1
IMPLICATIONS OF FOSSIL FUELS IMPLICATIONS OF FOSSIL FUELS PRODUCTION PEAKING FOR FORECASTSPRODUCTION PEAKING FOR FORECASTS
OF WORLD COOF WORLD CO22 EMISSIONS AND EMISSIONS AND ATMOSPHERIC CONCENTRATIONSATMOSPHERIC CONCENTRATIONS
Roger H. Bezdek. Ph.D., PresidentManagement Information Services, Inc.
Presented at The Unconventional Fuels Forum
Houston, TexasMay 2008
22
THIS PRESENTATIONTHIS PRESENTATION• Peak oil• Peak natural gas• Peak coal• Peak fossil fuels• CO2 emissions forecasts• CO2 concentration forecasts• Findings• Conclusions• Implications• The real problem• Recommendations
3
PEAK OIL: WORLD HAS BEEN CONSUMING PEAK OIL: WORLD HAS BEEN CONSUMING MUCH MORE OIL THAN IT HAS BEEN FINDINGMUCH MORE OIL THAN IT HAS BEEN FINDING
0
10
20
30
40
50
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2007
billi
on b
arre
ls p
er v
ear
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Reserve Additions
Consumption
4
PEAK OIL: AND THIS TREND WILL CONTINUEPEAK OIL: AND THIS TREND WILL CONTINUE (Actual and Projected World Oil Reserve Additions)(Actual and Projected World Oil Reserve Additions)
0
10
20
30
40
50
1900's 1920's 1940's 1960's 1980's 2000's 2020's
billi
on b
arre
ls p
er y
ear
Actual
ProjectionProjection
5
WORLD LIQUID FUEL PRODUCTION WORLD LIQUID FUEL PRODUCTION HAS PLATEAUEDHAS PLATEAUED
4% Production Fluctuation
Band
87
8685
84
8382
8180
79
7877
76
7574
2002 2003 2004 2005 2006 2007
Wor
ld O
il Pr
oduc
tion
Mill
ions
of b
arre
ls p
er d
ay Plateau
President Bush: "If they [Saudi Arabia] don't have a lot of additional oil to put on the market, it is hard to ask somebody to do something they may not be able to do."
6
OIL PRICES AT TRIPLE DIGITSOIL PRICES AT TRIPLE DIGITSWeekly Price of West Texas Crude, 1986 – 2008
0
20
40
60
80
100
120
Jan-
86
Jan-
88
Jan-
90
Jan-
92
Jan-
94
Jan-
96
Jan-
98
Jan-
00
Jan-
02
Jan-
04
Jan-
06
Jan-
08
dolla
rs p
er b
arre
l
7
PEAKING IS NATURALPEAKING IS NATURAL
Oil Fields Peak
(Notional)
1945 2000Year
Prod
uctio
n
U.S Lower 48 States
Regions Peak (Many oil fields)
The world will peak(All regions)
Time - Decades
Prod
uctio
n
8
1967 1969 1971 1973 1975 19772.9
3.0
3.1
3.2
3.3
3.4
3.5
Dai
ly P
rodu
ctio
n -M
M b
/d
100%
90%
85%
Perc
ent o
f M
axim
um95%
Texas
O
Peak in
1972.5
1980 1982 1984 1986 1988 1990
14.4
14.6
14.8
15.0
15.2
15.4
15.6
Dai
ly P
rodu
ctio
n -M
M b
/d
100%
98%
Perc
ent o
f Max
imum
North America
96%
94%
Peak in
1985
1994 1996 1998 2000 2002 20042.4
2.5
2.6
2.7
2.8
2.9
3.0
Dai
ly P
rodu
ctio
n -M
M b
/d
100%
90%
85%
Perc
ent o
f Max
imum
95%
United Kingdom
Peak in
1999
1994 1996 1998 2000 2002 2004
2.9
3.0
3.1
3.2
3.3
3.4
3.5
Dai
ly P
rodu
ctio
n -M
M b
/d
100%
90%
85%
Perc
ent o
f Max
imum
95%
Norway
Peak in
2001
EXAMPLES OF OIL PEAKINGEXAMPLES OF OIL PEAKING
54 of 65 of the most important oil-producing
countries have peaked
9
WORLD OIL PEAKING FORECASTSWORLD OIL PEAKING FORECASTS (Most Forecasters Expect Peak at < 100 MMbpd)(Most Forecasters Expect Peak at < 100 MMbpd)
Forecaster Date
