CAMWEST: Cyclists’ Action Movement West

The Ultimate Energy Paradigm Shift — The Urgent Need for Renewable Power

Danny Hannan
01/11/2010
danny_hannan@yahoo.com

Greatly appreciated is the editorial assistance provided by Paul Bowyer and Ian Macindoe

Topics

Tables Source

Charts from BP 2010

Figures inserted from source as is.

Preface

Humanity is facing multifaceted crises: the overriding problem is global overpopulation followed closely by the over-consumption of resources by economically developed and developing societies. A lecture by Professor Emeritus Al Bartlett Arithmetic Population and Energy provides important background understanding to these coming crises.

The crises in descending critical impact

The crisis that is going to impact on our societies first and hardest is ENERGY; for that reason the focus of this paper is Energy. The paper is already too long to even touch on the other subjects but many of the measures that would reduce the impact of the imminent energy crisis would also reduce the impact of some of the other crises that we are facing. Without action the combination of these crises will cause the perfect economic storm sometime early this decade; my bet is Q3 – 4 2012.

The Great Energy Depression of the Twenty First Century

Two immediate actions that would put the above crises off into a more distant future are:

OR

The first is morally unacceptable and the second would not be accepted by economists, who seem to think that the “economy” rules the Universe.

If we fail to act BOTH will be forced on us in the next few decades by the harsh realities of nature.

Introduction

My Grandson turned 11 years of age in April 2010.

By the time he is old enough to get a driver’s license we will be well into the depletion phase of global peak oil production with a projected global production shortfall of 10 million barrels a day by 2015 (EIA 2009). By April 2016 when he is old enough to get his driver’s license, there will be little point, because the cost of both liquid fuels and the cost of vehicles will be so high.

By the time he graduates from university in about 2022 oil production globally will be some 30 million barrels a day below current levels.  Global Peak Energy Production will already have past and coal, with its attendant greenhouse gas problems, will have overtaken oil as the major energy source.

Oil and gas supply 60% of our current global energy demand. But, by the time my grandson is in his 40s global reserves of oil and natural gas (methane clathrate excepted) will be virtually spent and coal production will be in serious decline. By the time he is in his 60s Australia's vast reserves of coal and gas will be virtually depleted, as will the energy reserves of the rest of the world.

Over the course of his expected life, my grandson will see the depletion of the Earth's entire energy resources. We will be left with whatever renewable energy production is put in place during that time.

Without the fossil fuels to produce the raw materials needed, little new infrastructure will be able to be put in place, including renewable power generation, exacerbating the increasing shortage of renewable energy.

Our society is like “Thelma and Louise” at full throttle heading to the precipice to crash into a “Mad Max” world.

The underlying staple for any economy or ecosystem — modern, primitive or natural — is energy. All economies are dependent on the supply of cheap energy. Shortages of supply and/or increases in the cost of energy will stall, or send negative, the growth of any economy.

We need to heavily tax our energy resources at the source — NOW:

Fossil fuels provided the energy necessary for the growth of the human population from 1.5 – 2 billion to nearly 7 billion people today. At present there are no alternatives that can replace fossil fuels.

Without fossil fuels how many people can Australia or the Earth feed?

This essay looks at the parlous state of the world’s reserves of fossil fuels and provides alternatives that need urgent action.

Fossil Fuels

Table 1 shows the world reserves of fossil fuels by type of fuel. It is measured in million metric tons of oil equivalent (Mtoe). Globally all the energy that is produced is consumed, so consumption is used to calculate the life of the reserves. Stated global reserves are used but many geologists consider the global reserves of both oil and coal to be seriously overstated making the life of the reserves up to 10 years less than shown here. The years the stated reserves will last at the IEA’s (International Energy Agency) projected 1.3% annual growth in consumption and current consumption rates respectively (BP 2010) are as follows:

Table 1
Fuel: Oil Black Coal Brown coal Natural Gas
Reserves: 181000 228511 138226 168741
Years: 30–40 40–60 40–60 40–60

