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Tinker, 2008
QAd3931x
Bureau of Economic GeologyJackson School of Geosciences
The University of Texas at Austin
Scott W. Tinker
Global EnergyMyths, Realities and Paradoxes
Global EnergyMyths, Realities and Paradoxes
RMSRMS--AAPG and COGAAAPG and COGADenver, CODenver, CO July, 2008July, 2008
RMSRMS--AAPG and COGAAAPG and COGADenver, CODenver, CO July, 2008July, 2008
Tinker, 2008
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• Fossil fuels are the bridge to an alternate energy future.
• Alternate energies will take time, technology, and money to scale up.
• The cost to reduce carbon is high; everyone must play and pay or we risk the global economy.
The Global Energy RoadThe Global Energy RoadThe Global Energy RoadThe Global Energy Road
Tinker, 2008
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Webster’s Online: Webster’s Online: MythMythWebster’s Online: Webster’s Online: MythMyth
Main Entry: myth Pronunciation: \ m̍ith\ Function: noun
Etymology: Greek mythos Date: 1830
1 a: a usually traditional story of ostensibly historical
events that serves to unfold part of the world view of a
people or explain a practice, belief, or natural
phenomenon b: parable, allegory
2 a: a popular belief or tradition that has grown up
around something or someone; especially : one
embodying the ideals and institutions of a society or
segment of society <seduced by the American myth of
individualism — Orde Coombs>
2 b: an unfounded or false notion
Tinker, 2008
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Webster’s Online: Webster’s Online: ParadoxParadoxWebster’s Online: Webster’s Online: ParadoxParadox
Main Entry: par·a·dox Pronunciation: \ p̍er-ə- d̍äks, p̍a-
rə-\ Function: noun Etymology: Latin paradoxum, from
Greek paradoxon, from neuter of paradoxos contrary to
expectation, from para- + dokein to think, seem — more at
decent Date: 1540
1: a tenet contrary to received opinion
2 a: a statement that is seemingly contradictory or
opposed to common sense and yet is perhaps true
2 b: a self-contradictory statement that at first seems true
2 c: an argument that apparently derives self-contradictory
conclusions by valid deduction from acceptable premises
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6. “Big Oil” controls the price of oil and gasoline and makes “obscene” profits.
7. Cutting oil imports will stabilize gasoline prices.
8. Global production of oil and natural gas are “peaking” and we are running out of fossil energy soon.
9. All coal is dirty.
10. The cost of energy increasing.
Ten Energy Myths Ten Energy Myths Ten Energy Myths Ten Energy Myths
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Ten Energy Myths Ten Energy Myths Ten Energy Myths Ten Energy Myths
1. The US can be energy independent in the next 25 years.
2. “Renewable energy” can reduce dependence on fossil fuels significantly in the next 25 years.
3. The economy will adapt easily to a rapid, federally imposed energy transition.
4. Energy efficiency and savings (alone) will solve the problem.
5. There is plenty of low cost (conventional) oil ready to be found.
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Crisis/Policy Paradox
Sound energy policy is necessary to
prevent an energy crisis, yet crisis is
seemingly necessary to cause policy to
be considered.
Energy ParadoxesEnergy ParadoxesEnergy ParadoxesEnergy Paradoxes
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Economy/Carbon Paradox
Emissions from the combustion of fossil
fuels enhance global warming which
harms the economy, yet a healthy
economy relies on fossil energy today.
or
The road to an alternate (clean) energy
future must be paved with fossil energy.
Energy ParadoxesEnergy ParadoxesEnergy ParadoxesEnergy Paradoxes
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Government/Markets Paradox
Government policies are needed to
enhance free market behavior.
Energy ParadoxesEnergy ParadoxesEnergy ParadoxesEnergy Paradoxes
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Nationalization/Globalization Paradox
The US should be energy independent in
order to remain a global leader in an
interdependent world.
Energy ParadoxesEnergy ParadoxesEnergy ParadoxesEnergy Paradoxes
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Global production of oil and natural gas are “peaking” and we are running out of
fossil energy soon.
Myth 8Myth 8Myth 8Myth 8
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Global EnergyGlobal EnergyGlobal EnergyGlobal Energy
We depend upon fossil fuels today.
Energy Use (Quadrillion Btu)
0 20 40 60 80 100 120 140 160
Africa
Canada & Mexico
Middle East
Central & South America
Eurasia
Europe
United States
Asia & Oceania
Quadrillion Btu
Data: EIA, October 2007
Oil
Gas
Coal
Nuclear
All Other
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Conventional Oil
Natural Gas
Data from EIA 2007
US Energy MixUS Energy MixUS Energy MixUS Energy Mix
Coal
Uranium
Transportation
Heat
Electricity
We depend
upon fossil
fuels today.
