Peak Oil: Peak Oil: Sooner? or Later?Sooner? or Later?

Dennis SilvermanDennis SilvermanPhysics and AstronomyPhysics and Astronomy

U C IrvineU C Irvinewww.physics.uci.edu/~silverma/www.physics.uci.edu/~silverma/

Laguna Beach Energy WorkgroupLaguna Beach Energy WorkgroupSept. 22, 2007Sept. 22, 2007

World and US Oil UseWorld and US Oil Use

• The World uses 85 million barrels (mbl) of oil a day.

• This is about 31 billion barrels of oil a year worldwide.

• The US uses a quarter of this, or 21 mbl per day.

• A barrel yields 42 gallons, about half of which is gasoline, and which we use in our cars.

Uses of a Barrel of Crude OilUses of a Barrel of Crude Oil

Petroleum Fuel FuturePetroleum Fuel Future• US oil production peaked around 1970.• World population growth is expected at 1% a

year. • US energy consumption is increasing at 1.5% a

year.• The US imports 60% of its oil.• Proven world oil reserves are about 2,000 billion

barrels with 1,100 bbl of this already used.• Unproven reserves plus better recovery may

boost this to 3,000 billion barrels.

Used (blue), Proved (red), Undiscovered (yellow), Used (blue), Proved (red), Undiscovered (yellow), Improved Recovery (purple)Improved Recovery (purple)

3,000 bbl available / 2,000 bbl available 3,000 bbl available / 2,000 bbl available

USGS Recoverable Oil (higher)USGS Recoverable Oil (higher)Industry Proven Reserves (lower) Industry Proven Reserves (lower)

• USGS:– Total 2,300 BBls– Middle East 40%– N. America

includes tar sands

• Industry:– Total 1,020 BBls– Middle East 66%

• Data for year 2000.

Pessimistic Oil Growth and Decline Pessimistic Oil Growth and Decline if only 2,000 Bbl available (1,000 Bbl left in if only 2,000 Bbl available (1,000 Bbl left in reserves). OPEC dominance from 2008.reserves). OPEC dominance from 2008.

ASPO Projection: 2008 PeakASPO Projection: 2008 Peak

Oil Discoveries Declining (ASPO)Oil Discoveries Declining (ASPO)

Optimistic 3,000 BBls of oil total resources, 2,000 Bbl left Optimistic 3,000 BBls of oil total resources, 2,000 Bbl left (from USGS). Peaking unlikely as refineries only built for (from USGS). Peaking unlikely as refineries only built for

long term production (20 years).long term production (20 years).

DOE / EIA: OPEC increases to 2030DOE / EIA: OPEC increases to 2030

Arguments for Peak Oil Soon or Arguments for Peak Oil Soon or The End of Cheap Oil The End of Cheap Oil

• Some oil geologists, Campbell and the Association for the Study of Peak Oil and Gas (ASPO)

• Major fields have all been discovered• Non middle east fields are in decline• Rate of discovery low• Saudi fields cannot expand to close gap

(Matthew Simmons)

Projections for Peak Oil Later: USGS, Saudi Projections for Peak Oil Later: USGS, Saudi Aramco, Cambridge Energy Research Aramco, Cambridge Energy Research AssociatesAssociates• Economists: If you can pay more, you can have more.• Oil now at $80/barrel, not $20.• Can pump fields up to 50-60% of resources with more

water and modern technology• Saudi Arabia and middle east may have more fields,

haven’t yet explored them• Saudis claim 50 years for oil fields, (but not that they can

increase production to make up for worldwide decline)• Can afford alternatives as tar sands, oil shale, heavy oil,

synfuel from coal, biofuels, deep ocean fields.

CERA CERA

Super Optimistic Oil Plus Oil Shale Super Optimistic Oil Plus Oil Shale 2 Trillion barrels, 3 trillion barrels, and oil shale 2 Trillion barrels, 3 trillion barrels, and oil shale

Oil Production Scenarios 2007. Note Plateaus. Oil Production Scenarios 2007. Note Plateaus. Earliest Peak: Earliest Peak: 2010 Colin Campbell 2010 Colin Campbell ASPO. .