Australia exports about 75% of the energy that it produces, so to calculate the life of Australian reserves of fossil fuels, projected and current production rates respectively are used (AERA 2010):

Fuel: Oil Black Coal Brown coal Natural Gas
Reserves: 500 20444 13133 2772
Years: 10 50–90 60–100 30–60

The Fuels and Past Projections

Past Projections: 1956

On March 8, 1956, Marion King Hubbert accurately forecast the peak of production of oil for the USA in the range of 1969–1975 and for the whole world in the decade after 1998.

These projections were well based in science, but even many geologists could not understand the data at the time, let alone economists.

Hubbert was the head of Shell Research. In 1956 a ground breaking new Scientific Theory was revealed in a symposium in Tasmania: The Theory of Plate Tectonics

The Theory of Plate Tectonics

The Theory of Plate Tectonics brought a new understanding of the Earth’s geology, including the mechanisms for the formation of many mineral concentrations and the mechanisms for the formation of fossil fuels. It was a relatively simple matter to apply The Theory of Plate Tectonics over the known geology to map areas with a high probability of containing fossil fuels and other mineral bodies. This new understanding led to 1960 being the year of peak volume of oil discoveries.

Indeed, today computer software exists that charts gravitational anomalies with Plate Tectonic history to locate possible deeply buried mineral concentrations.

Support for Hubbert’s projections

Any geological commodity (including oil) should be at its lowest price at its peak production. There are a number of inflation-adjusted measures for adjusting the real price of oil: examples can be found at WTRG Economics that also support Hubbert’s projections; but the Gross Domestic Product (GDP) price is the most valid measure.

Figure 1 from Citigroup shows the GDP price for oil. Lowest GDP prices for oil were in 1970 and 1998, coinciding with the peak of oil production in the USA and the world peak of conventional crude oil production respectively.

Figure 1

Graph from Citigroup of real cost of oil

Past Projections: 2001

The above prices were based on projected trends of growth in consumption, growth in production and GDP growth at the time. It is now history that global GDP growth was accelerated during 2002–2008 by low interest rates and excessive debt coupled with the invasions and protracted occupations of Afghanistan and Iraq. But we are roughly back to the growth trend lines from 2001, so those prices may be accurate if a little conservative.

Past Projections 2005

Table 2

Minimum world oil and Australian unleaded petrol prices to 2010:

Year Annual range Petrol A$/L
2005 US$42 – 71/barrel A$0.97 – 1.25/L
2006 US$56 – 95/barrel A$1.11 – 1.48/L
2007 US$74 – 126/barrel A$1.29 – 1.76/L
2008 US$99 – 168/barrel A$1.51 – 2.14/L
2009 US$133 – 223/barre A$1.82 – 2.65/L
2010 US$175 – 297/barrel A$2.21 – 3.33/L

Calculated at A$1=US$0.75

In 2005, by plotting estimates of global GDP growth (3%pa) and using the above price model, see Table 2, I estimated that with a price in excess of US$150/barrel, in 2008 – 9, oil would be the highest price relative to GDP ever recorded and be the cause for the world to be in an economic recession or worse. It is now history that the world went into recession in 2008 when oil hit US$147/barrel — not the only cause but a major contributing factor (Hamilton 2010).

Well-researched scientifically-based projections are very often quite accurate in predicting both events and timing. We need to listen to the science and act accordingly.

Global Oil Production and Consumption

Every modern human economic activity has a component of oil: for energy, for transport, or for raw material content. Oil provides over 90% of the energy for transport and mining, and 95% of the cost of agricultural production is the energy input, mostly oil. And oil provides over 90% of the raw materials for petrochemical and plastics industries, and these industries use some 20 – 25% of global oil consumption. As oil prices rise all economic activity increases in cost, reducing the economic activity (Hamilton 2010).

Chart 1 from BP 2010 shows the oil production and consumption for the last decade.

