Peak Oil

transcript

Peak OilPeak Oil

A PrimerA PrimerDr. Robert J. BrechaDr. Robert J. Brecha

Physics Dept. Physics Dept. University of DaytonUniversity of Dayton

UD Physics Dept. Seminar – Jan. 20, 2006

OutlineOutline

Basic background (Where are we?)Basic background (Where are we?) Models and predictions (Where are Models and predictions (Where are

we going?)we going?) Economics (Maybe somebody knows Economics (Maybe somebody knows

…)…) Alternatives (How else might we get Alternatives (How else might we get

there?)there?) ConclusionsConclusions

SubtextSubtext

How do we use our technical and scientific How do we use our technical and scientific background to look at complex, ill-defined background to look at complex, ill-defined problems? (Peer-reviewed work, physical problems? (Peer-reviewed work, physical principles)principles)

Can we contribute to the discussions about Can we contribute to the discussions about possible declining natural resources as possible declining natural resources as educators, even if the details are outside our educators, even if the details are outside our specialty? (EROEI, thermodynamics vs. specialty? (EROEI, thermodynamics vs. economics)economics)

Is this really new, or have we already been Is this really new, or have we already been here before?here before?

World Energy UseWorld Energy Use

Nuclear

Biomass

Geothermal, wind solar, etc.

Total~400 Quadrillion Btu

Total US Energy Use (Quads)

0.90.6

US Energy UseUS Energy Use

Industrial

Commercial

Residential

Transportation Lightvehicles

Med./hvytrucks

(Water, pipeline, rail, buses)

~2/3 of oil use is transportation

Human Development Index Human Development Index and Energy Useand Energy Use

0 5 10 15

Primary Energy Use per Capita (toe/yr)

0.5 billion (31 African countries)

0.5 billion4.2 billion

1.2 billion

Data from UNDP Human Development Report 2005, http://hdr.undp.org

GDP vs. Miles Driven GDP vs. Miles Driven (US)(US)

http://www.theoildrum.com/story/2005/10/22/235239/89

US Yearly Petroleum US Yearly Petroleum ProductionProduction

bl/year)

US Petroleum Production

Alaska NG Plant Liquids Lower 48

US Energy Information Agency: http://www.eia.doe.gov/oil_gas/petroleum/pet_frame.html

Many Countries Have Many Countries Have Peaked!Peaked!

The Countdown for the Peak of Oil Production has Begun – but what are the Views of the Most Important International Energy Agencies W. Zittel, J. Schindler, L-B-Systemtechnik, 12 October 2004 (zittel@lbst.de; schindler@lbst.de)

Peak ModelsPeak Models

A Brief History of OilA Brief History of Oil

Gaussian Fit to US Gaussian Fit to US ProductionProduction

Gaussian Production(quadratic fit)

y = -0.0003x2 + 1.1875x - 1167.5

R2 = 0.9898

1840 1860 1880 1900 1920 1940 1960 1980 2000 2020

Hubbert’s Logistic CurveHubbert’s Logistic CurveLogistic Curve

1800 1850 1900 1950 2000 2050

Logistic Curve

1800 1850 1900 1950 2000 2050

1980 Prediction

Logistic Curve

1800 1850 1900 1950 2000 2050

“Economic” argument: We will alwaysfind more and increase ultimate recovered amount

Problem with Logistic Problem with Logistic CurvesCurves

At early stages, curves for widely differing total amounts may look very similar.

There are too many free fitting parameters

USGS and Cumulative USGS and Cumulative ProductionProduction

Hubbert LinearizationHubbert Linearization

http://www.theoildrum.com/story/2006/1/11/6047/13568

Q (Gbbl)

OPEC Proved Crude Oil OPEC Proved Crude Oil ReservesReserves

Venezuela

Saudi Arabia

Kuwait

Energy Information Agency, posted March 2005, January 1, 1980 - January 1, 2005 Estimates

US Geological Survey US Geological Survey EstimatesEstimates

www.ihs.com

Bentley, Global Oil and Gas Depletion – an Overview, Energy Policy 30 (2002)

One Prediction (1998)One Prediction (1998)

