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Peak Oil/Coal
and
Uncertainty of
Climate Change
The Smith School
Oxford University
5 October 2011
1999
James W. Murray
School of Oceanography
University of Washington
2004
IEA WEO 2010
“The world’s energy system is at a crossroads. Current global trends in energy
supply and consumption are patently unsustainable — environmentally,
economically, socially. What is needed is nothing short of an energy revolution
with special acknowledgement to David Rutledge (Cal Tech) and Jim Hansen (Seattle)
CO2 emission Scenarios
Annual Fossil-Fuel CO2 Emissions, GtC
40
30
20
10
0
2000
2050
2100
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From ∑ Oil + Gas + Coal
These scenarios drive almost all climate change research
The Link Between Peak Oil and Climate Change
Today’s Conclusions
Evidence is increasingly strong suggesting that energy resource limitation
will be a serious issue.
Peak Oil has occurred or will occur soon.
Why? existing oil fields are declining at ~5-7% per year (~5 mbd)
New discoveries are not keeping up.
Even so production rate, not reserves, are what matter for our economy
Oil and Coal Reserves are much less than assumed by the IPCC.
Increased supply from other sources is neither scalable or timely.
We know enough to see that Resource Limitation
needs to at least be an IPCC Scenario
“uncertainty about climate change must include uncertainty
about the source of CO2“
Some Definitions
IEA – International Energy Agency (International, Paris)
EIA – Energy Information Agency in US Department of Energy (US DOE)
CERA – Cambridge Energy Research Association (Dir: Daniel Yergin)
IPCC – Intergovernmental Panel on Climate Change
SRES – Special Report on Emission Scenerios
OPEC – Oil Producing and Exporting Countries
Non-OPEC
USGS – US Geological Survey
MMS – US Mineral Management Service
WEC – World Energy Council
EWG – Energy Watch Group
ANWAR – Alaska National Wildlife
ASPO – Association for the Study of Peak Oil
Useful websites:
www.theoildrum.com
www.aspo-us.com
www.energybulletin.net
www.peakoil.net
Definitions of Oil
IEA reports Crude + condensate + natural gas liquids
= 82 mbd
EIA reports Crude + condensates
= 74 mbd
NGL = propane, butane
Condensates = low density HC liquids (C2 to C12)
Production Today
World Liquid Fuels = ~85 mbd (includes crude oil, lease condensates
natural gas liquids, ethanol, CTL, GTL)
World Crude Oil
= ~74 mbd* (includes lease condensates)
Recent History of Production Predictions
2004 IEA to 121 mbd by >2030
2005 IEA to 115 mbdby >2030
2005 EIA to 120 mbd by >2030
2006 IEA to 116 mbd by >2030
Christophe de Margerie
2006 EIA to 118 mbd by >2030
CEO Total SA
2006 CERA to 130 mbd by >2035
2007 <100 mbd
2008 EIA Projection 97 mbd
2008 <95 mbd
2008 CERA to 112 mbd by 2017
2009 <90 mbd
to 118 mbd by 2030
2009 IEA to 105 mbd by 2035
2010 IEA to 96 mbd by 2035
2011 Yergin to 110 mbd by 2030 (WSJ 17 Sept 2011)
IEA Predictions
May, 2005
to June 2010
18.7% / yr
The price of oil has increased almost continuously since 1999.
SRES A1 AIM scenarios expect $43 in 2020 then $73 in 2100
Today: WTI = $77 Brent = $101
Economists argument - resource constraints will be abated by
technology and substitution (e.g., Helm, 2011)
But This confuses substitution for increasing production at a higher price
Peak Oil Paradox: Growth in the economy requires increasing oil supply
But Increasing oil supply will require higher prices which tend to undermine
growth.
Outline
• The 4th UN IPCC Assessment Report
SRES Scenarios
• Oil Reserves
• Hubbert’s peak
– The history of US oil production
– How much oil and gas will the world produce?