Note that with only a small shortage of supply to demand in 2007 and 2008 oil prices hit not only record levels but the highest price ever paid in GDP terms.

In the years 2002 to 2008 we know from company reports that the major publicly traded oil companies spent a total of over US$100 billion a year on exploration and development but barely raised oil production at all. We don’t know how much the sovereign oil companies spent but it was substantial.

Even with well over US$100 billion a year spent to increase oil production, production was at best flat. With the drop in oil prices and tightening credit since 2008 spending on exploration and development is much reduced. In addition, restrictions imposed by insurance companies and the increased insurance costs (due to the Timor Sea and Gulf of Mexico oil spills) have further increased the cost of deep-water oil production

Chart 1

chart1: bar chart showing Global oil production and consumption

Can oil production be maintained with reductions in expenditure and increasing costs?

To make matters worse: The return on exploration has been negative for some years, even with the generous taxation treatments by governments for exploration expenditure. The major oil companies, including Saudi Aramco, are not investing in exploration; instead they are following a policy of acquisitions to increase reserves and share buy backs.

How can oil production be increased or maintained in such circumstances?

Chart 2

chart 2: bar chart showing saudi oil production and consumption

Chart 2 from BP 2010 shows the Saudi oil production and consumption.

Note that oil production is in decline despite Saudi Arabia boasting several million barrels a day of spare capacity; even in 2007 and 2008 with record prices Saudi Arabia was unable to substantially increase production.

Also note that Saudi consumption is growing. This is the case in most oil exporting countries, as their economies grow so does their oil consumption, further reducing the amount of oil available for export.

The boost in production in 2008 was due to a new gas field coming into production and producing large quantities of natural gas liquids.

From the 2005 peak to 2009 the decline in production is over 3% per year.

Chart 3

chart 3: bar chart comparing production decline with consumption
  growth

Chart 3 shows the gap between production and demand at conservative estimates of 1%. IEA projected growth in consumption is 1.3% a year and we have already seen that a 1% decline in production is conservative.

Figure 2 — IEA2007
Figure 2: IEA graph of projection for global libquid fuels

Figure 2 is the IEA 2007 projection for global liquid fuels and it shows there may be a shortage of supply before 2012 depending on the global GDP. It also appears that the IEA expected an economic down turn from 2008. Why else the drop in demand after 2008? The low demand GDP is close to actual consumption levels for 2009–2010.

Also note the IEA’s projection for the growth of bio-fuels.

Figure 3

Figure 2: graph showing a shortfall in liquid fuels expected in 2012

Figure 3 shows that the US Energy Information Agency (EIA) expects an increasing shortage of supply of liquid fuels after 2012. By 2030 the production of liquid fuels will be half what it is today. With a 10 million barrel a day shortage of oil in 2015 I am projecting a price of US$250–300/barrel. What price per barrel in 2030?

Figure 4

Figure 4: crude oil capacity extimates c.f. production

Figure 4 from Crude Oil Peak 2010 compares actual and IEA projected OPEC 10 production. Notice that the OPEC 10 countries were not able to raise oil production during the shortage of supply events of 2007 and 2008.

The political nature of the IEA causes it to make the best possible scenario projections instead of the reality. The IEA has constantly over-estimated future supply and under-estimated both future prices and growth in demand. This causes problems across the world with many countries and industries using these overly optimistic projections for planning.

In the International Energy Agency (IEA) report World Energy Outlook 2010, the IEA recognizes that global conventional crude oil production peaked in 2006 at 70 million barrels a day and that production will be maintained at a somewhat lower level for only ten years before falling more rapidly. Currently there are over 15 million barrels a day produced from non-conventional and alternative sources to supply the current consumption of 85 million barrels a day: Natural gas liquids, tar sands, heavy oil, and deep water oil. These non-conventional sources are much more expensive to produce.

