1 Depletable Resources: Peak Oil and Beyond: Topic 8

Learning Objectives 2 After this session, you should be able to Define the term ‘Peak Oil’ Explain ‘Hubbert’s Peak’ Understand when global peak oil is likely to occur based on empirical studies Know the likely implications of Peak Oil for the world economy Outline the various mitigation options

What is Peak Oil 3 Peak oil is the simplest label for the problem of energy resource depletion, or more specifically, the peak in global oil production. Oil is a finite, non-renewable resource The rate of oil 'production', meaning extraction and refining (currently about 85 million barrels/day), has grown almost every year of the last century. Once we have used up about half of the original reserves, oil production becomes ever more likely stop growing and begin a terminal decline, hence 'peak'.

M.K. Hubbert- Predicted Oil Peak 4

Hubbert’s discovery 5 In 1956, Hubbert noted that oil discoveries graphed over time tended to follow a bell shaped curve Hence, the rate of production would follow a similar curve, known as the Hubbert Curve No oil producing region fits the bell shape exactly because production is dependent on geological, economic and political factors US oil peak a significant geo-political event and created conditions for energy crises in the 1970s, led to a far greater US strategic emphasis on controlling foreign resources of oil and spelling the beginning of the end of the status of the US as the world’s major creditor nation

What does Peak Oil mean for society? 6 Industrial societies and financial systems were built on the assumption of continual growth based on the availability of cheap fossil fuels Oil currently accounts for 43% of the worlds fuel consumption and 95% of global energy used for transportation Oil are feedstock's for plastics, paints, pharmaceuticals, fertilisers, electronic components, tyres and more Peak oil will have implications across the realms of war and geopolitics, medicine, culture, transport and trade, economic stability and food production

The Hirsch Report 7 “ as peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.”

When will Oil Peak Globally 8 Global oil discovery peaked in the late 1960s Since the mid-1980s, oil companies have been finding less oil than we have been consuming Of the 65 largest oil producing countries in the world, up to 54 have passed their peak of production and are now in decline including the USA in 1970, Indonesia in 1997, Australia in 2000, the UK in 1999, Norway in 2001 and Mexico in 2004 Hubberts methods as well as other methodologies have already been used to make projections about the global oil peak, with results ranging from already peaked to the more optimistic 2035 In November, 2009 the International Energy agency's World Economic Report stated that oil and gas liquids were not expected to peak until 2030, at significantly higher levels than today (internal whistleblowers argue that figures are more political than scientific

Oil Discovery and Production 9

Empirical Studies on Global Peak Oil 10 Projected Date Source of Projection Bakhitari Simmons After 2007 Skrebowski Before 2009 Deffeyes Before 2010 Goodstein Around 2010 Campbell After 2010 World Energy Council Laherrere 2016 EIA (Nominal) After 2020 CERA 2025 or later Shell No visible Peak Lynch

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Alternative Energy Sources 12 Oil has a high Energy Returned on Energy Invested Ratio (EROEI) In 1960’s, this ratio was very high, for every barrel of oil used from exploration and drilling up to 100 barrels of oil found Ratio is now significantly lower Need to find an alternative energy source with high EROEI Alternative sources that have EROEI less than one include producing bio-diesel and ethanol More promising alternatives are wind, solar, thermal and hydropower

Implications of peak Oil 13 World Economy  Increase in oil prices and oil price volatility  Slowdown in global economic growth  Increases in inflation and unemployment, decline in output and living standards  Impact with be asymmetric (developing v developed countries)

Mitigation Options and Issues 14 Conservation  Fuel efficiency a priority especially in auto industry  Development of hybrids  Government regulation Improved Oil Recovery  Expand volume of recoverable oil from reservoirs

Mitigation Options 15 Heavy Oil and Oil Sands  Costly in financial and environment terms  Gas to Liquids (GTL)  Convert isolated pockets of natural gas to liquid natural gas Fuel switching Esp in transport sector (rail and auto)  Home Heating Switch to Renewable Resources (Solar, Hydrogen, Wave & Wind Power etc)

Questions for Consideration 16 What are the risks of heavy reliance on optimistic world oil production peaking projections? Must we wait for the onset of oil shortages before actions are taken? What can be done to ensure that prudent mitigation is initiated on a timely basis?

Required Reading 17 Peak Oil : _Peaking_NETL.pdf