K. Deffeyes, (retired professor & retired Shell) 2005 M. Simmons, M. (oil expert & businessman) 2005 E.T. Westervelt, et al. (U.S. Army Corps of Engineers) 2005 Energy Watch Group (research organization) 2006 S. Husseini, (retired Saudi Aramco executive) 2007/08 S. Bakhtiari, (Iranian National Oil Co. planner) 2007/08 T. Boone Pickens (oil & gas investor) 2007/08 D. Goodstein, (Vice Provost, Cal Tech) By 2010 C.T. Maxwell, Weeden & Co. (brokerage) By 2010 D. Strahan (energy analyst) By 2010 R. Bentley, (university energy analyst) 2010 C. Campbell, (retired oil company geologist) 2010/11 C. Skrebowski, (editor of Petroleum Review) 2010/11 L.M. Meling, (Statoil oil company geologist) 2011 X. Pang, (China Petroleum University) 2012 International Energy Agency 2012 Merrill Lynch (Brokerage/Financial) 2015 J.R. West, PFC Energy (Consultants) 2015 Shell 2015 Volvo Trucks By 2017 C. de Margerie (Oil company executive) By 2017 Wood Mackenzie (Energy consulting) By 2020 CERA (Energy consulting) After 2030 U.S. Energy Information Administration After 2030 ExxonMobil After 2030
Source: Management Information Services, Inc., 2008.
10
MISI FORECAST OF WORLDMISI FORECAST OF WORLD LIQUID FUELS PRODUCTIONLIQUID FUELS PRODUCTION
Source: Management Information Services, Inc., 2008.
0
20
40
60
80
100
1945 1955 1965 1975 1985 1995 2005 2015 2025 2035 2045
Mbp
d
Production peaks ~ 2015 at~ 95 MMbpd -- ~ 5.1 BTOE/yr.
11
PEAK NATURAL GASPEAK NATURAL GAS
• Data on worldwide NG reserves &resources even less reliable than for oil
• Much disagreement among experts• Reasonable figure for ultimate recoverable
conventional gas in world is ~ 10,000 tcf• An additional ~ 2,500 tcf of unconventional gas• ¾ the world’s NG reserves located in the Middle East
and Eurasia• Russia, Iran, and Qatar combined account for ~ 60% of
the world’s NG reserves• NG much more difficult & expensive to transport than oil
12
CONVENTIONAL NG ULTIMATE RESERVESCONVENTIONAL NG ULTIMATE RESERVES (Mean Values)
Ultimate Found Produced Remaining
Known Reserves TCF
Middle East 3,000 2,860 200 2,660 CIS 2,000 1,830 700 1,100 US 1,250 1,200 960 240 Asia 1,150 920 180 740 Africa 800 620 100 520 Latin America 800 580 150 430 Europe 800 620 300 320 Canada 250 215 155 60 World 10,000 8,800 2,700 6,100 OPEC 3,600 3,500 400 3,100
Source: Jean Laharrere, derived from the Oil and Gas Journal, World Oil, American Petroleum Institute, BP Statistical Review, OPEC, and IHS, Inc.
13
NATURAL GAS DISCOVERY AND FORECAST NATURAL GAS DISCOVERY AND FORECAST CONSUMPTION THROUGH 2020CONSUMPTION THROUGH 2020
0
20
40
60
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
billi
on b
arre
ls o
il eq
uiva
lent
discovered demand
NG discoveredglobally peaked
In 1970
Since mid-1990sNG use has been
exceeding discoveries
14
CUMULATIVE WORLD NG CUMULATIVE WORLD NG DISCOVERY AND PRODUCTIONDISCOVERY AND PRODUCTION
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
cum
ulat
ive
Tcf
discovery production
15
NG PRODUCTION FORECASTS BEING LOWEREDNG PRODUCTION FORECASTS BEING LOWERED
0
40
80
120
160
200
1950 1960 1970 1980 1990 2000 2010 2020 2030
tcf
EIA'07 IEA'06 EIA'06
conventional
unconventional
Recent 2030 forecastslowered from >180 tcf to ~ 160 tcf
16
MISI NATURAL GAS PRODUCTION FORECASTMISI NATURAL GAS PRODUCTION FORECAST
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
billi
on to
e
Source: Management Information Services, Inc., 2008.
