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The Peak Oil Debate

Will global oil production start its final decline soon, or not?

Bruce RobinsonConvenor, ASPO-Australia

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www.ASPO-Australia.org.auAn Australia-wide network of professionals working to reduce oil vulnerability

ASPO-Australia Working groupsFinance SectorHealth Sector Social Services SectorRemote indigenous communitiesActive transport (bicycle & walking)Agriculture, Fisheries and FoodBiofuels Urban and transport planning Oil & Gas industryBehavioural changeLocal Government sectorRegional and city working groupsConstruction IndustryFreight sectorPublic transport sectorDefence and Security EconomicsTourism Young Professionals working group

Senate inquiry submission

ASPO-Australia is part of the international ASPO movement

Senate Inquiry into Australia's future oil supply and alternative

transport fuels

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Outline What is Peak Oil ?

the time when global oil production stops rising and starts its final decline

We will never "run out of oil"

When is the most probable forecast date ? perhaps 2010-2015

What might it mean for Australia's Energy Security? lots!

What mitigation and adaptation strategies are practical?

1930 1970 2010 2050

Peak Oilbutwhen?

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Many books about Peak Oil

Campbell & Laherrère March 1998

Campbell 2003

Brian Fleay Perth 1995

Deffeyes 2001

Heinberg 2003 Roberts 2004

2005

2006

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•Please put your hand up if you think that we have crossed the Hubbert Peak and we are entering a demand driven pricing era,

•and hands up those who don’t?

•Undecided

Eric StreitbergEric StreitbergExecutive Director Executive Director ARC Energy LimitedARC Energy Limited

Australian Petroleum Production & Exploration Association conference

APPEAApril 2005Perth

•1/3rd

•1/3rd

•1/3rd

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Mb/d

US oil production: Peak in 1970

2002

Jeremy Gilbert, ex BP www.PeakOil.net

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Past World Oil Production and Forecasts

Prof. BauquisFrance

Dr Ali Samsam BakhtiariIran

Chris SkrebowskiUK

Prof. Aleklett, ASPOSweden

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Chris Skrebowski Editor, Petroleum Review, London

The practical realities

• The world needs oil production flows

• Consumers need delivery flows

• Reserves are only useful as flows

• Worry about flows not reserves

"40 years reserves left at current production rates"....This is a very misleading statement

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Alaskan North Slope ProductionReserves grow -- Production fallsPrudhoe Bay, Alaska

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A simple observation -- or why peak will be earlier than most people expect

‘Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.’

Decline

Expansion

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Why are oil supplies peaking?

• We are not finding oil fast enough• We are not developing fields fast enough• Too many fields are old and declining• We are short of people and equipment• Oilfield inflation is soaring

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The real oil discovery trendLongwell, 2002

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1995-2025 Discovery Forecast USGS

The real oil discovery trendLongwell, 2002

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Oil production flows -- all new flows take two to twenty-five years

Current supply84mn b/d or 30bn b/y

Global new field discovery (7-10bn b/y)Tar sands and Heavy oil

Biofuels + others

Known oil reservesin production (90%)

NIP10% Yet-to-find

probableYet-to-find

possible

2 to 25 years

EOR

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How old are the fields?

• Of the 18 largest fields, 12 are in decline, 5 have some potential and 1 is undeveloped

• The 120 largest fields give 50% of total• 70% of production from fields 30+ years old• Few large recent discoveries

• Relying more and more on ageing fields and new small discoveries

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What are the BP statistics saying?

• OECD production peaked in 1997 and has now declined by just under 2 million b/d (8.8%)

• Non-Opec, non-FSU production peaked 2002• North America/Mexico peaked in 1997• North Sea - UK/Norway/Denmark peaked in 2000

now declined by 1.2 million b/d (19.2%)• Around 25 significant producers in decline• About 28% of global production from decliners

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The UKCS depletion reality -- production down to 1mn b/d by 2010

UKCS oil production by month 1999-2010

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North Sea production by field

Forties monthly production to date

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The top five decliners in 2005

Country Production Peak Year DeclineUSA 6.8mn b/d 1985 -5.51%Norway 2.9mn b/d 2001 -7.50%UK 1.8mn b/d 1999 -11.00%Mexico 3.8mn b/d 2004 -1.60%Syria 0.5mn b/d 1995 -11.40%

1970

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How the Megaprojects database is created and used

• All publicly available data

• 2006-2012 148 Opec and 70 non-Opec projects

• Opec data (from their website)