• The Coal Question
• Discussion
– Future carbon-dioxide levels and temperatures
– Summary
The UN Panel on Climate
Change (IPCC)
• The UN Intergovernmental Panel on Climate
Change publishes assessment reports that
reflect the scientific consensus on climate change
• The 4th report (AR4) was released in 2007
– Over one thousand authors
– Over one thousand reviewers
– Nobel Prize
• Report discusses climate simulations for fossil-fuel
carbon-emission scenarios
• There are 40 scenarios, each considered to be
equally valid, with story lines and different
government policies, population projections, and
economic models
AR5 will only have 3 “scenarios”
Oil Production in the IPCC Scenarios
80
Annual Oil Production, Gb
182 mbd
40
28
0
2000
•
•
•
•
2050
2100
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Gb = billions of barrels 1 barrel = 42 gallons = 159 liters = GJ
In 13 scenarios, oil production is still rising in 2100
In none of the scenarios did oil production decrease because of
resource limitation
Today’s Crude Oil Production is 28 Gb y-1
14
Based on Rogner , 1997
CO2 emission Scenarios
Annual Fossil-Fuel CO2 Emissions, GtC
40
30
20
10
0
2000
2050
2100
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A1 ASF
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From ∑ Oil + Gas + Coal
These scenarios drive almost all climate change research
A2 = BAU
What is Peak Oil? There are not many
Peak Oil hypotheses
It’s not about Reserves!
It’s all about the Production Rate!
We are not close to running out of oil
The Prime Directive:
Never predict the future price of oil or
the date of world peak oil. You will only
be wrong and discredited.
Proved Reserves, Gb
OPEC Oil “Proven” Reserves!
Saudi
200
Iran
Iraq
Kuwait
100
0
1980
UAE
Not proven
by anybody!
1990
2000
•
•
•
Accurate reserve estimates for OPEC countries are closely guarded state secrets
Values for 1983 are probably accurate (for 1983)
No adjustment for 193Gb produced since 1980
•
These questionable reserves are 45% of world oil reserves used by IPCC!
•
Kuwait Example: A recent leak of Kuwait Petroleum Company documents showed the actual
reserves are only 48Gb (official reserves are 102Gb). 1980 Kuwait reserves adjusted for
production since then are 55Gb
From BP Statistical Review
Gb = billions of barrels
M. King Hubbert
• Geophysicist at the
Shell lab in Houston
• In 1956, he
presented a paper
with predictions for
the peak year of US
oil production
A model
logistic
distribution
Oil Wells and Fields Peak --- Regions Peak --- The World will peak
Everyone agrees that world oil will peak – controversy on the date
Examples: Rapid Depletion is Normal
DECC 2Q 2011
Gas  25%
Oil  16%
Both developed by private companies, using the best available technology,
with virtually no restrictions on drilling, yet both regions show clearly defined production
peaks. Furthermore, the initial declines in both cases corresponded to sharply rising
oil prices. Contrary to conventional wisdom, Peaks Happen, even in the best of
circumstances.
Mexico’s Cantarell Oil Field
Cantarell oil field
located 80 km offshore in
the Bay of Campeche.
Mexico
Was the #2 supplier of oil to the US
Now is #4
Cantarell from >2,000 in 2005
to 860,000 in Jan 2009
to 588,000 in July 2009
Both Mexico and the US
are in trouble.
Mexico:
Sale of oil = 40% of
federal budget
US:
Net exports are decreasing fast
US Oil Consumption today is about 20.5 million barrels of oil/day
ANWAR will not save us! US Production today is 5.5 mbd.
Case Study:
Apply the Principals of Hubbert’s Model
to the US to see how this works
Hubbert’s Peak
•
•
•
•
From Hubbert’s 1956 paper
Hubbert drew bell-shaped curves by hand, and added up barrels by
counting squares
For the larger estimate, he predicted a peak in 1973
Hubbert has been much criticized  there is no consideration of
supply and demand curves, prices, or policy, and new technologies
Lower 48 only, Alaska not a state until 1959
US Crude-Oil Production
Production
Price
• Production is bell-shaped, like the curves Hubbert drew
• Average price after the peak is 2.6 times higher than before
27
Hubbert’s Model - US Case Study
The model fit to the real data is not bad.
The model predicts 1973.
The real maximum occurred in 1970
The Logistic Curve or Rate Plot
P/Q = mQ + a
Q for which P/Q = 0 is 198 gigabarrels of oil.
Also called Qt (maximum cumulative production) (URR)
Half of this is 99 which occurred in 1973
Lower 48
A model for exponential growth in a finite system
Another Approach: Cumulative Oil Production
225Gb ultimate
Cumulative Production, Gb.