Production peaks ~ 2030 at ~ 140 tcf – ~ 3.3 BTOE/yr.
17
PEAK COALPEAK COAL
• Concept of peak coal as viable as peak oil and peak NG
• Difference is amount of reserves and extraction methods• Some nations already passed “peak coal,”
e.g., UK, Germany, Japan – 20 in all• However, some major coal producing
nations have young coal industry thatis in beginning of production curves
• Some analysts pessimistic about futureworld coal production
• Strong arguments also made that worldcoal resources and production potential under-estimated
18
SOME RECENT PEAK COAL ESTIMATESSOME RECENT PEAK COAL ESTIMATES
Forecaster Date Level National Coal Council No U.S. peak prior to 2030 None given Southern States Energy Board No U.S. peak prior to 2030 None given Energy Watch Group World peak in 2025 6.4 billion tons (world) Mikael Hööka, Werner Zittelb, Jörg Schindlerb, Kjell Alekletta
World peak in 2030 8.3 billion tons (world)
Gregson Vaux, NETL energy researcher
U.S. peak in 2032 3.3 billion tons (U.S)
Jean Laherrere, energy analyst World peak in 2050 3.6 Btoe (world) Pushker Kharecha and James Hansen, energy researchers
World peak in 2077 None given
Thomas Thielemann, Sandro Schmidt, and J. Peter Gerling, energy researchers
No world physical coal constraints through 2100
None given
Source: Management Information Services, Inc., 2008.
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ESTIMATES OF WORLD COAL PRODUCTIONESTIMATES OF WORLD COAL PRODUCTION
0
1
2
3
4
5
6
1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
billi
on to
e
EIA Ref IEA Ref IEA Alt Hooka, et.al.
Source: U.S. Energy Information Administration, 2007; International Energy Agency, 2006; and Mikael Hööka, Werner Zittelb, Jörg Schindlerb, Kjell Alekletta, 2007.
20
MISI WORLD COAL PRODUCTION FORECASTMISI WORLD COAL PRODUCTION FORECAST
0
1
2
3
4
5
6
7
8
9
1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
billi
on to
ns
Source: Management Information Services, Inc., 2008.
Production peaks~ 2040 at ~ 8.7 billiontons, ~ 4.1 BTOE/yr.
21
MISI ESTIMATES OF WORLD LIQUID FUELS, MISI ESTIMATES OF WORLD LIQUID FUELS, NATURAL GAS, & COALNATURAL GAS, & COAL PRODUCTIONPRODUCTION
0
1
2
3
4
5
6
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
billi
on to
e
oil coal gas
Source: Management Information Services, Inc., 2008.
22
MISI WORLD FOSSIL FUELMISI WORLD FOSSIL FUEL PRODUCTION FORECASTPRODUCTION FORECAST
0
2
4
6
8
10
12
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
billi
on to
e
Source: Management Information Services, Inc., 2008.
Total world fossil fuels productionwill peak ~ 2017 at ~ 11.5 BTOE/yr.
