1 / 53

Peak Oil Opportunities and Challenge at the end of Cheap Petroleum

The Oil Depletion Protocol. Peak Oil Opportunities and Challenge at the end of Cheap Petroleum. Richard Heinberg Scripps College September 18, 2006. Richard Heinberg Yellow Springs, Ohio September 23, 2006. Chevron: Will You Join Us?.

aya
Download Presentation

Peak Oil Opportunities and Challenge at the end of Cheap Petroleum

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Oil Depletion Protocol Peak OilOpportunities and Challenge at the end of Cheap Petroleum Richard Heinberg Scripps College September 18, 2006 Richard Heinberg Yellow Springs, Ohio September 23, 2006

  2. Chevron: Will You Join Us? Oil production is in decline in 33 of the 48 largest oil producing countries, yet energy demand is increasing around the globe as economies grow and nations develop. www.willyoujoinus.com

  3. Chris Skrebowski, Editor of Petroleum Review (London), in conversation regarding his April, 2006 study, “Oil Field Megaprojects,” said the following: “At the moment roughly 28% of world production is coming from countries in outright decline and going down at roughly 5%/year. By 2010 this will rise to 40% of world production. There is the possibility that things could deteriorate much more quickly.

  4. “My latest calculations show the world will develop 18.8 million b/d of new capacity in the 2006-2010 period.… Depletion will offset 9.5 Mb/d of this over the same period. This means if all goes fully according to plan … there will be 9.3 Mb/d of new capacity or just over 1.8 Mb/d each year to meet new demand. So up to 2010 we can probably muddle through with high prices and restrained demand.

  5. “Faster depletion and project delays would obviously make the situation worse. After 2010, however, the situation deteriorates rapidly with negative supply growth in 2011 and 2012. We don’t have any reliable data beyond 2012 but all the indications are that the situation would be getting worse quite quickly.”

  6. Chris added, when pressed: “I feel it is my duty, given the social and economic chaos Peak Oil will undoubtedly produce, to stick very closely to defensible assumptions. If you ask me do I personally think we'll make it to 2010 my answer is probably not. Random factors and Murphy’s law more or less rule out everything running smoothly. This however is not analysis but gut feel and hunch. On the hunch basis 2008 would probably be my answer but 2010 my analysis.”

  7. Why have prices fallen? • Easing of tensions between US and Iran • No Gulf hurricanes • Speculators and hedge funds have placed their bets elsewhere • Lowered demand due to high prices • Election season

  8. What about Jack No. 2? • Will come on line after the peak (2012) • Appears big because recent discoveries have been so piddling • Expected to produce (perhaps) 400,000 barrels per day; the US uses 21,000,000 barrels per day and its indigenous production is declining by 5-7% per year over the long haul • Fifteen years from now, even with Jack 2 at full flow, the US will still be importing much more oil than it is importing today

  9. Jack 2 merely illustrates the problem: the world’s easy oil has already been found. • One of the most technically challenging oil production environments (if not the most) the industry has ever had to confront: • Over a mile of sea water, then four miles of rock • Unless the oil is of high quality, it may not be worthwhile to extract all or even most of the resource in place, given the effort and expense entailed

  10. What about past predictions? Exxon: “Peak oil theory is garbage…. People have been predicting the end of oil since the 1920s.”

  11. The Prediction U.S. DOE/EIA’s International Energy Outlook 2001 stated the following concerning future U.K. oil production: “The United Kingdom is expected to produce about 3.1 million barrels/day by the middle of this decade (~2005), followed by a decline to 2.7 mb/d by 2020.”

  12. The Reality U.K. oil production (crude oil + condensate) achieved peak production in 1999 at 2.684 mb/d. The average production rate for the first 11 months of 2005 was 1.649 mb/d or 1.035 mb/d (38.6%) less than the 1999 average.

  13. Is “Peak Oil theory” a ploy by the oil companies to raise prices? • Most reserves and production are in the hands of national oil companies, not multinational corporations • Most of the oil companies are officially dismissive of Peak Oil • Most oil depletion analysts are either scientists retired from the industry or independent researchers

  14. Is Peak Oil a fringe idea?

  15. London Daily Telegraph, June 6, 2006 Russia: ‘Era of cheap fuel is over' Viktor Khristenko, Russia’s energy minister … declared that motorists and business would have to learn to live with expensive fuel.... “One can say with certainty that the era of cheap hydrocarbons is over.”

  16. China forecasts Peak Oil CNOOC Chief Economist Predicts $90 Oil By Erik Dahl06 Sep 2005 at 09:00 AM EDT SHANGHAI (Interfax-China) -- CNOOC Dep. Chief Economist Zhang Weiping said at a conference discussing China's energy needs in Beijing on Monday [that he expects] global oil production to peak at 94-100 mb/day during the next five years. "High oil prices will have adverse effects on China's economy," said Zhang.

