Top Ten Reasons Why Peak Oil Arrives Sooner Rather Than Later

For Clear Creek Watershed ForumSteve Andrews

ASPO-USAMarch 21, 2007

This isn’t sustainable…

USA

Mexico

North Sea

FSU

Saudi Arabia

0

10

20

30

40

50

60

70

80

90

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

mill

ion

b/d

0

10

20

30

40

50

60

70

80

90

mill

ion

b/d

Eight fold increase

Source: Dr. Peter Wells, Neftex (11/05)

We need a commonframe of reference

• 85 mmb/day – world’s daily dose• 21 mmb/day – US• 14 mmb/day – US transport sector

• 9.5 mmb/day – US gasoline

There are two camps, two views about the peak oil “theory”

Fields peak, then regions, then nations…

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

Pro

d.

(b/d

)

1975 1980 1985 1990 1995 2000 2005 2010 Year

Prudhoe Bay extraction history

The first peak: U.S. oil extraction 1900 - 2050

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

GONE: 2/3-3/4 OF U.S. OIL HAS

BEEN USED. IT’S HISTORY.

2005DOWN

THE OIL “OFF

RAMP”

PEAK 1970

Eventually continents peak…

Source: PFC Energy (2004 slides)

! ! !

Timing: add regions and the world peaks

Source: PFC Energy

Source: ASPO-USA; created by OilPoster.org

Key nations past peak• 1. Russia*• 3. USA• 4. Iran*• 5. Mexico• 6. China (this year??)• 7. Norway• 9. Venezuela*• 11. Kuwait*• 15. UK• 17. Libya* (3.3 > 1.7)• 20. Indonesia

• Oman (0.96 > 0.78)• Argentina• Egypt• Columbia• Australia• Syria• Yemen• Denmark• Congo• #39 Gabon

– (0.37 > 0.23)

Primary source: BP Statistical Review of World Energy—2005 data

You can see it now or you can wake up later…

1. Geologic and non-geologic factors

• M. King Hubbert (1956)—for the big picture – There are geologic limits

• Numerous other synergistic constraints against expanding production in a timely way– Timely investment– Logistics– Equipment shortages– Skilled manpower– Weather / extreme environments– Political or military conflict

2. Oil is geographically concentrated, and large producers are flagging

• 20 countries = 83% of production• Half have peaked for various

reasons– Geologic limits: US, Norway, UK,

Indonesia (China peaking soon)– Political/financial/geologic: Mexico,

Russia (now increasing; repeaks soon)– OPEC/political: Iran, Venezuela

(daydreaming of doubling)– Mixed: Iraq, Kuwait, Libya (incr.),

0

1

2

3

4

5

1930 1950 1970 1990 2010 2030 2050

Dis

co

very

Gb

0

500

1000

1500

2000

2500

3000

Pro

du

cti

on

kb

/d

UK (ASPO-Ireland)

0

5

10

15

20

25

30

35

1930 1950 1970 1990 2010 2030 2050

Dis

co

very

Gb

0

2000

4000

6000

8000

10000

12000

14000

Pro

du

cti

on

kb

/d

Note: the depletion slopes shown here could well be more gradual

Russia (ASPO-Ireland)

3. Non-OPEC to peak soon

• Everyone agreed at National Academy of Sciences peak oil workshop (Oct 20-21, 2005)– PFC Energy– ExxonMobil, Chevron– OPEC– CERA– ASPO-Ireland

• Canada, Brazil, Kazakhstan not enough

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

mill

ion

b/y

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

mill

ion

b/y

FSU

Non-OPEC/FSU

Source: Dr. Peter Wells, Neftex

Note: the depletion slopes shown here could well be more gradual

4. Most oil in the Middle East; risks abound

• Riven by religious and cultural conflict

• Cauldron for geopolitical and military conflict

• Muslim countries control 2/3 of remaining conventional oil

• Most are bitterly opposed to US policies

• Resource for expanding production is larger than the current desire/ability to do so

5. Production from non-Gulf OPEC

• Unlikely to compensate for production declines elsewhere

• Nigeria’s problems persist

• Indonesia declining• Venezuela’s spiral not

finished• Newcomer Angola not

large enough

6. Relentless depletion

• If world average decline rate is 5%, we lose 2.5 million barrels/day per year

• If true, we’ll need 20 mbd new by 2015 just to offset depletion

• Largest fields sagging Cantarell

7. National Oil Companies (NOC)s hold the cards

• Roughly 80% of the world’s oil• Some longer term thinking (e.g., oil for the

grandkids) – UAE, Kuwait• A finger in the eye – Venezuela• World energy power flex – Russia• ExxonMobil—12th rated producer, riding a

plateau• Project delays now

increasingly the norm

8. Discovery rates falling

• The big easy oil is gone (Chevron)

• Large non-OPEC finds rare – no repeat cavalry of the 1960s and 1970s

• Offshore West Africa, Caspian, Brazil and GOM are smaller, more complex, more $$ than Prudhoe, North Sea, Cantarell

• Producing 2-3 barrels for every one we find

“2005 will go down in history books as perhaps the poorest year for exploration since World War II…” World Oil magazine 8/06

9. Domestic consumption in exporting countries will play a growing role

• 2006 Russian consumption increased faster than production increased, so exports dropped (based on early reports)

• Iran, Mexico, Venezuela in worse situation• “Peak exports” probably impact before

peak/plateau production • ASPO-USA anticipates peak/plateau

production any time between now and 2015 (2020 at the very outside)

10. Unconventional petroleum resources won’t substantially impact peak

• Not all barrels are equal (“oil shale” is vastly different from tar sands and conventional oil)

• Development is expensive, technically arduous and slow – think delays and dollars

• Other issues– Timing of flow--mostly post-peak?– Rates of flow—can slow but not offset declines– Carbon/environmental footprint– Demand for power, other infrastructure– Net energy

• Oil from sands: 0.5 – 1.5 mmb/day• Gas-to-liquids: 0.4 to 0.75 mmb/day• Ethanol (corn): 0.3 to 0.4 mmb/day (% of crop?) • Coal-to-liquids: 0.1 to 0.4 mmb/day• Oil from shale: 0 to 0.1• Biodiesel 0.1?• Electricity for PIHEVs: 0 to 0.2• Hydrogen: zero (25 fueling stations today)• Efficiency: 1.0 – 2.0 mmb/day• Mode shifting: 1 to 3 mmb/day

Additional unconventional fuels by 2015 (potential peak)

Alt fuels: net energy is really important

Input Output

U. S. oil industry today: 1 to 15

Ethanol from corn: 1 to 1.3

Kerogen from marlstone;

oil from tar sands SAGD

1 to 3 +/-

Impacts and form matter

??

• Texas oil 1930: 100 to 1• US oil 1970: 30 to 1• Wind today: 18 to 1• US oil today: 15 to 1• Ethanol ( Brazil) 8 to 1• Coal to liquids, gas to liquids: 6-1 to 8-to-1 (est.)• Oil sands SAGD: 3 to 1 (mining =higher EROEI)• Oil shale: 3.5 to 2.0 to 1 (Shell’s fig.)• Ethanol from corn 1.5 to 1 (ave. gov’t figures)• Electricity from coal: 0.35 to 1• Solar (6 to 1?), nukyalur? cellulosic ethanol? H2?

Net Energy; also known as “Energy Returned on Energy Invested”

Many of these have ranges. Wind and solar vary with location. Ethanol from corn varies from irrigated to non-irrigated crops. Source: Cutler Cleveland, Boston Univ.