US Transportation Energy Demand
(2006 Btu)
16407
618
264
4892
2647
1333
611
147
592
688
Light-Duty Vehicles
Commercial Light Trucks 1
Buses
Freight Trucks
Air 3
Water
Rail
Lubricants
Pipeline Fuel Natural Gas
Military Use
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0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Glo
ba
l A
nn
ua
l P
rod
uc
tio
n
(mb
o)
World Oil Production (Thousand Barrels)
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
Glo
ba
l R
es
erv
es
(b
bo
)
World Oil Reserves (Billion Barrels)
15
20
25
30
35
40
R/P
Global Reserves and ProductionGlobal Reserves and ProductionGlobal Reserves and ProductionGlobal Reserves and Production
Source: 1980-2007 Energy Information Administration As of January 2008
(www.eia.doe.gov/pub/international/iealf/crudeoilreserves.xls ), 1950-1980
OPEC (http://www.opec.org/library/)
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
Oil
Pri
ce
($
20
07
)
Oil Price Average in $/bbl Inflation Adjusted 2007
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M
ExxonMobil, 2005. http://www.exxonmobil.com/Corporate/Citizenship/Corp_citizenship_energy_outlook.asp
The Conventional Oil
“Wedge”
~35 MMBD new demand
If China and India grow from
1 B/P/Y today to 5 B/P/Y by
2030, it will create 48 MMBD
of new demand
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Option Time to Initiate Impact (+10 Yrs)
(Yrs) (MM bpd)
– Enhanced Oil Recovery 5 3
– Heavy Oils / Oil Sands 3 8
– Shale Oil 10 2
– Coal Liquids 4 5
– Gas-To-Liquids 3 2
– Biofuels 2 1
21
after Hirsch et.al, 2005
Options to Conventional Oil Options to Conventional Oil Options to Conventional Oil Options to Conventional Oil
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One More Option to Conventional Oil… One More Option to Conventional Oil… One More Option to Conventional Oil… One More Option to Conventional Oil…
1 MMBOPD and 1.4 TCFY in 15 years
ARI, 2006
Access Restrictions
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Global Natural Gas Supply and DemandGlobal Natural Gas Supply and DemandGlobal Natural Gas Supply and DemandGlobal Natural Gas Supply and Demand
50
60
70
80
90
100
110
Year
Na
tura
l G
as
(Tc
f)
*Supply = world natural gas production & Demand =world natural gas consumption.
Data: EIA, October 2007
Supply
Demand
60
70
R/P
(yrs)
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0
5,000
10,000
15,000
20,000
25,000
1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004
Year
U.S
. N
atu
ral G
as
Pro
du
cti
on
(B
cf)
Total Natural Gas
Conventional Gas
Difference
U.S. Natural Gas ProductionU.S. Natural Gas ProductionU.S. Natural Gas ProductionU.S. Natural Gas Production
Conventionals: EIA (1949-1990) and NPC (1991-2015)
Unconventionals: 1970-1988 data from GRI, 1999. Updated data from 1989-2005 is from EIA, 2007
0
1
2
3
4
5
6
7
8
9
10
1990 1995 2000 2005 2010 2015 2020 2025Year
An
nu
al
Natu
ral G
as
Pro
du
cti
on
(T
CF
)
Gas Shales
Coalbed Methane
Tight Gas
Unconventionals
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US Dry Natural Gas ReservesUS Dry Natural Gas ReservesUS Dry Natural Gas ReservesUS Dry Natural Gas Reserves
Source: Energy Information Administration (EIA)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Reserv
es (
Bcf)
Unconventionals
Technology and Ideas
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• Easy to produce (but hard to find!) conventional oil will plateau and then decline; i.e. the conventional oil “plateau”
• Global natural gas production is a few decades away from a plateau
• Easy to find (but hard to produce!) unconventional oil and natural gas are playing a growing role (function of environmental policy, economics and technology)
• Fossil fuel resources combined (oil, natural gas and coal) could provide over two hundred years at current consumption rates
Myth 8 RealitiesMyth 8 RealitiesMyth 8 RealitiesMyth 8 Realities
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Myth 2Myth 2Myth 2Myth 2
“Renewable energy” can reduce dependence on fossil fuels significantly in the next
25 years.
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QAc9841c
Global Energy ConsumptionGlobal Energy ConsumptionGlobal Energy ConsumptionGlobal Energy Consumption
U.S. Data: Annual Energy Review 1999 (EIA, 2000)World Data: International Energy Annual 1999 (EIA, 2000)
100
80
60
40
20
0
Perc
en
tag
e o
f to
tal m
ark
et
Year
1850 1900 1950 2000
H/C>4(Natural Gas,
Nuclear,
All others)
H/C<1(Wood, Coal)
H/C~2(Oil)
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1.25% annual demand growth
Historical Data: EIA October 2007: Forecasts: Tinker, 2008
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030Glo
bal
En
erg
y C
on
su
mp
tio
n (
qu
ad
s)
Petroleum
Natural Gas
Coal
Hydroelectric Nuclear
Biomass, Geothermal, Solar & Wind
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%%
To
tal
Co
ns
um
pti
on
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Future Global TrendsFuture Global TrendsFuture Global TrendsFuture Global Trends
0
100
200
300
400
500
600
700
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Glo
ba
l E
ne
rgy C
on
su
mp
tio
n (
Qu
ad
s)
Unconventional Gas
Unconventionals/Res Growth
1.25% Global Annual Demand Growth
4 8 16 32
2X
every
7 yrs
91% 87% 80%
Sound energy policy is necessary to
prevent an energy crisis, yet crisis is
seemingly necessary to cause (poor)
policy to be considered.
and
The road to an alternate (clean) energy
future must be paved with fossil energy.