200
90% exhausted in 2011
100
31Gb remaining
USGS/MMS 189Gb remaining
0
1900
•
•
Includes
48+Alaska
1950
2000
2050
EIA data from 1859
Fit for cumulative normal gives the ultimate production and the time for 90%
exhaustion
Historical Projections for US Oil
USGS
McKelvey
Hubbert
The power of Hubbert’s Linearization is that it uses past
behavior of a system to indicate possible future performance
31
Can we apply this approach to estimate
ultimate global oil production?
Rate Plot from 2005:
Maximum Cumulative Production (Qt) = 2165 Gigabarrels
½ Qt = 1083 Gb
Cumulative production of SRES A1 family = 3400Gb
A2 family = 2900 Gb
B family = 2790 Gb
World Crude Oil Production May Have Peaked in May 2005
IEA still
predicts
an increase
(May 19, 2009)
MBD
Year
Who are the experts that IPCC turn to?
Energy Information Agency (EIA) - DOE
International Energy Agency (IEA) – Paris
US Geological Survey (USGS) - Washington
Their economic models for future emissions are driven by demand (not supply)
Price is not a factor.
The EIA forecasts in 2008 projects a 30% increase in oil production between now
and 2030 (from 85 to 97 mb/d) (D = +12 mbd).
The hard truth is that increasing energy supply at all will be difficult.
To have growth we need to balance
decline of exisiting fields
with discovery of new oil
Existing Oil Fields are in Decline
Existing oil fields are declining at – 5 % per year (IEA 2008; Exxon,
CERA, ASPO)
For 2010 to 2030 the world needs 70 mbd of new production –
just to maintain flat production
The projected growth requires
discovery of 70 + 12 = 82 mbd of new oil!
82 mbd ÷ 9 mbd = 9+ new Saudi Arabias
Urban Legend – we can drill more to get more oil
Oil discoveries have been declining since 1964
Middle
East
US
The red box shows the average amount estimated to be discovered by the
USGS each year between 1995 and 2025.
The world’s oil provinces have been well explored.
Future discoveries will be limited to smaller structures and deeper formations
Canadian Tar Sands
Hugh resource = 1.7 trillion barrels
surface mining (~20%)
in-situ
(~80%)
1.2 mbd in 2008; projected 2.4 mbd in 2020
4 barrels of water for each barrel of oil
2 tons tar sands = 1 barrel
Big energy demand
EROI = ~6:1 gold (natural gas) to lead (oil)
Neither scaleable nor timely
Natural Gas – Shale Gas is overhyped!
Shale Gas is the big news – in the US the Barnett, Haynesville, Fayetteville
and Marcellus formations get the big news.
But while the initial production rates are very high the first year decline rates
are extremely steep. Example below from the Barnett Fm. in Texas
Environmental issues (ground water contamination) associated with
hydraulic fracturing (fracking) are a major issue.
Arthur Berman
At $7.00/Bcf
requires 1.5 Bcf.
Avg Barnett = 0.95
Producers claim
2.2 to 2.3 Bcf/well
What about coal?
There are supposed to be hundreds
of years of supply of coal!
Big 3 Reserves:
US (27%)
Remarkably the data-quality is very poor globally
Russia (17%)
but especially for China (last update 1992)
China (13%)
and SE Asia and FSU
then
India, Australia, South Africa
See World Energy Council (WEC) Reports
We have a big problem with coal.
The reserves may not be as large as
We’ve been led to believe.
"Present estimates of coal reserves are based upon methods
that have not been reviewed or revised since their inception
in 1974, and much of the input data were compiled in the
early 1970s. Recent programs to assess reserves in limited
areas using updated methods indicate that only a small
fraction of previously estimated reserves are actually minable
reserves."
from the National Academy of Sciences
Report on Coal, June, 2007
The world’s proven reserves of
coal are decreasing fast!
Whenever coal reserves are updated the reserve estimates
are revised downward (significantly).
Not due to production, but rather more thorough geological surveys.
Example: World Reserves by WEC decreased from 10 trillion tons
to 4.2 trillion tons in 2005
Example: Gillette in Wyoming from 20.9 billion tons to 9.2 billion tons (2009)
The energy content of coal mined is decreasing.
Another Problem is Energy Content
IPCC reports energy units (ZJ)
Types of coal (four types – different energy content)
Anthracite (30 MJ/kg)
Bituminous (19 – 29 MJ/kg)
Sub-bituminous (8-25 MJ/kg)
Lignite (5-14 MJ/kg)
The high energy coal is running out
US passed peak anthracite in 1950
peak bituminous in 1990
Total energy content of US coal peaked in 1998
Total energy content of world coal should peak in 2025
42 GJ = ton of oil equivalent
6.12 GJ = one barrel of oil
Energy Watch Group (2007) Coal: Resources and Future production
Reserves
So-called proven reserves are anything but.
