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Peak oil meets climate change
The numbers game of the century
Jeremy Leggett
USA 48
1956
US-48
Discovery Gb
25
20
15
10
10000
8000
production
Hubbert predicts6000
US production
peak in 1971
4000
5
2000
0
0
1930 1950 1970 1990 2010 2030 2050
Production kb/d
30
USA 48
1998
US-48
10000
Discovery Gb
25
8000
20
Campbell &
6000
Laherrere: the first
oil industry earlytoppers speak
4000out
15
10
Production kb/d
30
production
5
2000
0
0
1930 1950 1970 1990 2010 2030 2050
Everyone agrees oil is finite
There are two views of quite how: 1
Late Toppers:
Topping Point (peak of production) in 2030s
“Forty years supply at least” (Lord Browne, 2004)
• Believers:
 most oil companies and OPEC
 almost all financial analysts & journalists
 all governments and agencies, e.g. IEA
• Implications:
 economies can continue growing in principle
 there will be time to develop alternatives
Everyone agrees oil is finite
There are two views of quite how: 2
Early Toppers:
Topping Point (peak of production) this decade
…and the market will wake up to this soon
• Believers:
 a growing number of dissident experts
…….mostly oil company geologists
 some financial analysts & journalists
 some futures traders
• Implications:
 economies will be dislocated
 there will be no time to develop alternatives
The Peak Oil stakes: summary
“A serious demand-supply discontinuity could lead
to worldwide economic chaos.”
DoE Office Naval Petroleum
& Oil Shale Reserves, 2005
“We are not good at recognising distant threats
even if their probability is 100%. Society ignoring
this is like the people of Pompeii ignoring the
rumblings below Vesuvius.”
James Schlesinger, former US
Energy Secretary, 2005
Leggett’s qualifications on this issue
• Geologist consulting in the oil industry, 1980–1989
– Research funding from BP, Shell, among others, at Royal School of Mines,
Imperial College, including for oil source rock studies and seismic
stratigraphy.
– Taught on petroleum geology and engineering undergraduate and
postgraduate courses.
– Exploration and consultancy with Hydrocarbon Development Institute of
Pakistan, Japan Petroleum Exploration Corporation among others.
– Two major international awards for research from the premier UK
professional body for geologists, the Geological Society.
• Environmental campaigner (energy), 1989-1996
– At the international Climate Convention negotiations and the
Intergovernmental Panel on Climate Change.
• Renewable energy industry executive, 1997-present
– Founding director of world’s first renewable energy private equity fund,
Bank Sarasin’s New Energies Invest AG, 2000-present.
– CEO of UK’s largest independent solar solutions company 1999-present.
– Member of UK Government’s Renewables Advisory Board 2001-2006.
World
60
Real Discovery Trend
50
Expectation of
future production
Gb
40
30
20
10
?
0
1930
1950
Past discovery
1970
1990
2010
Past production
2030
2050
Future discovery
World
60
Real Discovery Trend
50
Expectation of
future production
Gb
40
30
20
Future production
10
0
1930
1950
Past discovery
1970
1990
2010
Past production
2030
2050
Future discovery
Dwindling discovery
Statistics for “giant” oilfields of 500 million
barrels of more
Context: at >80 million barrels per day current
global demand, 500 mb is less than a week’s
global supply
• In 2000 there were 16 discoveries
• In 2001 there were 9
• In 2002 there were just 2
• In 2003 there was 1
• In 2004 none
• In 2005 there was 1
Source: Petroleum Review
The demand /supply challenge summarised
• We need 2-3 million barrels per day more
each year (c. 1.8% growth rate)
• We are depleting at 4-5 mbd each year
• So in total we need to find 6-8 mbd of
new oil each year
….one Saudi Arabia every year and a bit
….How did we do in 2005? 3.7 mbd
“It can’t be done indefinitely. It’s not
sustainable.”
Sadad al-Husseini, former head of Exploration
and Production, Saudi Aramco, August 2005
Production, Gboe/a
50
40
30
Non-con Gas
Gas
NGLs
Polar Oil
Deep Water
Heavy
20
Regular
10
0
1930
1950
1970
1990
2010
2030
2050
Production, Gboe/a
50
40
30
Non-con Gas
Gas
NGLs
Polar Oil
Deep Water
Heavy
20
Regular
10
0
1930
1950
1970
1990
2010
2030
2050
Production, Gboe/a
50
40
30
Non-con Gas
Gas
NGLs
Polar Oil
Deep Water
Heavy
20
Regular
10
0
1930
1950
1970
1990
2010
2030
2050
$80
$60
$40
2
Second
energy
crisis
1979
to 1981
6
2003 prices
1
3
$20
prices of the day
4
5
?
$80
$60
$40
2
Second
energy
crisis
1979
to 1981
6
2003 prices
1
3
$20
prices of the day
4
5
?
A quarterly audit of 2006
Climate change
Oil depletion
Q1
Threat of “explosive”
Greenland ice collapse: 10
years to act, says NASA
Kuwait fears only half its
reported reserves are real
…& may not produce them!
Q2
Lloyd’s warns climate
change can destroy the
insurance industry
Oil sands companies turn to
mergers as costs spiral out
of control
Q3
Ocean acidification is killing
corals, US govt agencies
warn
BP faces criminal court over
corroding pipelines &
exploding refineries
Q4
US Supreme Court will rule
on emissions case brought
by states
IEA warns non-OPEC oil will
soon peak & current energy
course is “doomed to failure”
CO2 concentrations > long1.07 run average: fear of
runaway effect
Russia: oil-and-gas
nationalism now overt and
rampant
A quarterly audit of 2006
Climate change
Oil depletion
Q1
Threat of “explosive”
Greenland ice collapse: 10
years to act, says NASA
Kuwait fears only half its
reported reserves are real
…& may not produce them!