Tinker, 2008
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• Energy is not “renewable”
• One of the great challenges of alternate energy is scale
• Energy transitions take time and are expensive
• Oil is beginning to plateau
• Disruptive breakthroughs in electricity storage and transmission are needed to facilitate alternate energy
Myth 2 RealitiesMyth 2 RealitiesMyth 2 RealitiesMyth 2 Realities
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Myth 1Myth 1Myth 1Myth 1
The US can be energy independent in the next
25 years.
Tinker, 2008
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US Economy and Oil PriceUS Economy and Oil PriceUS Economy and Oil PriceUS Economy and Oil Price
Nixon Clinton Bush 2 Bush 1 ReaganCarterFord
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
1970 1975 1980 1985 1990 1995 2000 2005
Year
GD
P G
row
th (
% p
oin
ts a
t a
nn
ua
l ra
tes)
0
10
20
30
40
50
60
Oil
Do
me
sti
c W
ell
hea
d P
ric
e (
$)
GDP Growth (Percentage points at annual rates)
Crude Oil Domestic Wellhead Price ($2000)
Data: EIA February 2007 and US department of Commerce
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1800 1855 1910 1965 2020
An
nu
al U
se
(Q
ua
ds)
1
0.1
10
100
Electricity’s RoleElectricity’s RoleElectricity’s RoleElectricity’s Role
Total Energy
After Huber and Mills, 2005. Data: EIA, Annual Review, 2003. US Census Bureau, Historical Statistics of the US Colonial Ties to 1970
Energy
used
to produce
electricity
45Q
Electricity will play an ever
greater role in the energy
end use mix.
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Conventional Oil
Natural Gas
Data from EIA 2007
ElectricityElectricityElectricityElectricity
Coal
Uranium
Transportation
Heat
Imports
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Electricity OptionsElectricity OptionsElectricity OptionsElectricity Options
• Natural Gas
– Abundant, reliable, price volatility, and cleaner
– Challenges: Global deliverability (LNG) and Access
• Coal
– Abundant, reliable, cheap and dirty
– Challenge: Sequestration (IGCC w/CCS), financing, public perception
• Nuclear
– Abundant, reliable, moderate price and cleaner
– Challenges: Waste disposal, security, public perception
• Renewables
– Cleaner, less reliable and more expensive
– Challenge: Capacity impacts cost and reliability
• Efficiency
– Fuel, lighting, electronics, insulation
– Challenge: Rebound effect
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Global Carbon EmissionsGlobal Carbon EmissionsGlobal Carbon EmissionsGlobal Carbon Emissions
4,000
6,000
8,000
10,000
12,000A
nn
ua
l A
nth
rop
og
en
ic C
O2
(m
mT
)
NA Africa
Europe
EurasiaME
Cent & SA
Asia & Oceania
2,000
EIA, 2007
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Year
0.00
0.50
1.00
1.50
2.00
2.50
GD
P (
$B
20
00
)/C
O2
(M
MT
)
GDP/Carbon EmissionsGDP/Carbon EmissionsGDP/Carbon EmissionsGDP/Carbon Emissions
NA Africa
Europe
Eurasia
ME Cent & SA
Asia & Oceania
Emissions from the combustion of fossil
fuels enhance global warming which
harms the economy, yet a healthy
economy relies on fossil energy today.
and
Government policies are needed to
enhance free market behavior.
Tinker, 2008
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• The world is “flattening;” resource interdependence is becoming the norm
• Independence requires realistic, scalable alternatives, which take time and are very expensive ($ trillions)
• Concerns about climate and security have placed the public sights squarely on fossil energy, especially coal and oil
• Energy and economies are inextricably linked and mandated transitions don’t really work
Myth 1 RealitiesMyth 1 RealitiesMyth 1 RealitiesMyth 1 Realities
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Summary ThoughtsSummary ThoughtsSummary ThoughtsSummary Thoughts
• The Three E Waltz (Energy, Economy, Environment) is a sensitive dance
• Oil and natural gas provide nearly 2/3 of the world’s energy
• We need to be realistic about a carbon constrained world
– It is coming, it will take time, it won’t be cheap
– Everyone needs to play and pay
– Research funding and talent are vital
– Government, private, academic partnerships
