Riccardo Pagotto, Carlotta Ragazzo

Fossil Resources: past, present and future

The marketing evolution of the Fossil

Fuels: Golden Age and Crisis

Outline !  The Golden Age

!  The Hubbert prediction

!  The Peak Oil

!  The End of the Cheap Oil

Fossil Fuels: The Golden Age

!  Rapid growth after first drill (Pennsylvania, 1859)

!  Oil discoveries era (1859 - 1960)

!  The rarest oil fields: Giants (grater than 0.5 billion barrels)

Source:  peakoil.com  

The Oil Monopoly

!  Control of the oil production and prince among the earliest companies in order to make a consistent profit.

!  Standard Oil Company: strongly believed that monopolies were far better than competition

Oil discoveries and extraction

!  Discoveries of giant fields have been extremely rare: about 70% of world supply comes from fields discoveries before 1970s.

!  The world started to use more oil than the real supply in 1980s.

!  Gap between discovery and production has became wider

Source  :  Peak  Oil,  Economic  Growth,  and  Wildlife  Conserva<on.  J.  Edward  Gates,  Brian  Czech,  David  L.  Trauger  (2014)    

Oil discoveries (Gb/yr of oil equivalent)

1  

Discovery and annual oil production in France.

2  

Peak oil: The Hubbert Peak Theory

The Hubbert curve used to to predict the rate of production from an oil-producing region containing many individual wells.

Source  :  Peak  Oil,  Economic  Growth,  and  Wildlife  Conserva<on.  J.  Edward  Gates,  Brian  Czech,  David  L.  Trauger  (2014)    

Hubbert projection

Source  :  Peak  Oil,  Economic  Growth,  and  Wildlife  Conserva<on.  J.  Edward  Gates,  Brian  Czech,  David  L.  Trauger  (2014)    

US field production of crude oil from 1859 to 2011 shows a peak around 1970, as predicted by Dr. M. King Hubbert.

What Do We Know About “Peak Oil” Today? Peak  Oil  =  point  of  maximum  producMon  

source:  seekingalpha.com    

Saudi  Arabia  is  a  strongest  player  in  oil  producMon  

Production of primary energy from different resources (Gtoe)

The  avg  consume/person  =  25  barrels  of  oil/day  The  avg  worldwide  =  25  bbl/yr  or  cubic  mile  of  oil  (CMO)  !  CMO  ≅  6-­‐9/yr  Replacing:  32*1000  MW  nuclear  power  plant  or  36k*3MW  wind  farm  

Global consumption of oil per capita

1  -­‐  Fossil  fuels  have  no  apparent  subsMtutes  

Source  :  The  First  Half  of  the  Age  of  Oil.  Charles  A.  S.  Hall  and  Carlos  A.  Ramírez-­‐Pascualli  (2013)  

2  -­‐  “Energy  Slaves”  

peakoilbarrel.com    

The addition of unconventional sources of oil (heavy, deep-water, polar, natural gas liquids (NGL)) had little effect on the peak in worldwide oil production.

Oil Reserves and Peak Oil

Source  :  Peak  Oil,  Economic  Growth,  and  Wildlife  Conserva<on.  J.  Edward  Gates,  Brian  Czech,  David  L.  Trauger  (2014)  ;    

2 - World Energy Consumption

1 – The ASPO model

1 - China’s Energy Production by Fuel Type (1980-2015)

3 - Total energy consumption in China by type (2011)

2 - Total energy consumption in India (2011)

Source:  U.S.  Energy  Informa<on  Administra<on  

The Emerging Economies

source:  Paul  Chefurka  (2011)    

Source  :  The  First  Half  of  the  Age  of  Oil.  Charles  A.  S.  Hall  and  Carlos  A.  Ramírez-­‐Pascualli  (2013)  

The end of the Cheap Oil (Scientific American: C. Campbell, J. Laherrère; 1998)

1  

Oil prince since 1860.

2  Source  :  Paul  Chefurka  (2011)  

Oil prices changes in response to:

1.  weaker (or stronger) oil demand; 2.  strong OPEC supply; 3.  new discoveries (US unconventional); 4.  geopolitical conflicts; 5.  technology improvments

Pictures’  source  :  The  First  Half  of  the  Age  of  Oil.  Charles  A.  S.  Hall  and  Carlos  A.  Ramírez-­‐Pascualli  (2013)  EROI  source  :  What  is  the  Minimum  EROI  that  a  Sustainable  Society  Must  Have?  Charles  A.  S.  Hall  ,  Stephen  Balogh  and  David  J.  R.  Murphy  (2009)  

•  Declining EROI will take a huge economic toll in the future

•  Traits of the fossil fuels: 1.  Sufficient energy density; 2.  Transportability; 3.  Relatively low environmental impact 4.  Per net unit delivered to society; 5.  Relative high EROI

EROI: Energy Return On Investment 1  

2  

•  Sustainable production should be at least to the EROI ratio = 1.05:1

Perspective on the Economy and Price of Oil

Source:  www.eia.gov    

•  Price BRENT ≅ $60/bbl; WTI ≅ $50/bbl (03/17/2015) source eia;

•  Global Gross Production (GDP): growth projection for 2015 remained relative stable;

•  Continued increases in global oil consumption could bring oil markets closer into balance in the second half of 2015

Historical crude oil front month futures price

Conclusion !  The “end of cheap oil” is not only a potential

disaster but also a great opportunity for developing a better source of energy.

!  Reducing the amount of the net fuel society needs through efficiency improvements or lifestyle changes.

!  If the real price of the oil relative to other goods and services increases, and the economy stays at the same size, some other components of the economy are diverted to pay for that oil.

Source  :  The  First  Half  of  the  Age  of  Oil.  Charles  A.  S.  Hall  and  Carlos  A.  Ramírez-­‐Pascualli  (2013);  What  is  the  Minimum  EROI  that  a  Sustainable  Society  Must  Have?  Charles  A.  S.  Hall  ,  Stephen  Balogh  and  David  J.  R.  Murphy  (2009);  Peak  Oil,  Economic  Growth,  and  Wildlife  Conserva<on.  J.  Edward  Gates,  Brian  Czech,  David  L.  Trauger  (2014)