23
CARBON DIOXIDE FORECASTSCARBON DIOXIDE FORECASTS
• CO2 emissions usually forecast over extended time period – often 100 yrs +
• Forecasts include CO2 atmospheric concentrations• CO2 atmospheric concentrations much more difficult to
forecast, and forecasts differ widely• IPCC developed series of 24 climate change projections• IPCC contends that:
-- World carbon emissions must peak by 2015 to avoidirreversible climate change
-- CO2 atmospheric concentrations must not exceed450 ppm
24
IPCC SCENARIOS THROUGH 2100IPCC SCENARIOS THROUGH 2100
25
IPCC ESTIMATES OF IMPACTSIPCC ESTIMATES OF IMPACTS
26
RETHINKING CORETHINKING CO22 FORECASTSFORECASTS
• We used MISI peak fossil fuels forecasts and historical CO2 emission levels through 2005
• Estimated CO2 emission levels based on fossil fuels consumption through 2050
• Estimated CO2 concentration levels based on fossil fuels consumption through 2050
• MISI estimates that:-- CO2 emissions will peak ~ 2017 at ~ 31.4 Bmt –
11% higher than in 2005-- CO2 atmospheric concentration will peak ~ 2042 at
~ 430 ppm, and will then decline
27
MISI ESTIMATE OF WORLD COMISI ESTIMATE OF WORLD CO22 EMISSIONS, 1980EMISSIONS, 1980--20502050
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
mill
ion
met
ric to
ns
Source: U.S. Energy Information Administration, 2007, and Management Information Services, Inc., 2008.
CO2 emissions peak ~ 2017at 31.4 Bmt – 11% > 2005
28
MISI ESTIMATE OF WORLD COMISI ESTIMATE OF WORLD CO22 CONCENTRATIONS, 1960CONCENTRATIONS, 1960--20502050
0
100
200
300
400
500
1959 1966 1973 1980 1987 1994 2001 2008 2015 2022 2029 2036 2043 2050
ppm
Source: U.S. Department of Commerce, NOAA, ESRL, 2008, and Management Information Services, Inc., 2008.
CO2 atmospheric concentrationpeaks ~ 2042 at ~ 430 ppm
and then declines
29
MISI ESTIMATES MAY BE MISI ESTIMATES MAY BE ““WORST CASEWORST CASE””
• MISI estimates may be high:-- Many analysts contend that oil will peak before 2015
at < 95 MM bpd-- Our forecast assumes that 2005 GHG controls will
remain at same level through 2050-- However, technology developments will likely lower
MISI forecast of CO2 emissions-- Further, world economy is becoming less CO2
intensive per unit of output, and this trend willaccelerate
30
FINDINGSFINDINGS
• Peak oil drives peak fossil fuels and CO2 emissions/ concentrations
• World fossil fuel production peaks ~ 2017, 2 years after peak oil
• CO2 and carbon equivalent emissions peak ~ 2017• CO2 atmospheric concentration peaks ~ 2042 at ~ 430
ppm • Fossil fuel peaking will prevent attainment of CO2
levels forecast by IPCC and others• MISI findings are conservative and robust:
-- Oil may peak prior to 2015-- CO2 estimates ± 2-3 years do not change
conclusions-- New technologies will further reduce output CO2
31
IMPLICATIONSIMPLICATIONS
• IPCC: -- “World CO2 emissions must peak by 2015 to avoid
irreversible climate change.”-- “World CO2 atmospheric concentrations must not
exceed 450 ppm.”• Peaking of world fossil fuels & CO2 emissions ~ 2017
will meet IPCC targets without legislative mandates• Fossil fuel peaking will limit CO2 atmospheric
concentration to ~ 430 ppm – well below climate change models forecasts
• Geologic resource constraints will impact sooner & more severely than legislative GHG control actions
• Geologic constraints supersede legislative actions in controlling future CO2 emissions
32
FURTHER IMPLICATIONSFURTHER IMPLICATIONS
• World GDP can continue to increase in real terms ~ 2.1%/yr. without increasing carbon emissions
• Two caveats• First, world economic growth beyond 2017 requires vast
new energy supplies to replace declining fossil fuels• Ensuring these supplies will require massive efforts
beginning at least a decade in advance of fossil fuel peaking – e.g. now
• Second, world population forecast to increase from current 6.7 billion to ~ 9 billion in 2050