Latest Plateau: Latest Plateau: 2065 Saudi2065 Saudi, , Daniel YerginDaniel Yergin CERA

World Proven Oil Reserves by Region (2003):World Proven Oil Reserves by Region (2003):Total 1,150 BBls, 31 BBls yearly usage.Total 1,150 BBls, 31 BBls yearly usage.

Strait of Hormuz. 17 mbls per day out of world Strait of Hormuz. 17 mbls per day out of world total of 85 mbls per day (20%). US has two total of 85 mbls per day (20%). US has two months of imported oil stored in the Strategic months of imported oil stored in the Strategic Petroleum Reserve.Petroleum Reserve.

• Iran on right• Iraq, Kuwait,

Saudi Arabia, UAE, Qatar on left

• Two 2 mile wide ship channels

Problems in Estimating Oil Reserves Problems in Estimating Oil Reserves

• The simple fact is that everyone involved in the industry is motivated to be super optimistic.

• Also, availability depends on the cost of oil which recently has risen from $20 to $70 per barrel. It will probably stay there since motorists haven’t cut consumption at that price.

• When you get to the older oil fields, you can now pay more for water and steam extraction, and tar sands becomes a source, but it must be hard to estimate production under such future methods.

• Congress has held hearings on this, but the basic estimation problems will remain.

• New sources: deep sea drilling, melting arctic ice cap allowing drilling, drilling near national parks and forests, near shore leases in gulf proposed, outer continental shelf drilling, and synfuel from coal.

Motivations for Oil Entities to Make Motivations for Oil Entities to Make Optimistic EstimatesOptimistic Estimates

• OPEC countries can pump proportionately to their reserves, so these may be overestimated. Many of them doubled their estimate of reserves recently.

• Many countries have nationalized their oil, and estimates from them are politically suspect. 65% of oil now in nationalized oil companies, not available to others to develop.

• Such countries often don’t have the capital to exploit their fields in the best manner.

• Oil company stocks depend on the value of their reserves.• Oil shale costs of manpower and heating shale with natural gas for

extraction are underestimated.• The oil companies also have a vested interested in seeding doubts

about global warming, which might limit their ultimate production of $80 trillion in oil reserves.

• The super optimistic estimators raise money from subscriptions from the oil industry.

Geopolitical MaximsGeopolitical Maxims

• Most oil producing states and regions are in conflicts because factions or states are fighting over the vast profits from oil.

• These battles and the nationalization of oil usually lower the productivity of the oil fields in question.

• They also lead to “failed states” of dictatorships with a lack of human rights.

• Unless we act to significantly lower oil use, this will continue, along with our continuing involvement in the Middle East.

Pseudo Peak Oil Pseudo Peak Oil (All the Economy Will Bear)(All the Economy Will Bear)

• One way we would have known that we had hit peak oil with increasing demand, is that the price would go up.

• However, due the intransigent (inelastic) demand of motorists, OPEC has managed to increase the price of oil from $20 to $70 a barrel. This would have happened anyway since there is little spare capacity.

• This has at least held demand steady in the US, although gas guzzler sales are on the rise again.

• So we have the effects of an oil peak, without there being a peak, and should adapt accordingly.

Cost of the Oil to UsCost of the Oil to Us

• Consider the lower reserve case at 1,000 Bbls (a trillion barrels).

• At $80 / barrel, the reserve is worth $80 trillion.• Assume the US still keeps using a quarter of the

oil, and the imports are at least 60% of this.• Then the US will buy $12 trillion in imported oil.• With 300 million citizens, this amounts to at least

$40,000 per capita that will go abroad regardless of when the peak or plateau occurs.