  17. Oil Companies at Peak Business Week of May 15th: “Although major oil companies are making record profits from high prices, their actual production is close to peak and their reserve replacement is slipping to negative.”

  18. “We may be at a point of peak oil production. You may see $100 a barrel oil in the next two or three years.” — Former US President Bill Clinton (March 28, 2006, London Business School)

  19. New York Times editorial March 1, 2006 “The concept of peak oil has not been widely written about. But people are talking about it now. It deserves a careful look—largely because it is almost certainly correct.”

  20. Summary • Oil and gasoline supply problems and high prices are here to stay, and will likely increase in severity as time goes on; • The economic, social, and political consequences will be severe; • There are no easy or quick fixes.

  21. 2. Options and Strategies: The Oil Depletion Protocol

  22. History of the Oil Depletion Protocol • Proposed by Dr. Colin Campbell in 1996, presented in 2002 at first ASPO conference in Uppsala, Sweden • Has been known as “Uppsala Protocol” and “Rimini Protocol” • Initiation of the Oil Depletion Protocol Project in July, 2006 by Post Carbon Institute

  23. Without a Protocol • Extreme price volatility will make planning and investment difficult • Conflict over remaining oil reserves will hinder their development and divert resources from the energy transition • Lack of foresight, planning, and preparation will leave societies vulnerable to economic collapse • Efforts to produce oil at maximum rates will damage reservoirs

  24. The General Direction • We need an agreement to gradually reduce oil consumption in order to discourage competition, stabilize prices, aid with planning and preparation, and protect the resource base • The rate of reduction should be pegged to some objective datum so as to avert lengthy negotiations

  25. “The overwhelming thing we need is a national plan to deal with oil depletion.” —Christine Milne, member of the Australian Senate

  26. “Foreign oil’s undeniable ties to terror, to global instability and to continued environmental degradation make immediate, decisive action to reduce our petroleum consumption absolutely critical.” —George Pataki, Governor of New York State

  27. “We’ve got to wean ourselves off of petroleum.” —George W. Bush

  28. The Oil Depletion Protocol • The world and every nation shall aim to reduce oil consumption by at least the world depletion rate. • No country shall produce oil at above its present depletion rate. • No country shall import at above the world depletion rate.

  29. The depletion rate is defined as annual production as a percentage of what is left (reserves plus yet-to-find). • The preceding provisions refer to regular conventional oil—which category excludes heavy oils with cut-off of 17.5 API, deepwater oil with a cut-off of 500 meters, polar oil, gas liquids from gas fields, tar sands, oil shale, oil from coal, biofuels such as ethanol, etc.

  30. “The proposal to cut oil imports to match depletion rate seems to be simple common sense.” —The Right Honourable Michael Meacher, Member of Parliament, UK

  31. Dealing with Diminishing Oil: Options and Strategies

  32. A few suggestions… Substitution: Develop renewable sources including wind, solar, and biomass

  33. Conservation: Efficiency and Curtailment • Like alternative energy sources, conservation (efficiency) requires investment • Investments yield diminishing returns • However, at least in the initial stages, efficiency is almost always cheaper than new supply options • Curtailment is the cheapest option of all, but requires changes in habits and expectations

  34. Agriculture: transition from oil-based industrial model to more labor-intensive, localized, organic model

  35. Transportation: Rail and light rail—the best long-term options for motorized transport of freight and people

  36. Short-term transport strategies • The Smart Jitney (communitysolution.org) • Car co-ops, ride-share, and carpooling • Community-supported hitchhiking

  37. Domestic Implementation: Rationing • Some form of rationing is inevitable—by price or by quota • Quota rationing works well in case of shortages of essential goods • David Fleming’s proposal for Tradable Energy Quotas (teqs.org)

  38. Emissions-based and Depletion-Based Protocols • How are they different? • Are they mutually reinforcing?

  39. How Can the Oil Depletion Protocol Be Adopted?

  40. Countries in full or partial de facto compliance with the Protocol • Sweden • Iceland • Cuba • Kuwait (?) • Declining producers (Indonesia, etc.) • Poor nations unable to afford oil at $70+

  41. Municipal Efforts • San Francisco, CA • Bloomington, IN • Sebastopol, CA • Denver, CO • Plymouth, NH • Portland, OR • Tompkins County, NY • Willits, CA

  42. Municipal Efforts, Cont’d • Burnaby, BC, Canada • Hamilton, ON, Canada • Kinsale, Ireland • Brisbane, Australia

More Related