It is pure fantasy that the very expensive non-conventional oil will be able to replace declining conventional production and meet a substantial increase in demand for the next 25 years to 99 million barrels a day and maintain such a low price as the IEA projects of US$113/barrel in 2035 (p.6 Executive Summary).

See www.onlineopinion.com.au/view.asp?article=11235 and associated links for more critical analysis of the WEO 2010 report.

The IEA projection that 3 million barrels a day is to be supplied from grain crops (technical yield of 2 barrels of oil equivalent/tonne or 1.5 million tonnes of grain a day) means that many will starve so that a few may drive their cars.

Current and future oil production data analyzed by the Association for the Study of Peak Oil (ASPO) and published by Australia’s Matt Mushalik at crudeoilpeak.com provides evidence that there will be a liquid fuels shortage in 2012 and rapidly declining fuel supplies after 2014. See Figure 5.

Figure 5

Figure 4: The Megaprojects database: a graph showing projects starting up from 2007

Australian Energy Resources Assessment 2010

With global production of oil set to decline below demand in the near future, Australia, with its depleted resource base, growing population, increasing demand and heavy dependence on motor transport, faces a massive increase in the price of liquid fuels — with the attendant impact on the economy.

Natural Gas Production and Reserves

Chart 4

Chart 4: Global Natural Gas production and consumption

The production of natural gas has increased by over 2% a year. While it is a clean burning fuel, transportation and storage are much more expensive in energy terms than oil and coal.

While the export of natural gas requires very large investments, the global demand for energy is driving that investment. Australia has some 12 new LNG plants proposed. It is unlikely that all 12 will be realized; but Australia’s production of natural gas will double within 10 years, reducing the life of the reserves to less than 40 years. Global production is expected to behave similarly.

See Matt Mushalik’s analysis of Australia’s natural gas future. Essentially the contractual export agreements of the mining companies mean a continuing shortage of local supply.

“Western Australia’s natural gas resources could be fully depleted within 30 years. In addition, if government and producer export targets of 50-60 million tonnes per annum of LNG are reached, the total existing resources of the Carnarvon Basin will be fully committed by 2015-2020.

When gas resources are committed as long term LNG export contracts, they are unable to meet current and emerging needs of the local economy.” (crudeoilpeak.com/?p=1902)

Table 3 — Natural Gas Reserves Mtoe
  Mtoe % of Global Reserves Life
North America 8244 4.9 11.3 years
Venezuela 5110 3.0 100+ years
Norway Netherlands 2826 1.7 18 years
Russian Federation 39942* 23.7 84 years
FSU 11610 6.9 ~90 years
Iran 29601 15.8 100+ years
Iraq 2853 1.7 100+ years
Qatar 22833 3.5 100+ years
Saudi Arabia 7128 4.2 100+ years
United Arab Emirates 5787 3.4 100+ years
Middle East 68561* 40.6 100+ years
Africa 13284 7.9 72.4 years
Australia 2772 1.6 72.7 years
Asia Pacific 14616 8.7 37 years
Total World 168741 100 62.8 years

(* Unverified reserves)

Note that the Australian reserves are small at 1.6% of global reserves.

Coal

Coal Equivalents

1 ton of oil = 1.5 tons of anthracite
 = 2 tons of bituminous coal
 = 3 tons of sub-bituminous coal or lignite

Black Coal: anthracite and bituminous coal are the only forms coal economically viable for export.

Anthracite is also known as hard coal, coking coal or metallurgical coal and is in world short supply and priced around US$200/metric ton. The shortage of anthracite is projected to worsen.

Bituminous Coal, also known as steaming coal or thermal coal, is also in high demand and priced around A$95/metric ton in Newcastle.

Brown Coal, or sub-bituminous coal and lignite, is only economically viable when short transportation distances are involved.

As global demand for energy increases — either due to the decline in production of oil and/or from population and/or economic growth — the demand for coal will increase, so the price of coal will only increase.