Foreign Oil Sources for the US in percentages of Foreign Oil Sources for the US in percentages of imports. Most imports come from Canada, Saudi imports. Most imports come from Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria. The US Arabia, Mexico, Venezuela, and Nigeria. The US imports 60% of its oil.imports 60% of its oil.

Where do our oil import expenditures go?Where do our oil import expenditures go?Prince Bandar was the Ambassador to the US from Saudi Arabia. This Prince Bandar was the Ambassador to the US from Saudi Arabia. This is his estate in Aspen, CO. It is now on the market for $135,000,000, is his estate in Aspen, CO. It is now on the market for $135,000,000, the most expensive home in the world. His 56,000 square foot the most expensive home in the world. His 56,000 square foot residence is larger than the White House. residence is larger than the White House.

Middle East Oil Fields. Dubai Tower is Middle East Oil Fields. Dubai Tower is now the tallest building in the world.now the tallest building in the world.

Peak Oil Ranges for three rates of growth.Peak Oil Ranges for three rates of growth.The darker shading is the more likely area.The darker shading is the more likely area.

CERA Super Optimistic Plus Adds Oil Shale, CERA Super Optimistic Plus Adds Oil Shale, Extra Heavy to 4,800 BBls Oil, Including 800 Extra Heavy to 4,800 BBls Oil, Including 800

from Further Exploration from Further Exploration

US Crude Oil Pipelines. California isolated US Crude Oil Pipelines. California isolated from other states, leads to higher prices.from other states, leads to higher prices.

Future of Fossil FuelsFuture of Fossil Fuels

• Petroleum• Natural Gas• Coal• Oil Shale and Tar Sands• CO2 Emissions

U.S. 20 Year Projections of Energy Use U.S. 20 Year Projections of Energy Use in Quadrillions of BTUs (Quads)in Quadrillions of BTUs (Quads)

US and World Natural GasUS and World Natural Gas• US demand growth is 3% per year.• A shortage now exists in the US and plans for

Liquid Natural Gas (LNG) terminals for imports exist around the country (Ventura, Long Beach, Baja California)

• LNG could grow from 1% now to 20% by 2020.• The graphs are for the time the supply will last.• The units are in Quads (Quadrillion BTUs)• The whole US energy consumption in all forms

is 100 Quads per year.

• Current US Proven is 12 years at current production

USA Natural Gas Production Forecast. USA Natural Gas Production Forecast. Falloff starts in 2015Falloff starts in 2015

World Oil and World Oil and Natural Gas Natural Gas

ReservesReserves• Total reserves,with natural gas reserves

in equivalentbillion barrels ofOil (bbl).• World oil consumption

is 30 bbl/year.• Left out Canadian tar

sands at 179 bbl oil.• US has 22 bbl oil, and

produces 2.0 bbl/year and would last only 11 years.

Coal Strip Mining. Truck holds 350 tons of Coal Strip Mining. Truck holds 350 tons of coal. Enough carbon per capita for a US coal. Enough carbon per capita for a US

resident for 60 years.resident for 60 years.

US Coal SupplyUS Coal Supply• The total US coal reserve is 5700 Quads.• The current rate of use is about 20 Quads per year.• Population growth will reduce its longevity from 250

years with no growth• Conversion to motor fuel (synfuel) uses 2 Quads of coal

to generate 1 Quad of fuel plus the additional CO2 emission.

• Conversion to hydrogen fuel uses even more.• The following graph of US coal lifetime assumes 54% of

underground coal is recoverable.• Estimates are for various growth rates of use.

US Coal Lifetime. Only 100 years if 1.5% US Coal Lifetime. Only 100 years if 1.5% growth or if partially converted to gasoline.growth or if partially converted to gasoline.

World Coal ReservesWorld Coal Reserves

Dilute Fossil ResiduesDilute Fossil Residues• Oil shale or tar sands has dilute amounts of heavy oil or

near-solid carbonaceous residues. – Surface is mined at 2 tons per barrel of oil.– Deeper deposits are steam diluted and further processed to

yield fuel, using energy, and costing CO2 production. – Cost is range of $20-$40/barrel before shipping.