• Thus, to improve living standards, an economic growth rate > the “carbon neutral” rate of ~ 2.1%/yr. required
33
REAL PROBLEM WE FACEREAL PROBLEM WE FACE
• Real energy problem world faces is peaking and then decline of fossil fuel production
• Economic growth & energy requirements closely correlated
• Major problem for most of world is achieving economic growth to reduce poverty
• This will require vastly increased energy supplies for the foreseeable future
• Most energy available will be fossil and nuclear• Failure to achieve economic growth will hurt poor nations
and poor people the most• Most nations not ready to go on strict energy diet• This may supersede global warming concerns
34
POPULATION GROWTH TRENDSPOPULATION GROWTH TRENDS
8.2
7.6
6.8
6.1
5.3
4.4
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
1980 1990 2000 2010 2020 2030
Wor
ld P
opul
atio
n in
Bill
ions
Current U.S. population: ~ 300MU.S. population in 2040: ~ 400M
35
CURRENT ECONOMIC GROWTH FORECASTCURRENT ECONOMIC GROWTH FORECAST
154
129
88
4634
0
25
50
75
100
125
150
175
1990 2000 2010 2020 2030
Trill
ion
Dol
lars
of G
DP
World GDP in Trillion 2000 Dollars
In 20 years, worldGDP will double
36
DEMAND FOR ENERGY: THE RISING TIDEDEMAND FOR ENERGY: THE RISING TIDE
78 85 99 107 110 131
205
262301
404
489
570
0
100
200
300
400
500
600
1980 1990 2000 2010 2020 2030
U.S Rest of the World
Note: 1.6 billion people currently do not have electricity.
Qua
drill
ion
Btu
Con
sum
ed
.
In 20 years, world energyconsumption will increase 80%
37
U.N.: ACCESS TO ABUNDANT ENERGY U.N.: ACCESS TO ABUNDANT ENERGY IS KEY TO QUALITY OF LIFEIS KEY TO QUALITY OF LIFE
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
0 5 000 10 000 15 000 20 000
Electricity Use
Hum
an D
evel
opm
ent I
ndex
Canada
Qatar
SwedenFinland
United States
UAE
MozambiqueZambia
ZimbabweBangladesh
Ethiopia
South Africa
Malaysia
Argentina
Italy
IndiaMorocco
ChinaBrazil
Indonesia
Electricity Use Per Capita and the U.N. Human Development Index
Source: International Energy Agency, World Energy Outlook 2005.
38
IndiaChina
Mexico
RussiaSouth Korea
Australia
USA
UKItaly
Malaysia
0
3,000
6,000
9,000
12,000
15,000
0 10,000 20,000 30,000 40,000
GDP per Capita (in US$)
Kilo
wat
t-hou
rs p
er C
apita
Mexico
Russia
South Korea USA
Italy
IndiaChina
AustraliaUK
Malaysia
0
150
300
450
600
0 10,000 20,000 30,000 40,000
GDP per Capita (in US$)
Pass
enge
r Veh
icle
s pe
r 1,0
00 P
eopl
e
Electricity Usage per Capita Passenger Vehicles per Capita
MOST NATIONS STILL AT EARLY STAGES OF MOST NATIONS STILL AT EARLY STAGES OF MODERNIZATION MODERNIZATION –– AND ENERGY USEAND ENERGY USE
Projections assume Chinese consumption remains below current levelsin Mexico for next 25 years
39
CONCLUSIONSCONCLUSIONS
• Data on fossil fuel resources, reserves, availability, & production potential incomplete, of poor quality, & often unavailable
• Data deficiencies for NG & coal more serious than for oil• World fossil fuel production & CO2 emissions will peak ~ 2017• CO2 atmospheric concentration peaks ~ 2042 @ < 450 ppm• Fossil fuel peaking with achieve IPCC CO2 reduction goals
without legislation• Geologic constraints supersede legislative actions in
controlling future CO2 emissions• Real energy problem world faces is peaking and then
decline of fossil fuel production • The challenge is developing the vastly increased energy
supplies world requires in coming decades
40
RECOMMENDATIONSRECOMMENDATIONS
• Research required to improve data on fossil fuel resources, reserves, availability, & production potential
• Research priority should be on data deficiencies for NG & coal
• Further research required on relationship between fossil fuel production limitations and CO2 emissions
• Research should concentrate on post-2017 energy, CO2 , and economic issues and interrelationships
• Credible, comprehensive study required by objective organization independent of IPCC – perhaps the U.S. or Canadian National Research Council