• Incremental production allocated by start up date

• Graphed to show volumes available to meet demand

Megaprojects Report, Petroleum Review April 2006

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Global liquids capacity to 2015

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Chris Skrebowski's conclusions

• Supply will remain tight and prices high barring a major economic setback

• Oil supply will peak in 2010/2011 at around 92-94 million barrels/day

• Oil supply in international trade may peak earlier than the oil production peak

• Collectively we are still in denial • WE HAVE JUST 1,500 DAYS TO PEAK

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ABARE forecasts

ASPO Random number generator

"If the price of eggs is high enough, even the roosters will start to lay." ABARE to Senate inquiry into Australia's future oil supplies

"Forecasters' Droop" ??

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ABARE oil price forecastsUS$/bbl2002 for 2004 $262004 for 2005 $322004 for 2005 $37.95 – 4.8%

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1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77May-06 Dec 2012Dec 2011

NYMEX Futures WTI 10th April 2006 US$/bbl

ABAREUS$39

in 2011

NYMEXUS$67

in 2011now US$64.5

ABARE2005

US$35 in 2006

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Geoscience Australia, APPEA, ABARE

Australia’s oil production and consumption1965-2030

Million barrels/day

Actual Forecast

Consumption

Production

P50

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80% of Australia’s oil usage is in transport

If Australia’s 20 M tpa wheat crop → ethanol = 9%

Australia uses 45,000 megalitres of oil each year

a 360m cube

Sydney Harbour Bridge is 134 m high

=1.3 EfT3

100 ml of oil contains 1 kWh of energy. Enough to move a small car to the top of the Eiffel tower

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Million barrels/ day 2005 BP Statistical Review, 2006

Australia uses 0.9 China 7.0US 20.6World 82.5 US 1 cubic km oil / year

Australia China United States

1 kml l

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Oil Consumption bbl/day (blue = net imports, red = production)Total Oil Consumption

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Energyfiles LtdEnergyfiles Ltd

EENERGYNERGYFFILEILESS

www.energyfiles.cowww.energyfiles.comm

Oil production is not shared equitablyUS: 5% of world's population uses 25% of world oilChina: 21% 8%

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Quelle: BP Analyse: LBST, ß

Production decline rate ~ 10%UK will be a net importer by 2007

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Quelle: BP 2003; Analyse: LBST, ß

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Data: BP. Analyse: Zittel LBST, ß, Pang Xiongqi

2020

Production

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Common MythLeonardo MaugeriENI SPA Rome

“..just as the Stone Age did not end for the lack of stones, the Oil Age will not end because of the scarcity of oil. Rather oil will inevitably be surpassed in convenience by a new source of energy in the future”.

Biomass Walking, horses, horse & cart, horse-drawn barge

Coal Trains

Oil (& gas) Cars, trucks, trains, planes

?? Is there anything else better than oil & gas ?? or even as good ? Thermodynamics? Theology?

EconomistUltra-optimist 15th December 2003

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Richard Miller BP Exploration Operating Co. Ltd. Middlesex, UK

…oil, the most energy-dense of the natural, non-nuclear fuels on the planet..But there isn't anything conceivable that could replace conventional oil, in the same quantities or energy densities, at any meaningful price…

Realist ?, Pessimist ?

12th January 2004

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Impact (MM bpd)

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Coal Liquids

Heavy Oil

GTL

Efficient Vehicles

Worldwide Crash Program Mitigation of Conventional Oil Production Peaking

A Study for DOE NETLHirsch et al., 2005

Delay / Rapid growth.

Roughly 35 MM bpd at year 20.

2005

Study

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Is there a possible transition to another fuel?. Probably not.

Can we run ALL our cars on water, hydrogen, ethanol, GTL ?? No.

EROEI (Energy return on energy invested) Very important

Les Magoon, USGS 2001

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December 2005

July 2006

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VIPER Oil vulnerability and socioeconomic factors

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VAMPIRE Oil vulnerability and mortgage rate risk

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Probably yes. As the Senate report shows, the "no-worries" camp are remarkably short on reliable future production data and remarkably long on hope.

What should we do.?

Governments and businesses should each set up an "Office of Oil Vulnerability" to help people plan for the probability of Peak Oil. There are many options useful for mitigation and adaptation.

No "Silver Bullet", but "silver buckshot"

Oil vulnerability risk assessment and managementis an important mechanism of minimising exposureand maximising opportunities. It is a new and promising field.

