7 years of peak oil MAV presentation November 2011 Matt Mushalik (MIEAust, CPEng)

Contents 1.1 Global production plateau in year #7 1.2 Net available crude oil exports have peaked already 1.3 Peak oil in key countries triggers social unrest 2 Why we still have our heads in the sand 3 We are too blind to see when peak oil pops up here and there: Some impacts for Australia: EVs, Transurban, Qantas 4We really screw it up: gas, our only viable alternative transport fuel, is exported in huge quantities 5 Links between peak oil and debt crisis 6 All together now: System dynamics: peak oil, financial and CO2 debt, ME geo-politics

Peak oil is a process

Export peak

Available net crude oil exports

Projection by Jeff Brown: Available net exports by 2020

ASPO Projection

The other side of the coin - imports

What some are “saving’ is consumed by others

Peak oil in key countries: Egypt

Comparison diesel prices Egypt/International

Egypt energy subsidies

Surprise waiting in Libya

Sudan

Syria

Yemen

Oil prices in US$ to balance oil producer’s budgets Banque Saudi FransiPIRAPFC EnergyMEES Saudi Arabia66/8481/854950/58 Iran80/ /95 Iraq71/ /76 Kuwait65/ /60 Qatar58/6555/55 Algeria72/ Venezuela81/858340/40 Russia9875/105 Angola63 Indonesia60/95

Iran’s oil export extinction

Summary: Strategic shift for oil supplies from MENA countries Convergence of many problems with peak oil Young, aspiring and growing population Oil industry does not create many jobs Fluctuating revenue from oil as a result of oil price roller coaster Budget problems as a result of subsidies which are hard to reduce The era of the West’s cosy relationship with strong rulers who guaranteed oil supplies is over

Heads in the sand: Responses to my s 1.I suspect he sent this to every he could find. I would have ignored it. (inadvertent c/c ) 2.I believe you are a legend in your own mind, keep living in it. 3.I am not sure why I get these s 4.I am sick of receiving these messages 5.Your s are of no relevance and no interest to me 6.For a simpler 2011, please remove me from your mailing list 7.Interesting but I just have too many s 8.It's great that you're advocating for more critical approach to infrastructure decision making. But I'm quite busy, so could you please remove me from your list?

What Ministers say 1.May 2008 in front of ABC studios: “Prime Minister, we need electric rail on all free-ways like in Perth”. PM Rudd:“Yes, I have seen that”. No action. 2.July 2008 Transport Minister Albanese at Petersham Climate Forum: “We cannot solve the problem of peak oil in 5 minutes tonight”. Result: More highways funded. 3.April 2010 Resource Minister Ferguson at Community Cabinet Meeting, Epping: “We can always buy oil” 4.April 2010: “Prime Minister, OPEC’s paper barrels require your immediate attention”. Sadad-Al-Husseini’s graph disappeared in a big heap of files

What top bureaucrats say NSW Director General Planning At a Sydney Uni Sunset seminar on the Metropolitan Strategy, May 2010 Question: “How many million barrels of oil, million tons of coal and million m3 of gas are needed to implement plans for, say, 10 years and what is the CO2 absorption capacity of the atmosphere when burning these fossil fuels?” Answer: “That question goes too deep”

What top bureaucrats say Secretary Infrastructure in budget hearing May 2011 Senator LUDLAM: So what is going on? Mr Mrdak: In relation to peak oil? Senator LUDLAM: Yes, in relation to peak oil and the biggest road construction program in 40 years. Is there any contradiction inherent in those two concepts? Mr Mrdak: I do not believe so …….. Senator LUDLAM: Where are we going to be getting our oil from? Mr Mrdak: For a decision on what alternative fuel sources may be available, a whole range of technological and vehicle investment decisions are taken. I do not think anyone is suggesting that peak oil, if and when it is reached, will reduce demand for private travel. The reality is consumers look to alternative modes of power source for travel. Senator LUDLAM: No, they will look to public transport. As to your saying 'if and when', the International Energy Agency said the rollover for conventional oil was We are not having the if-and-when conversation any more. Mr Mrdak: I do not think that debate is completely closed

Summary heads in the sand 1.Top decision makers are unconcerned think we can endlessly debate assume market forces and technologies will solve demand problems have complete confidence in business as usual 2.Current set of decision makers cannot and will not prepare for declining oil production and reduction of CO2 3.Some really dramatic and continuing events must happen for this to change

Geoscience Australia: oil decline

WA oil production profile

Australia’s oil import dependencies

Australia’s import dependency

End of car culture in this decade: EVs will have marginal impact

Qantas hit by invisible hand of peak oil Profits global airline industry only 1.2% of revenue in 2011

Transurban Tolls too low to pay back $ 4bn debt 40% of distributions financed by printing shares

ConnectEast

Equivalent of EDR gas produced in just 20 years There are no plans to use gas as transport fuel EDR = Economic Demonstrated Resources

Natural gas squandered in LNG exports

Natural gas as transport fuel Total Australian requirement equivalent to 5.5 LNG trains – this is planned to be exported

No provision for coal seam gas to be used as transport fuel

Peak oil = peak debt Gail Tverberg, actuary from Atlanta: the US 65 year old debt bubble now pricked by peak oil Debt can only be paid back in growing economy, but oil- dependent economy cannot grow if oil production does not grow Only way out is to fundamentally increase oil use productivity in economy, but governments do not work on a portfolio of projects which would do that, e.g. rail

Oil prices economies can afford <= Trend is running at +$10 pa Price spike in 2008 caused by additional Chinese demand for Olympic games Spare capacity now only 1 mb/d Analysis from Chris Skrebowski, ODAC => Blue line: Brent price going up at $10 pa Red line: affordable price with efficiency increase of 3% pa Crossover: 2014

Energy Consumption & GDP – (by Euan Mearns)

Timelines mitigation

Global warming NASA climatologist James Hansen: "Australia doesn't agree now that they got to stop their coal, but they are going to agree. I can guarantee you that within a decade or so because the climate change will become so strongly apparent that's going to become imperative" or_james_hansen.shtml or_james_hansen.shtml Future compensation claims to be decided by courts M.H. Talukder, State Minister, Water Resources (Bangladesh) "Regionally, we are sufferer, and it is not created by us, it is our national argument that the responsible parties must compensate for it"

System diagram peak oil, global warming, debt, Middle East

Matt Mushalik (MEAust, CPEng)