A key message is how fast they have been
revised downward (55% in last 25 years).
Major new discoveries are unlikely
China (largest producer) The R/P ratio
55 yrs from 1992 at 1992 rates (now >3x faster)
EWG states that China will peak in ~10 yrs
China is now a net coal importer
China’s reliance on coal means growth will end!
USA (“the Saudi Arabia of coal”)
Large Reserves but many are of low quality
and high sulfur
Volume will increase for another 10 to 15 years
but net energy will decrease
Global Picture
Six countries hold 90% of reserves
Rarely is coal exported
The world coal energy peak will occur ~2025
Compare with IEA WEO scenarios
Reference scenario is unrealistic
Alternative scenario is feasible
Many independent groups are coming to the same conclusion
David Rutledge – Cal Tech
http://rutledge.caltech.edu
Uppsala – Kjell Aleklett Peak Coal in 2030
(examples follow)
http://www.tsl.uu.se/uhdsg/Publications/Coalarticle.pdf
Energy Watch Group (EWG-Germany) Peak Coal in 2025
http://www.energywatchgroup.org/files/Coalreport.pdf
Institute of Energy (IFE)
Kavakov and Peteves (2007) The Future of Coal
http://ie.jrc.ec.europa.eu/
Richard Heinberg Post Carbon Institute (2009)
“Blackout : Coal. Climate and the Last Energy Crisis”
New Society Publishers
Can we apply Hubbert’s approach to coal?
UK
Germany
Japan
Höök et al (2008)
Rate Plot for British Coal
Historical Projections for UK Coal
• Reserve numbers are available before projections stabilize
• Produced 18% of the 1871 Royal Commission reserves + cumulative
• Criteria were too optimistic ― 1-ft seams, 4,000-ft depth (Deffeyes’ law)
48
Projections vs Reserves for World Coal
Region
Projection Gt
Reserves Gt
Eastern US
37
96
Western US w/o Montana
33
79
Montana
68
Central and South America
16
China
88
South Asia
189
68
Australia and New Zealand
50
77
Former Soviet Union
36
226
Europe
21
44
Africa
16
30
435 (1.6Tboe)
903
World (at 3.6boe/t)
• UN IPCC scenarios assume 18Tboe is available
for production
from D. Rutledge
From Aleklett
Cumulative Production, Tboe.
Future Fossil-Fuels Production
10
5
50% in 2022
4.7Tboe fossil fuels
remaining
1.6Tboe coal
remaining
0
1950
2000
2050
2100
D. Rutledge
Cumulative Future Fossil-Fuel.
CO2 Emissions, GtC .
Comparing with the IPCC Scenarios
2,000
1,000
Projection
0
2000
2050
2100
• This projection has lower emissions than any of the 40 IPCC
scenarios
• This is still true even with full coal reserves
D. Rutledge
Carbon-Dioxide Levels
•
•
•
•
460ppm
460
440ppm
440
420
400
Projection
380
5
360
50% Stretch-out for
Fossil Fuel Burning
340
320
300
0
2000
2100
2200
2300
CO2 Concentration, ppm.
Fossil-Fuel CO2 Emissions, GtC.
10
280
2400
Simulations with the program MAGICC from Tom Wigley at the National
Center for Atmospheric Research (NCAR) in Boulder
This program was used in the earlier UN IPCC Assessment Reports
profiles that come with the program are modified to use our projection for
fossil-fuel emissions
profiles are business-as-usual for other greenhouse gases
Conclusions: A slow-motion train wreck
1) Supply Limitation will be serious and soon!
Existing scenarios and energy policies are based on emissions - not supply
Production rate matters not size of reserves
2) Coal is thought of as a solution to energy needs –
This will be a disaster for climate change without CO2 sequestration.
Is CO2 sequestration realistic?
3) Energy will pass climate change as the hot button issue
We have to get our energy plan in order before we can move forward
on climate change
4) Energy Supply Limitation will Buffer Economic Recovery.
Something like $300B/year taken out of the economy.
But for average household D = $169/month
5) Security Issue:
Seven nations control 75% of world’s oil exports. There will be shifts
in global power and wealth
Once it is clear that oil production has peaked is there are reason to
believe that exports will not be limited?