R.C. Duncan and W. Youngquist,“Encircling the Peak of World Oil Production,” Natural Resources Research 8, 219-233 (1999). Also by the same authors: “The World Petroleum Life-Cycle” http://www.dieoff.com/page133.pdf

Duncan and Youngquist Duncan and Youngquist PredictionsPredictions

Peaked prior to 1997Peaked prior to 1997 14 14 countriescountries

Recovered from peak after 1997Recovered from peak after 1997 0 countries0 countries

Predicted to peak 1998-2005Predicted to peak 1998-2005 16 16 countriescountries

Actually peaked between 1998-Actually peaked between 1998-20052005

11 11 countriescountries

Predicted to peak after 2005Predicted to peak after 2005 13 13 countriescountries

Predicted to peak after 2005, Predicted to peak after 2005, but have already peakedbut have already peaked

2 countries2 countries

Finding NorwaysFinding Norways

R.C. Duncan and W. Youngquist, “The World Petroleum Life-Cycle”http://www.dieoff.com/page133.pdf

Reserves-to-Production Reserves-to-Production RatioRatio

BP Statistical Review of World Energy June 2005, p.40

BP claims the world has only 40 yearsworth of oil at current extraction rates

World Reserve Additions World Reserve Additions and Productionand Production

World Oil Production

1960 1970 1980 1990 2000 2010

UK Reserve Additions and UK Reserve Additions and ProductionProductionGreat Britain Production

1960 1970 1980 1990 2000 2010

-5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Keep Watching…Keep Watching…

http://www.theoildrum.com

Peak “Good” OilPeak “Good” Oil

OPEC Monthly Oil Market Report, August 2005

A somewhat fuzzy story, but it appears that the peak in production of light,sweet crude oil is already past.

New TerritoryNew TerritoryRCLC1 Cushing, Ok Crude Oil Future Contract 1 (Dollars per Barrel)

In the history of oil use, we have never before experienced a prolonged period of ever-increasing oil prices

Predictability?Predictability?

-100 -50 0 50 100

% Change, Previous year

Higher Prices, More Oil?Higher Prices, More Oil?

The “price-reserves relationship has its limits, because oil is found in discrete packages (reservoirs) as opposed to the varying concentrations characteristic of many minerals. Thus, at some price, world reserves of recoverable conventional oil will reach a maximum because of geological fundamentals. Beyond that point, insufficient additional conventional oil will be recoverable at any realistic price.”

“PEAKING OF WORLD OIL PRODUCTION:

IMPACTS, MITIGATION, & RISK MANAGEMENT” Hirsch, Bezdek, Wendling (contracted report for DOE)

The Law of Supply ?

Higher Prices Will Drive Higher Prices Will Drive Discovery?Discovery?

From D. Reynolds, Using non-time-series to determine supply elasticity: How far do prices change the Hubbert curve?, OPEC Review, June 2002, p.147-167

“Cumulative discovery is used as an information and depletion indicator that determines the Hubbert curve …Technology and regulatory effects are added …Price and other variables are added to determine how powerful price is for changing the Hubbert supply model, both for discovery and production … The Hubbert curve can be thought of as a limit of production.”

Translation: Geology is the limiting factor

U.S. Production vs. PriceU.S. Production vs. Price

Production

1950 1960 1970 1980 1990 2000

2002 dollars per barrel

Dramatic Improvement in Oil Field Technology

Billions of barrels / year

“PEAKING OF WORLD OIL PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT” Hirsch, Bezdek, Wendling

““Elasticity” and the Law of Elasticity” and the Law of DemandDemand

Oil Usage curve (2001-2005)

76.00 78.00 80.00 82.00 84.00 86.00

World oil usage (MMbbl/day)

How Have We Reacted How Have We Reacted Previously?Previously?

Data from EIA and Transportation Energy Data Book, 24th ed.

US Energy Consumption

1970 1975 1980 1985 1990 1995 2000 2005

Transportation Residential Total US Crude Oil Price

The Hirsch ReportThe Hirsch Report

“PEAKING OF WORLD OIL PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT” R.L. Hirsch, R. Bezdek, R. Wendling (Feb. 2005)

We cannot conceive of any affordable government-sponsored "crash program" to accelerate normal replacement schedules so as to incorporate higher energy efficiency technologies into the privately-owned transportation sector; significant improvements in energy efficiency will thus be inherently time-consuming (of the order of a decade or more).

