evolution of 1P (‘political/financial’) global oil
reserves is very different from that of backdated 2P
(‘technical’) reserves:
- 1P data show reserves always increasing;
- 2P data show that reserves peaked in 1980 (next slide).
By 2000 1P reserves exceeded 2P due to ‘quota wars’!
(Note: Since 2000, 1P data include non-conventional oil.)
Comparing 1P vs. 2P data: Global oil reserves
1P (brown line): Ever-increasing. 2P backdated (green): Peak in 1980.
World remaining oil reserves
from political/financial and technical sources
1800
technical = 2P = proven+probable =
backdated mean excluding extra-heavy oil
1600
political & financial = 1P = current so
called proved
including tarsands
+200 Gb Venezuela
+175 Gb Canada
present OPEC 1P reserves OGJ
1400
remaining reserves Gb
Non-OPEC 1P reserves OGJ
1200
first production
Athabasca 1967
1000
800
-omission of probable
-incorrect aggregation
600
OPEC fight for quotas
+300 Gb = speculative
resources S. al-Husseini
excluding 215 Gb
Orinoco from
1936 to 1939
Ghawar
400
200
0
1920
1930
1940
Jean Laherrere May 2013
1950
1960
year
1970
1980
1990
2000
2010
2020
Sources: IHS, USDOE, CAPP, API, OGJ
N.B. Since 2001, 1P include extra-heavy; 2P as shown here do not.
iv). ‘Mid-point’ peaking: When to expect the resourcelimited peak of global conventional oil production
This needs industry 2P cumulative discovery data
i.e., (produced to-date) + (remaining reserves).
Most analysts:
- Did not know they needed these data - were happy to
work with 1P.
- Did not have access - are expensive to license, or much
work to assemble.
- Did not know how to use the data - did not understand
‘mid-point’ peaking.
N.B. ‘Mid-point’ peaking is short-hand for the complex interplay of geology (fieldsize distribution), physics (pressure decline and/or increasing water-cut in fields),
and economics (marginal vs. avg. cost) that drives a region’s production to peak
well before all the recoverable resource has been produced.
‘Mid-point’ peaking in a region:
Peak is driven by discovery (big fields first) and by field decline.
Annual Discovery & Production
(arbitrary units)
100
Assumes fields take 5 years to get into production
80
Discovery
60
Production
40
20
0
-4
-1
2
5
8
11
14
17
20
23
26
29
32 35
38
41
Years
Peak is counter-intuitive: It occurs when production has been rising;
reserves are large; new fields are being discovered; & technology is
raising recovery factors..
Date of peak of global conventional oil by comparing backdated cumulative 2P discovery with cumulative production.
Use either extrapolated discovery and ‘mid-point’ to estimate
date of peak, or PFC ‘60%’ rule. Discvy: green; Prodn: brown.
Data indicate that the
conv. oil peak is ~now.
Dates of oil peak / plateau from ‘bottom-up’ models
In addition to the simple, robust, approach of ‘mid-point’
peak, and the PFC Energy rule of ‘peak at 60% of 2P
discovery’, we can use ‘bottom-up’ models.
E.g:
- IHS CERA: By field, all-liquids.
Capacity: ‘Undulating plateau’ starts ~2030 - 2040.
- Miller. By field, conventional oil only (& excl. NGLs).
Capacity (moderate growth, all-fallow): Peak by ~2040.
Likely: Peak now (at current prices).
- Smith (Globalshift). By field, all-oil, incl. NGLs & ‘other’ oils.
Likely: Peak by ~ 2028.
- Campbell: By country, ‘regular oil’. Likely: Peak 2005.
“ All-oil incl. NGLs: Likely: Undulating plateau 2005 - 2020.
Details of some models: UKERC 2009 report: Global Oil Depletion
Campbell: All-oil, all-gas forecast to 2050 (Gboe/yr.)
(Excludes: CTLs, GTLs, biofuels; gas hydrates. ‘Conv.’ = ‘regular’)
Oil & Gas Production 1930-2050
60
50
Gboe
40
30
20
10
0
1930
1940
1950
Conventional Oil
1960
1970
Heavy, Tight
1980
1990
Deepwater Oil
2000
2010
Polar Oil
2020
NGL
2030
Gas
2040
2050
Non-Con Gas
v) . Last piece of the puzzle: Why mainstream forecasts
(IEA, EIA, OPEC, BP, Exxon, ...) were so wrong.
E.g.: IEA forecasts 1998 - 2012: Forgot field decline (until
2008), hence no mechanism to generate peaking!
Mainstream ‘Quasi-linear’ forecasts, vs. Peak forecasts.
120.00
Global production (Mb/d)
100.00
80.00
60.00
40.00
20.00
0.00
2000
BP Statistical Review
IEA WEO 2008: All, except biofuels
IEA WEO 2008: Conventional oil + NGLs
US EIA: All, reference case
US EIA: Conventional, reference case
OPEC 2008: All oil plus biofuels
OPEC 2008: All conventional oil excl. NGL (re-based)
ExxonMobil: All liquids
ExxonMobil: All oil
Miller 2008 : All oil except NGL (re-based)
Meling 2006: Base case, all oil
Total 2008: All oil
Shell: Oil (Blueprint scenario)
Shell: Oil (Scramble scenario)
Energyfiles 2009: All
Uppsala: All oil excluding YTF
Skrebowski 2008: All oil
Campbell 2008: All
LBST: All oil
Year
2005
2010
2015
UKERC Global Oil Depletion report, 2009.