Global Production and Consumption of Coal

Chart 5

Table 4 — Global Reserves of Black Coal — Million tonnes (BP 2010)
  Total % Reserves Life
North America 113281 27.5 108 years
Russian Fed 49088* 12 N/A
FSU 43521* 11 200* years
South Africa 30408* 7.4 122* years
Australia 36800 9 90 years
China 62200 15 20 years
India 54000 13 96 years
World 411321 100 56 years

(* Indicates reserves have no recent reviews)

Global production of coal is growing at 4 – 5% per annum, but as oil production declines only coal has the capacity to rapidly replace the energy from oil, for a few years anyway.

Coal production is projected to double in Australia by 2020 (and similarly globally) halving the life of the reserves and doubling the CO2 emissions.

Global Coal Production (EarthWatch 2007)

While the tonnage of coal production in the USA will likely continue to increase and peak in the 2020 – 2030 time range, the energy produced will only be a small increase over current net energy production.

The highest grades of coal have already been extracted, with declining quality for the future and higher energy costs for the extraction.

In the last 40 years global reserves of coal have been continually revised down some 55% of 1970 levels due to better geological data. Because of this trend the best possible scenario is that the global tonnage of coal will peak after 2020 but the net energy from coal production will peak some time before that.

Earth Watch 2007: Probably the maximum possible production of energy from coal

Figure 6

Notice that the best scenario for energy production from coal peaks in 2020. But oil production is projected to be down by 20 million barrels a day by then, so Global Peak Energy Production is likely to occur well before 2020. A recent paper by Tadeusz W. Patzek and Gregory D. Croft (2010) projects that both the energy from coal and the carbon dioxide emissions from coal will peak in about 2011 and decline to about 1990 levels by 2037.

With the IEA WEO 2010 Peak Oil Production being 2006, and Peak Coal Production being as early as 2011, it is looking more likely that Global Peak Energy Production could have been as early as 2008 but will almost definitely be before 2020.

A major problem and cost for coal mining is the conflict of land usage where the coal reserves exist. Examples from Australia include:

Primary Energy Consumption

Chart 6

Chart 6 from BP 2010 of global primary energy consumption shows the total global consumption of energy, 11,000,000,000 metric tons of oil equivalent a year. That is about 500,000,000,000,000,000,000 Joules of energy each year and the same order of magnitude needed to cause the Global Warming we are experiencing. Notice that so far the peak energy year was 2008.

Chart 7 from BP 2010 shows the source of the Global Primary Energy. Notice that apart from hydro-electric, renewable energy does not rate a mention. Renewable energy other than hydro-electric supplies less than 1% of global primary energy. Also notice that nuclear energy is in decline as some of the 400 aging reactors are removed from service.

In the last 10 years the consumption of coal has grown at 4 – 5% a year while the consumption of oil has been close to flat. Natural gas consumption has grown at 2 – 3% a year.

Chart 7

It is a problem that the net energy from our fossil fuels is also in decline. Each Joule of energy that we produce is requiring a bigger energy investment each year. The Energy Profit Ratio (EPR) or the Energy Returned on Energy Invested (EROEI) for energy production is in decline. We get less energy each year for the energy expended.

Australian Primary Energy

Although AERA 2010 quotes 5% of Australian primary energy coming from renewable sources, most of that is from biomass, and the biomass data do not have a source; 2% comes from hydro-electricity and only 0.3% comes from other renewable electricity. BP 2010 does not rate the level of Australian consumption of renewable energy, as shown in chart 8.

80% of the oil that we use is imported and the amount is growing quite quickly each year as our consumption grows and our production declines. While Australia consumes just over 1% of global energy we export 75% of the energy we produce.

Chart 8

If we are to have any prospect of a modern society after fossil fuels we need at least 25% of our current primary energy consumption to come from renewable sources by 2030. And this must be done while we still have the fossil fuel resources to provide the materials necessary to build the infrastructure.