Auto LifetimeAuto Lifetime

Transportation Energy Data Book, 24th Ed.

Driving Habits vs. Driving Habits vs. HybridsHybrids

2.50E+08

2.70E+08

2.90E+08

3.10E+08

3.30E+08

3.50E+08

3.70E+08

3.90E+08

4.10E+08

2000 2005 2010 2015 2020 2025 2030

Scenario 1 Scenario 2 Scenario 3 Scenario 4

Scenario one: Fleet grows by 0.5%/yr; no hybrids; driving amount remains const. at 11,600 mi/veh/yrScenario two: Fleet grows by 0.5%/yr; hybrids incr. at 25%/yr.; driving amount remains const. at 11,600 mi/veh/yrScenario three: Fleet grows by 0.5%/yr; no hybrids; driving cut by 10% one time to 10,440 mi/veh/yrScenario four: Fleet grows by 0.5%/yr; no hybrids; driving cut by 2%/yr from 11,600 mi/veh/yr

But … if the decline rate is 3 – 5 %/year?

Fuel Economy by SpeedFuel Economy by Speed

Transportation Energy Data Book, 24th Ed.

Driving at 60 mph instead of 70 mph could saveroughly 500,000 barrels of oil each day

Trains, Anyone?Trains, Anyone?

Natural GasNatural Gas

National Petroleum Council (1998)US Prod. Import from Canada

1998 19 Tcf 3 Tcf2010 25 Tcf 4 Tcf2015 27 Tcf

Now the numbers are more like …1998 19 Tcf2003 19 Tcf 2008 15 Tcf

And Canada peaked in 2001 at ~5 Tcf and expects a declineof 2.5% per year

Natural Gas in the USNatural Gas in the USNG Data

0.010.020.030.040.050.060.070.080.090.0

1960 1970 1980 1990 2000 2010

US Production (Bcf) Percentage of successful wells

US Proven Reserves (Tcf) Henry Hub Prices ($/MMBtu)

Number of wells drilled (thousands)

EIA Statistical Review of World Energy data

(per day)

Tar SandsTar Sands Alberta, Canada + VenezuelaAlberta, Canada + Venezuela Effectively a mining operationEffectively a mining operation Current production of 600,000 bbl/day of Current production of 600,000 bbl/day of

synthetic crude oilsynthetic crude oil Estimates of 2 – 3 MMb/d in 10 – 20 years if all Estimates of 2 – 3 MMb/d in 10 – 20 years if all

goes well. goes well. Needs large amounts of NG and water, plus Needs large amounts of NG and water, plus

hazardous waste disposalhazardous waste disposalThe plan now is to expand capacity from the present 155,000 barrels a day to more than 500,000 by 2015. This will require many billions of dollars of further investment in mining and upgrading facilities. Malcolm Brinded Executive Director Exploration & Production, Royal Dutch Shell plchttp://www.shell.com/static/media-en/downloads/speeches/mb_oxford_energy_seminar.pdf

Oil ShaleOil Shale

Western U.S.Western U.S. Possibly 800 billion barrels !!Possibly 800 billion barrels !! A mined productA mined product Techniques proven in principle, but not at Techniques proven in principle, but not at

large scalelarge scale Only profitable with oil >$75/bblOnly profitable with oil >$75/bbl High growth, optimum scenario – 10High growth, optimum scenario – 1066 bbl/d bbl/d

in 2025 or later.in 2025 or later.

Rand Corp. report for US DOE, Nat’l. Energy Rand Corp. report for US DOE, Nat’l. Energy Tech. Lab.Tech. Lab.