2020
2025
2030
So:
Conclusions on Conventional oil
• Current constraints on global conventional oil production due to:
- Below-ground: Discovery of oil in new fields in decline for ~50
years; production decline in fields, especially large-old.
- Above-ground: Access by multinationals to some countries;
Iran production; Saudi Arabia reluctant to pump all possible, etc.
• But there have always been above-ground factors.
• To-day’s high oil price is primarily due to resource limits on the
production of global conventional oil.
• We do not really know how fast non-conventional oil supply can
grow: mainstream forecasts say ‘sufficiently’; peak say ‘not’.
• Today’s high price is ‘The End of Cheap Oil’.
Caution: Price reflects small differences in supply & demand, so is
hard to predict and likely to be volatile. Oil costs go up due to
depletion, more difficult fields, EROEI, etc.; but price destroys
demand and brings on new projects. In short-term prices can fall.
Limit 2: Resource-limited peak of conv. gas production
- Compare back-dated cum. 2P discovery with cum. prod’n.
Use either extrapolated discovery and ‘mid-point’ to estimate
date of peak, or PFC ‘60%’ rule. Discov’y: red; Prod’n: orange.
Data indicate the conv.
gas peak is ~2025.
Limit 3: Maybe max. of conventional hard coal
Plot from Energy Watch 2013 report. Zittel cautions that
global coal data are too poor for other than educated guess.
Limit 4: Alternatives mostly have lower energy returns
Hall et al. suggest that modern society needs a minimum
energy return on energy invested (EROEI) of ~10 -15x.
Even where ratios are higher than this, falling EROEI
ratios reduce society’s overall wealth.
Approx. EROEI range
Conv. oil: 1930 / 1970 / today
100 / 40 / 14
Tar sands
1.5 - 8
Coal
40 - 80
Nuclear fission
4 - 16
Wind
10 - 28
PV
2.5 - 8
Biodiesel, gasohol
~3
Most data: C. Hall & J. Day, American Scientist, 97, 230-237, 2009. (Gives EROEI
of PV as ~8; value of 2.5 is from Prieto & Hall, Springer Briefs in Energy, 2013.)
Limit 5: Rate-limits in moving to these other fuels
• Changing to a new energy-saving measure, or new energy
source, faces rate-limits that are sometimes overlooked.
• These include: technological & society readiness,
availability of investment, limits to inputs such as water or
gas, and net-energy rate-limits.
• The latter are often forgotten, and may be critical.
E.g. Because of rapid growth, the total PV installed to-date
(~ 100 GWp) has not yet returned any net-energy to
Mankind. The date for positive net-energy return is unclear.
See: Dale & Benson. Energy Balance of the
Global Photovoltaic (PV) Industry - Is the
PV Industry a Net Electricity Producer?
Environ. Sci. Technol., 2013, 47 (7), pp
3482–3489. Also: Prieto & Hall: Spain’s
Photovoltaic Revolution - Energy Return on
Investment ISBN: 978-1-4419-9436-3
Limit 6: High energy cost destroys economies
OPEC exports now
cost importers $1
tn./yr., real-terms,
as in 1979.
[Note the rapidly
rising internal
demand within
OPEC.]
• There is a very poor understanding of the impacts of high
energy cost on economic activity. Authors such as Slessor,
Odum, Hawker, Lovins & Lovins, Kümmel, Ayers, and Hall and
Klitgaard suggest new paradigms, but I guess (I am not an
expert) that none has been adequately tested.
• To understand the future, the links between availability of
energy and economic activity need to be properly understood.
Limit 7: Greenhouse gas limits
CO2: 450 ppm; Hansen 350 ppm? 250 ppm?; 400 ppm now.
- IPPC-5: ~800 Gt C for 2 ºC.; i.e., only ~300 Gt C more.
We have long known about many of these limits, e.g.:
- Temperature effect of CO2 in the atmosphere: Arrhenius, 1896.
- Conventional oil: Estimates made from 1956 to 1981 by Hubbert,
Esso, a report to the UN, UK Dept. of Energy, Shell, BP and
others, based on estimated global conventional oil ‘ultimates’ of
1,250 - 2,500 Gb, predicted the global resource-limited peak or
plateau of conventional oil production at about the year 2000.
- Net-energy rate limit: Chapman, Fuels paradise (nuclear), 1975.
- Systems limits - Resource use grows to extract resources, and deal
with pollution: Limits to Growth, 1972, 1993, 2004; Bardi, 2011.
- Non-conventional oil EROEI limit: Hubbert,1981.
- All resources: The Global 2000 Report to the President, 1982.
Conclusions
• The planet has immense energy resources.
• We can use much less energy than now.
• But we face some tough energy limits:
- Peak conventional oil: probably about now.
- Peak conventional gas: ~10 to 15 years from now.
- Peak conventional hard coal: possibly fairly near.
- Lower EROEI of non-convs. & renewable energies.
- Limits to rate-of-change; incl. net-energy.
- Impact of energy cost on global economic activity.
- Greenhouse gases.
• We long knew about many of these limits, but were
forgotten. They must be taken into account.
Thank you for listening
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