After 2030 the cost of the fossil fuels to manufacture the materials for the vast infrastructure necessary to capture the diffuse sources of renewable energy will render the venture unviable.

The IEA also points out that fossil fuels are globally subsidized to the tune of US$557 billion dollars a year while renewable energy receives only US$45 billion a year in subsidies.

Fossil fuels receive 12 times the subsidies as renewable energy without taking into account the cost of the impact on Global Warming, air and water pollution, public health costs, and catastrophes like the Gulf of Mexico oil spill.

The very technology that will replace the declining supply of fossil fuels is being financially handicapped while the fuels that will be largely gone inside fifty years, and are causing such serious problems globally; are being heavily subsidized. This is a serious error in economic logic.

While Australia has good reserves of coal we are exporting it at an accelerating rate. Production is projected to double before 2020 with new coal loaders and rail lines planned and financed for the three major ports. Newcastle is projected to be exporting 180 million metric tons a year by 2013, up from less than 100 million tons a year currently. This will reduce the life of the reserves to a maximum of 50 years.

Exports of coal, uranium and LNG are all expected to rise significantly, to meet growing world energy requirements. Net imports of liquid fuels are projected to increase at an average rate of 3.3 per cent per year, reflecting declining oil production.(AERA 2010, p. 26)

Energy Section 1: 24 Joint Operating Environment 2010

To meet even the conservative growth rates posited in the economics section, global energy production would need to rise by 1.3% per year.

By the 2030s, demand is estimated to be nearly 50% greater than today.

To meet that demand, even assuming more effective conservation measures, the world would need to add roughly the equivalent of Saudi Arabia’s current energy production every seven years.

Australian Energy Resources Assessment 2010

Conclusion

We need to immediately impose a substantial and direct tax on our resources: By the time my 11-year-old grand-son is my age we will be virtually depleted of fossil fuels. I do not want to leave him with nothing else in their place.

 

Challenges Associated With Renewable Energy

Renewable energy is quite diffuse. It is spread over a large area so we need large area collectors to make use of that energy. The exception is in places where nature has collected and concentrated that energy, such as in high-rainfall mountain valleys and volcanically active areas. Unfortunately Australia is not blessed with abundant examples of either.

Australia’s renewable energy is not ideally located near population centres or markets. Our main wind and wave potential is along the continental southern coast but few people live there. Our tidal potential is in the far north and few people live there. Our solar potential is closer to the centre of the continent and few people live there.

Well over A$500 billion will need to be spent on Australia’s energy production by 2030 (AERA 2010).

More than half of this is expected to be in resource extraction, and around a quarter in transportation, including rail, pipelines, and electricity transmission lines. Within the electricity sector, more than half of the requirement investment is in generation, and a further 41 per cent in transmission. The requirement could be even greater if Australia commits to accelerated climate change action, particularly increasing the share of renewable energy in electricity generation. (AREA 2010, p. 46 Asia Pacific Energy Research Centre 2009)

The EPR or the EROEI (Energy Profit Ratio or the Energy Returned on Energy Invested) for renewable energy is low, but also must include the EPR for the fossil fuels that are needed to mine, transport, and refine the materials to manufacture, and to install the needed infrastructure.

An example is a large wind turbine. The tower alone contains some 22 tonnes of steel, the foundations contain many tonnes of concrete and we need some 1000 such wind turbines to replace one medium-sized coal-fired power station. And they only produce electricity when the wind blows. The turbine’s blades are high-tech devices as are the rare-Earth metals-based generators, both requiring high energy inputs.

Also needed, and to be counted in the EPR equation, is the transmission infrastructure to transport the electricity from the generation areas to markets.

As the EPR on fossil fuels declines the EPR on renewable energy production declines.

Solar arrays, both photovoltaic and thermal, must cover large areas, thousands of square kilometres. Infrastructure of those dimensions is expensive in both materials and energy. Australia can power itself with a 2000 sq km solar array but it would cost several years total GDP.