HydrogenHydrogen Current US annual production: 10 Mt Current US annual production: 10 Mt

accounts for 5% of natural gas usage accounts for 5% of natural gas usage releases 100 Mt COreleases 100 Mt CO22. . Direct use for all US transport would require some Direct use for all US transport would require some

200 Mt/yr. 200 Mt/yr. Mostly from reforming methane (NG)Mostly from reforming methane (NG) Used for making ammonia (fertilizer); oil refiningUsed for making ammonia (fertilizer); oil refining

Could use electricity to obtain HCould use electricity to obtain H22 from H from H22OO Fuel cellsFuel cells

Expensive $3000/kW (gasoline engine: $30/kW)Expensive $3000/kW (gasoline engine: $30/kW) Well-to-wheels efficiency Well-to-wheels efficiency current hybrid electric current hybrid electric

vehiclesvehicles

Physics Today, Dec. 2004 +Transportation Energy Data Book, 24th ed.

EthanolEthanol

Yield for ethanol from corn is ~70 GJ/ha (@9000 kgcorn/ha)

Automobile + light truck transportation uses ~1.7×1010 GJ/a

Quick calculation: we would need 2.4×108 ha of land

Currently we have in the US 1.2×108 ha of cropland total

But … the key point missing is the energy input. Ethanol fromindustrial-scale corn farming is an energy break-even, at best. Energy return on Energy invested (EROEI) ratio is ~1.

D.Pimentel and T. Patzek, Natural Resources Research 14, 65-76 (2005) Shapouri - USDA “The Energy Balance of Corn Ethanol: An Update” Ag. Econ. Report 813

EROEIEROEI

“Net energy from the extraction of oil and gas in the United States”Cutler J. Cleveland Energy 30 (2005) 769–782T

Four ScenariosFour Scenarios

2000 2005 2010 2015 2020 2025 2030 2035 2040

Moderate Green Nuclear Coal Current Growth

Effects of Peak Oil – Effects of Peak Oil – Scenario IScenario I

Gas hydrates

Shale oil

Biomass

Tar sands

Nuclear

Nat. gas

Scenario I ParametersScenario I Parameters First scenario, which could be referred to as a

moderately changed business-as-usual energy future. Natural gas and oil peak in consumption in five years; the decline rate for each being 3%/year. Solar and wind energy grow at 10%/year, while nuclear power and coal as energy sources grow at 1%/year as is currently the case. Non-conventional oil and gas production increases are based on current optimistic estimates: shale oil and methane hydrates beginning commercial production in 10 years and increasing at 0.15 million boe/day/year, while tar sands oil production increases from the current level of 1 million boe/day by 0.2 million boe/day/year.

Coal ProductionCoal Production

http://www.eia.doe.gov/emeu/aer/coal.htmlEnergy Information Administration – Annual Energy Review 2005

Coal ProductionCoal Production

Coal Production, 1949-2004

1950 1960 1970 1980 1990 2000 2010

Coal production Million Btu/ton Energy content

The Coal Future – The Coal Future – Scenario IVScenario IV

Gas hydrates

Shale oil

Biomass

Tar sands

Nuclear

Nat. gas

Scenario IV ParametersScenario IV Parameters

Fourth scenario, coal energy future. Natural gas and oil peak in consumption in five years; the decline rate for each being 8%/year, leading to a strong increase in the use of coal, at a rate of 5%/year. Solar and wind energy grow at 10%/year, while nuclear power grows at 1%/year as is currently the case. Finally, the prognoses for non-conventional oil and gas are based on current optimistic estimates: shale oil and methane hydrates beginning commercial production in 10 years and increasing at 0.15 million boe/day/year, while tar sands oil production increases from the current level of 1 million boe/day by 0.2 million boe/day/year.

NuclearNuclear

Technology knownTechnology known Good for environment – at least for Good for environment – at least for

COCO22 emissions emissions Electricity, not transportationElectricity, not transportation Back to HirschBack to Hirsch Waste disposal, etc.Waste disposal, etc. Non-renewable (~50 years at Non-renewable (~50 years at

CROC?)CROC?)

Nuclear Future – Nuclear Future – Scenario IIIScenario III

Gas hydrates

Shale oil

Biomass

Tar sands

Nuclear

Nat. gas

Scenario III ParametersScenario III Parameters Third scenario, nuclear-supplemented fossil-

fuel energy future. Natural gas and oil peak in consumption in five years; the decline rate for each being 3%/year, as in the first scenario. Solar and wind energy grow at 10%/year and coal grows at 1%/year, while nuclear power as an energy source increases at 10%/year beginning in 10 years to allow for ramp-up. Finally, the prognoses for non-conventional oil and gas are based on current optimistic estimates: shale oil and methane hydrates beginning commercial production in 10 years and increasing at 0.15 million boe/day/year, while tar sands oil production increases from the current level of 1 million boe/day by 0.2 million boe/day/year.