Q2
Lloyd’s warns climate
change can destroy the
insurance industry
Oil sands companies turn to
mergers as costs spiral out
of control
Q3
Ocean acidification is killing
corals, US govt agencies
warn
BP faces criminal court over
corroding pipelines &
exploding refineries
Q4
US Supreme Court will rule
on emissions case brought
by states
IEA warns non-OPEC oil will
soon peak & current energy
course is “doomed to failure”
CO2 concentrations > long1.07 run average: fear of
runaway effect
Russia: oil-and-gas
nationalism now overt and
rampant
A quarterly audit of 2006
Climate change
Oil depletion
Q1
Threat of “explosive”
Greenland ice collapse: 10
years to act, says NASA
Kuwait fears only half its
reported reserves are real
…& may not produce them!
Q2
Lloyd’s warns climate
change can destroy the
insurance industry
Oil sands companies turn to
mergers as costs spiral out
of control
Q3
Ocean acidification is killing
corals, US govt agencies
warn
BP faces criminal court over
corroding pipelines &
exploding refineries
Q4
US Supreme Court will rule
on emissions case brought
by states
IEA warns non-OPEC oil will
soon peak & current energy
course is “doomed to failure”
CO2 concentrations > long1.07 run average: fear of
runaway effect
Russia: oil-and-gas
nationalism now overt and
rampant
A quarterly audit of 2006
Climate change
Oil depletion
Q1
Threat of “explosive”
Greenland ice collapse: 10
years to act, says NASA
Kuwait fears only half its
reported reserves are real
…& may not produce them!
Q2
Lloyd’s warns climate
change can destroy the
insurance industry
Oil sands companies turn to
mergers as costs spiral out
of control
Q3
Ocean acidification is killing
corals, US govt agencies
warn
BP faces criminal court over
corroding pipelines &
exploding refineries
Q4
US Supreme Court will rule
on emissions case brought
by states
IEA warns non-OPEC oil will
soon peak & current energy
path is “doomed to failure”
CO2 concentrations > long1.07 run average: fear of
runaway effect
Russia: oil-and-gas
nationalism now overt and
rampant
A quarterly audit of 2006
Climate change
Oil depletion
Q1
Threat of “explosive”
Greenland ice collapse: 10
years to act, says NASA
Kuwait fears only half its
reported reserves are real
…& may not produce them!
Q2
Lloyd’s warns climate
change can destroy the
insurance industry
Oil sands companies turn to
mergers as costs spiral out
of control
Q3
Ocean acidification is killing
corals, US govt agencies
warn
BP faces criminal court over
corroding pipelines &
exploding refineries
Q4
US Supreme Court will rule
on emissions case brought
by states
IEA warns non-OPEC oil will
soon peak & current energy
path is “doomed to failure”
CO2 concentrations rising >
1.07 long-run average: fear of
runaway effect
Russia: oil-and-gas
nationalism now overt and
rampant
Reasons to fear global warming
1. The degree
7. Threat to food supplies
2. The rate
8. Threat to water supplies
3. Biodiversity loss
9. Threat to human health
4. Sea level rise
10. Increased risk of conflict
5. Threat to insurance industry
11. Threat to societal stability
6. Threat to capital markets
12. Danger of amplifying
feedbacks
13. Danger of runaway effect
Global average near
surface temperature oC
1861 - 2003
700
Projected
(2100)
650
600
Vostok Record
IPCC IS92a Scenario
Law Dome Record
Mauna Loa Record
550
500
450
400
oC
Current
(2001)
350
300
250
200
150
400,000
300,000
200,000
Years Before
Present
Years before
present
(B.P. -- 1950)
100,000
0
2
CO2 Concentration in Ice Core Samples and
Projections for Next 100 Years
CO Concentration
(ppmv) (ppmv)
CO2 Concentration
parts per million
Atmospheric CO2 concentration
difference w.r.t. end of
the 19th Century
CO2 and fossil fuel use 1861 –2100
Surface temperatures 1000 – 2100 AD
Average temperatures from a range of
IPCC energy scenarios short of deep
cuts in fossil fuel use
Threshold of severe danger: 2oC above
pre-industrial average temperature
(EU target not to exceed)
Year AD
TOTAL COAL
“RESOURCE”
3500
3000
3,500
2500
2000
1500
1000
2oC THRESHOLD
billion tonnes carbon of carbon
4000
500
0
400
700
3100
TOTAL OIL
“RESOURCE” TOTAL GAS
“RESOURCE”
700
500
TOTAL COAL
“RESOURCE”
3500
3000
3,500
2500
2000
1500
1000
2oC THRESHOLD
billion tonnes carbon of carbon
4000
500
0
400
700
3100
TOTAL OIL
“RESOURCE” TOTAL GAS
“RESOURCE”
700
500
Conclusions
•
Can we go zero carbon on renewable and
efficient energy?
Yes, more quickly than most think
•
Will we? Will we even go low carbon?
The jury is out
•
Can we plug the energy crisis if the early
peak on oil production is correct?
No, and neither can anything else
….the silver lining to the cloud is going to
be about renaissance, and “going
renewable” versus “going coal”