Hint: Check your superannuation is not being invested into urban toll-roads, tunnels and airports.

www.ASPO-Australia.org.au

The Peak Oil Debate Will global oil production start its final

decline soon, or not?

EENERGYNERGYFFILILESESwww.energyfilewww.energyfile

s.coms.com

Bruce.Robinson@ASPO-Australia.org.au08-9384-7409 0427 398 708

GLOBAL OIL PRODUCTION FORECAST: 1950 to 2050

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© Energyfiles Ltd

DISCOVERIES

PRODUCTION

offshore

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a few more slides follow,in case they are needed for questions

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February 2004

By 2015, we will need to find, develop and produce new oil and gas equal to eight out of every 10 barrels being produced today.

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www.PeakOil.net Association for the Study of Peak Oil & Gas, 2004

Gboe/pa World All Oil

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www.PeakOil.net ASPO 2004

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World oil shortfall scenarios

Past Production of Oil

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By 2030, the gap is equivalent to 6,000 nuclear reactors

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Past Production of Oil

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• no single “Magic Bullet” solution, • probably no replacement ever for cheap plentiful oil• Urgent preparation and adjustment are vital

2005

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AustraliaGeoscience Australia

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Past Oil Production and Forecasts

1930 1970 2010 2050

TotalBass Strait

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1: “Talk about it, Talk about it”2. Engage people, “Participatory democracy”3. Dismantle the "perverse policies" that subsidise heavy car use and excessive freight transport.

Australian Government Policy and Action Options

4. Encourage frugal use of fuel, and disadvantage profligate users. Fuel taxes should be incrementally raised to European levels to reduce usage.5: SmartCard personal fuel allocation system. A flexible mechanism for short-term oil shocks, as well for encouraging people to reduce their fuel usage..6. Concentrate on the psychological and social dimensions of automobile dependence, not just “technological fixes”7. Implement nationwide "individualised marketing" travel demand management.8. Railways, cyclepaths and public transport are better investments than more roads.9. Give priority for remaining oil and gas supplies to food production, essential services and indigenous communities, using the Smart-Card system.10. Review the oil vulnerability of every industry and community sector and how each may reduce their risks.11 Promote through the United Nations an Intergovernmental Panel on Oil Depletion, and a Kyoto-like protocol to allocate equitably the declining oil among nations. An international tradable sliding scale allocation mechanism is one hypothetical option.

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China

US

Australia

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EENERGYNERGYFFILILESESwww.energyfilewww.energyfile

s.coms.com

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Australian Parliament, SenateRural and Regional Affairs and Transport References Committee

Inquiry intoAustralia's future oil supply and alternative transport fuels

194 submissions

Interim report "Peak between now and 2030"September 2006

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We must acknowledge oil depletion All of us: industry, governmentscommunity, media, academia...

We must not let the opportunities slip awayMany of the policy options to reduce fuel usage will also lead to economic opportunities and healthier and happier communities.

We are very well placed globally Long, growing awareness of oil depletion,

but no reliable information from Federal Govt, only ABARE, BTRE

World-leading demand management skillsTravelSmart and water conservation

Considerable uncommitted gas reserves

Failure to act now will prove incredibly costly

Govts should set up "Office of Oil Vulnerability""Oil vulnerability risk assessment and management"

www.ASPO-Australia.org.au

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This is the real new capacity to 2012 (Peak in first quarter of 2011)

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Running on empty August 27, 2006

You're about to hear two of the scariest words in the English language — "peak oil".

The point where oil production reaches its absolute peak; the point when supplies start running out.

31/8/06 WA Planning and Infrastructure Minister Alannah MacTiernan said that major Federal investment in public transport was vital if Australia was to avoid major disruption as global petroleum production reached its peak.

Four Corners Peak Oil? 10/07/2006 Dr Brian Fisher of ABARE was positively jovial. If the price of eggs is high enough, even the roosters will start to lay.

Oil production limit reached: expert ABC News July 10, 2006.

Former National Iranian Oil Company executive Dr Ali Samsam Bakhtiari has told the Financial Services Institute in Sydney the world's oil fields are producing as much oil as they can.

Oil prices will keep rising: analystThe Age, August 21, 2006 Chris Skrebowski. "The price of oil will continue to rise until world oil production peaks in 2010 at around 94 million barrels of oil per day

Sept 11 2006 The world has an abundant supply of oil, ExxonMobil Australia chairman Mark Nolan said today.He debunked the theory of peak oil, which suggests oil supplies have peaked and will dwindle over the next 20 years.