Life-cycle COLife-cycle CO22 emissions emissions

H. Hondo / Energy 30 (2005) 2042–2056

Solar EnergySolar Energy

Clearly plentiful, renewableClearly plentiful, renewable Now provides ~0.1% of energy (see Now provides ~0.1% of energy (see

Hirsch)Hirsch) Embodied energy questions – but Embodied energy questions – but

seem favorableseem favorable Hot water or electricityHot water or electricity Local generationLocal generation In Ohio?In Ohio?

Green Energy Future – Green Energy Future – Scenario IIScenario II

Gas hydrates

Shale oil

Biomass

Tar sands

Nuclear

Nat. gas

Scenario II ParametersScenario II ParametersSecond scenario, which could be referred to as a

green energy future. Natural gas and oil peak in consumption in five years; the decline rate for each being 8%/year, considered as an upper limit, but consistent with the declines seen in the North Sea. Solar and wind energy grow at 20%/year, while nuclear power and coal as energy sources grow at 1%/year as is currently the case. Finally, non-conventional oil and gas development proceeds more slowly than in the first scenario: shale oil and methane hydrates beginning commercial production in 10 years and increasing at 0.05 million boe/day/year, while tar sands oil production increases from the current level of 1 million boe/day by the same 0.05 million boe/day/year.

Scenario II – Slower Scenario II – Slower DeclineDecline

2000 2005 2010 2015 2020 2025 2030 2035 2040

Moderate Green Nuclear Coal Current Growth

World Oil Production per World Oil Production per CapitaCapita

Adapted from Pat Murphy, Community Service, Inc.

Some ConclusionsSome Conclusions

It will happen – but when?It will happen – but when? Transitions take time – decade Transitions take time – decade

timescalestimescales 97% of transportation is petroleum97% of transportation is petroleum Food system, pharmaceuticals, Food system, pharmaceuticals,

plastics, …plastics, … No good substitutes in sight (Jevons)No good substitutes in sight (Jevons) Faith-based energy initiatives …Faith-based energy initiatives …

Population-Driven Energy DemandPopulation-Driven Energy Demand

10,00010,000

8,0008,000

6,0006,000

4,0004,000

2,0002,000

0015001500 17001700 19001900 21002100

World PopulationWorld Population(Millions)(Millions)

World Primary Energy World Primary Energy ConsumptionConsumption(Quadrillion BTU)(Quadrillion BTU)

500500

400400

300300

19751975 19851985 19951995 20052005 20152015AAPG Explorer, 8/95AAPG Explorer, 8/95

http://www.aapg.org/slide_bank/armentrout_john/index.shtml

Solar Hot WaterSolar Hot Water

““Giant” DiscoveriesGiant” Discoveries

Paper presented at the EMF/IEA/IEW meeting , IIASA, Laxenburg, Austria - June 19, 2001 Plenary Session I: Resources

Prices of OilPrices of Oil

BP Statistical Review of World Energy June 2005, p. 14

Rough Outline of the Rough Outline of the FutureFuture

USGS published reserve estimates in USGS published reserve estimates in 19981998

EIA uses those estimates, along with EIA uses those estimates, along with consumption patterns to predict future consumption patterns to predict future growthgrowth

A gap between predicted demand and A gap between predicted demand and predicted production begins to grow predicted production begins to grow

Gap is to be filled with a) Saudi Arabia Gap is to be filled with a) Saudi Arabia producing >20 MMbbl/day, and b) producing >20 MMbbl/day, and b) “unidentified unconventional” sources“unidentified unconventional” sources

American government's forecast for future oil supplies are a "dangerous over-estimate". Sadad Al Husseini (recently retired vice-president of the Saudi oil company Aramco) (10/26/04)

Matthew Simmons – “Twilight in the Desert”

Peak Oil

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