We must install our renewable power generation NOW while we still have the low energy-cost fossil fuels to do it.

The distribution of electricity and all other services to a sprawling suburbia is extremely energy-expensive.

Figure 7

Figure 7 and 8 from the USA show the energy wasted in distributing it to sprawling markets.

Figure 8

Australian population has one of the lowest densities. To increase our energy efficiency we must change our way of living to small-area high density cities so that the energy costs of providing the necessary services has a much higher energy efficiency.

The world needs a low cost photovoltaic roofing material so that housing is also a distributed power generator.

Economists need to stop thinking and projecting in the virtual economy of financial terms but start thinking and projecting in the real economy of energy.

Glossary

EIA
United States Department of Energy: Energy Information Agency
EPR
Energy Profit Ratio: Determined by dividing the net energy produced by the gross energy inputs
EROEI
Energy Returned on Energy Invested: Calculated as per the EPR
IEA
International Energy Agency: An agency made up of political appointments from 28 countries
GDP
Gross Domestic Product
Mtoe
Million metric tonnes of oil equivalent
OPEC
Organisation of Petroleum Exporting Countries
Primary Energy
The energy consumed both in the production of energy and consumption of the energy produced. Primary Energy is all energy consumed, from all sources.
WEO 2010
The IEAs annual report; World Energy Outlook 2010

References:

Australian Energy Resource Assessment 2010

Department of Resources, Energy and Tourism Minister for Resources and Energy: The Hon. Martin Ferguson, AM MP Secretary: Mr John Pierce

Geoscience Australia A/g Chief Executive Officer: Dr Chris Pigram

Australian Bureau of Agricultural and Resource Economics (ABARE) Executive Director: Phillip Glyde

Released March 1 2010

https://www.ga.gov.au/products/servlet/controller?event=GEOCAT_DETAILS&catno=70142

This 350 page report is a large collection of contradictions. It reads like three different unrelated reports shuffled together. The very reliable data in the report come from Geoscience Australia. Then it appears that ABARE take the data, along with some optimistic assumptions, and produces some equally optimistic projections. The Department of Resources Energy and Tourism and Minister of Resources and Energy, The Hon. Martin Ferguson, then appears to further embellish the already optimistic ABARE projections.

An example of the embellishment of optimistic projections (spin):

While a rise in the marginal cost of production is expected over time, technological developments associated with non-conventional liquids, such as coal-to-liquids (CTL), gas-to-liquids (GTL), shale oil and second-generation bio-fuels, have the potential to play a major role in anchoring oil prices at a level that is below what would be the case without these backstop technologies (p. 43).

The reality:

At present there are very few commercial CTL and GTL projects, reflecting large capital and production costs and technically challenging production processes(p. 79).

The future expansion of gas-to-liquids (GTL) capacity will depend on competing uses for natural gas such as for electricity generation, transport or export by pipeline or as LNG.

One of the challenges for coal-to-liquids (CTL) is managing the high CO2 output. Each barrel of oil produced from this technology releases between 0.5 and 0.7 tonnes of CO2 (3.5 – 5 tonnes of CO2 for each tonne of oil), compared with around 0.2 tonnes of CO2 from a barrel of oil from the GTL process (IEA 2008).

In comparison to GTL and CTL, production from oil shale is the more uncertain, given its energy and carbon intensity. There is some oil production from oil shale in Brazil, China and Estonia. The introduction of a price for carbon would further increase the cost of shale oil extraction (p. 80).

production costs for these unconventional sources have all increased, associated with higher capital and operating costs (p. 66).

With increasing energy shortages and rising energy prices — which will also increase infrastructure costs — the challenges facing CTL and GTL, shale oil and bio-fuels will only be exacerbated.