• It also contains nitrogen and heavy metal compounds.• The US has little. Worldwide estimates are large but

speculative. 180 billion barrels worth in Canada.• Source for several of the previous graphs is on the web

in Physics Today, July 2004, by Paul B. Weisz.

Fossil Fuel Future SummaryFossil Fuel Future Summary• Oil, Natural Gas, Shale Oil, and Coal produce CO2.

– Carbon sequestration requires an extra 30% of power and needs research. FutureGen $1 billion research plant.

• Oil is needed for transportation fuel– Too expensive for electricity generation – Reserves: About 50 years with growth in use– 2/3 is in the Middle East

• Coal may be converted to liquid fuel for transportation– 250 years at current rate, 100 years with conversion

• Total world reserve of oil is a large question, uses politically motivated estimates of individual countries

• Current rate of use of fossil fuels will increase world wide• U S proposed climate technology program

Comparative Recent World CO2 EmissionsComparative Recent World CO2 Emissions

2000 and 2025 World Greenhouse Gas 2000 and 2025 World Greenhouse Gas EmissionsEmissions

Short Term OptimumShort Term Optimum• The best way to hold down CO2 increases is to remove

fossil fuels from electricity generation, but use it just for vehicles.

• Since ½ of US electricity comes from coal which generates twice as much CO2 per energy unit as does natural gas, we should switch to natural gas. This, however, involves massive and possibly costly imports.

• We need increases in alternate energy sources such as hydro, nuclear, wind and solar.

• We also need increases in energy efficiency and conservation.

• This especially includes high mileage vehicles.

Transport gives 41% of California Transport gives 41% of California greenhouse gases as an end-use sectorgreenhouse gases as an end-use sector

Comparative Projected Vehicle Fuel Comparative Projected Vehicle Fuel EconomiesEconomies

Carbon in Fuels: Billions of tons of CCarbon in Fuels: Billions of tons of C

What can California Do?What can California Do?• California is the world’s fifth largest economy, and has

led the way on reducing vehicle pollution before.• State law and executive order for utilities to increase

renewable electricity to 20% by 2020. • Use combined heat and electricity systems in large

plants.• Clean up older, high polluting plants.• Mass transit and growth planning.• Removing firewood in forests and increasing them as a

carbon storage component.• See Union of Concerned Scientists:

www.climatechange.org• Unfortunately, they leave out a nuclear plant option.

Paris: Energy efficient small car Paris: Energy efficient small car and convenient parkingand convenient parking

Fossil Fuel Energy UnitsFossil Fuel Energy Units

• The Quad is 1015 Btu (British Thermal Units)• Total U.S. energy use is nearly 100 Quad per

year.• A barrel of oil (bbl) is 5.8 million Btu.• So 100 Quads is equivalent to

100 x 1015 / 5.8 x 106 = 17 x 109 bblor 17 billion barrels of oil.

• A barrel of oil is 42 gallons.

The Long-term ChallengeCarbon emissions and stabilization scenarios

The Global Carbon Cycle - 1990sThe Global Carbon Cycle - 1990sUnits Gt C and Gt C yUnits Gt C and Gt C y-1-1

The KP seeks to reduce net carbon emissions by about 0.3 Gt C below 1990 levels from industrial countries

Atmosphere

Fossil Deposits6.3

63

91.7

60

90

3.2

Plants

Soil

Oceans

750

500

2000

39,000

About 16,0001.

6

…are leading to a build up of CO2

in the atmosphere.

Fossil emissions ...

…and land clearing in the tropics...

Minimum Summer Arctic IceMinimum Summer Arctic Ice2007 versus 20052007 versus 2005

Summer ice may be all gone by as early as 2030Summer ice may be all gone by as early as 2030