Forecasting World Crude Oil Production Using Multicyclic Hubbert

Ibrahim Sami Nashawi, Adel Malallah and Mohammed Al-Bisharah

Department of Petroleum Engineering, College of Engineering and Petroleum, Kuwait University February 4 2010

http://pubs.acs.org/stoken/presspac/presspac/full/10.1021/ef901240p

This is a definitive study in modeling. This is the most optimistic timing of global peak oil production of any scientific analysis. Their modeling indicates that oil production will not peak until 2014. The bad news is that the modeling indicates that there will only be an additional 5 million barrels a day production more than in 2009. The decline in production after 2014 will be 2 – 3% per year.

Kuwait University, for political reasons, must use stated reserves. Many petroleum geologists and academics believe the global reserves are up to 40% overstated. Instead of the stated 1330 billion barrels of world reserves they consider the number to be more realistic at 700 – 900 billion barrels. Applying these numbers in the modeling produces a peak up to 10 years earlier with a decline rate in production approaching 5% per year, in line with IEA reported global peak production of 2006 and production decline rates.

BP Statistical Review of World Energy June 2010

http://www.bp.com/sectiongenericarticle.do?categoryId=9033088&contentId=7060602

This is a valuable compilation of data of the world’s energy. The only criticism is that the data are published as received without verification. For production and consumption the data are reasonably reliable as these data have been well scrutinized. The reserves data for most democratic countries are acceptable as there are strict reporting guidelines. But for many sovereign oil companies the reserves data are totally unverified and disputed by many petroleum geologists and academics.

Joint Operating Environment 2010

United States Joint Forces Command

(JOE 2010)

http://www.peakoil.net/files/JOE2010.pdf

This report looks at the future operating environments for the US defense forces, including food, water, energy etc. The US Joint Forces Command is the world’s largest consumer of liquid fuels and possibly the largest consumer of energy. The security of supply and the cost of energy and liquid fuels in particular, are of major strategic importance to the US military.

The supply of liquid fuels may be inadequate to meet demand as early as 2012. And by 2015 the shortfall of supply of liquid fuels to demand may be as high as 10 million barrels a day.

Nonlinearities and The Macroeconomic Effects Of Oil Prices

James D. Hamilton email: jhamilton@ucsd.edu

Department of Economics University of California, San Diego

December 9, 2009 Revised: June 14, 2010

http://dss.ucsd.edu/~jhamilto/oil_nonlinear_macro_dyn.pdf

This paper studies the effect of oil prices on economies and is useful for reference.

The cost of oil and energy has non-linear affects on the economy. Ten of the eleven economic recessions since the Second World War have been preceded by substantial rises in oil prices. The one exception from the 1960s was very mild in extent.

A Global Coal Production Forecast With Multi-Hubbert Cycle Analysis

Tadeusz W. Patzek , Gregory D. Croft

Energy May 2010

http://xa.yimg.com/kq/groups/20593576/885722944/name/Patzek+and+Croft+2010+-+Peak+Coal+2011.pdf

A global multi-Hubbert analysis of coal reserves and production indicates global energy from coal (and the associated carbon dioxide emissions) peak in 2011 and decline at 2% pa for about two decades afterwards.

Coal: Resources and Future Production

Background paper prepared by the Energy Watch Group March 2007

http://www.energywatchgroup.org/fileadmin/global/pdf/EWG_Report_Coal_10-07-2007ms.pdf

This report reviews the reserves, production and energy from coal.

The coal reserves of some countries with notable reserves have not been reviewed in nearly 40 years, but in countries that have done the reviews, the reserves are down to 55% of pre-1980 reserves.

While the tonnage of coal production may continue to increase for a decade or so, the net energy from coal production is soon to peak.

Crude Oil Peak

http://www.crudeoilpeak.com

Australia’s own Matt Mushalik compiles considerable data, reports and reviews on this web site. This is a valuable Australian-focused tool.

Danny Hannan
1 November 2010
revised 1 December 2010

[an error occurred while processing this directive]

Contact Us

contact (AT) camwest.pps.com.au

Coming Rides

Articles

Home | About Us | Projects | News | Rides | Advocacy | Links