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Sustainable Supply Chains

Sustainable Supply Chains. Supply Chain Oil Vulnerability: Mitigation and adaptation. Bruce Robinson Convenor ASPO-Australia. Supply Chain Oil Vulnerability: Mitigation and adaptation Bruce Robinson Convenor Australian Association for the Study of Peak Oil.

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Sustainable Supply Chains

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  1. Sustainable Supply Chains Supply Chain Oil Vulnerability: Mitigation and adaptation Bruce Robinson Convenor ASPO-Australia

  2. Supply Chain Oil Vulnerability: Mitigation and adaptation Bruce Robinson Convenor Australian Association for the Study of Peak Oil The evidence and the “No Worries” mythology

  3. www.ASPO-Australia.org.au An Australia-wide network of professionals working to reduce oil vulnerability Working groups Oil & Gas industry Urban and transport planning Finance Sector Health Sector Social Services Sector Regional and city Defence and Security Conservation and Environment Remote & indigenous communities Active transport (bicycle & walking) Agriculture, Fisheries and Food Biofuels Construction Industry Public transport sector Economics Tourism Children and Peak Oil Young Professionals working group

  4. Outline • ●What is Peak Oil ? • the time when global oil production stops rising and starts its final decline • ●When is the most probable forecast date ? ? 2015 +/- 5 years • ● “Peak Exports” will arrive sooner, as exporting countries • use more of their own oil internally, leaving less for export • ● What psychology or mythology is stopping • decision-makers considering these risks ?? 1. Serious global oil shortages are quite likely in the near term. The evidence is mounting, but so is the “no-worries” hype. 2. Supply chain and logistics planning should include serious consideration of "Peak Oil" scenarios 3. Oil vulnerability assessment of key suppliers, clients and contractors would be a valuable precaution

  5. Psychological aspects of Peak Oil “Beyond The State of Denial” Peak Oil seminar, Perth, 2001 The Theory of Black Swan Events is a metaphor The event is a surprise (to the observer) and has a major impact. After the fact, the event is rationalized by hindsight.

  6. Revised edition, 2008 Why do leaders consistently ignore looming signs of crises even when they know the consequences could be devastating? Most events that catch us by surprise are both predictable and preventable, but we consistently miss (or ignore) the warning signs Peak Oil is probably a "Predictable Surprise" which is being ignored

  7. Optimism bias Strategic misrepresentation

  8. Sydney Morning Herald, 10th July 2008

  9. Doomsday warning on fuel stock • Cameron StewartFebruary 28, 2013 • AUSTRALIA would grind to a halt within three weeks with almost no deliveries of food or medicine if its overseas oil and fuel supplies were cut off.An NRMA-commissioned report on the nation's liquid fuel security released today says the government has allowed the country to become too dependent on foreign supply of liquid fuels.It says there are no coherent contingency plans to deal with the devastating impact of any cut to overseas supply because of war, economic turmoil or natural disasters, instead adopting a "she'll be right" approach.The report, written by retired RAAF Air Vice-Marshal John Blackburn, finds that 85 per cent of transport fuel comes from overseas crude oil or imported fuel..

  10. Air Vice-Marshal John Blackburn AO retired from the Royal Australian Air Force in 2008 as the Deputy Chief of the Air Force following a career as an F/A-18 fighter pilot, test pilot and strategic planner.

  11. Dr. Sadad I. Al Husseini, ex Saudi Aramco • Oil and Money Conference, London, October 2007 ...predicts a 10 year plateau a structural ceiling determined by geology 100 90 80 70 Production M b/day Price $/barrel The economic mantra is that as prices rise, production will increase. Clearly not true from these data.

  12. Murray and King, January 2012 481 433-435

  13. Oil prices to double by 2022, IMF paper warns (West Australian May 2012) May 2012 October 2012 IMF study: Peak oil could do serious damage to the global economy Washington Post October 27, 2012

  14. 2009 report supressed see Daily Telegraph 20th Jan 2012 "The modelling is forecasting what can be termed ‘the 2017 drop-off’. The outlook under a base case scenario is for a long decline in oil production to begin in 2017

  15. BITRE 117 David Gargett

  16. Tuesday 13 July 2010

  17. 'Peak Oil' and the German Government Military Study Warns of a Potentially Drastic Oil Crisis 1st September 2010 US military warns oil output may dip causing massive shortages by 2015 April 11th 2010

  18. www.csiro.au/resources/FuelForThoughtReport.html

  19. US oil peak 1970 mb/d US Oil Production 1910 – 2012 (EIA) million barrels / day 2012 Now 48% self-sufficient ? ? US EIA Field Production of Crude Oil MCRFPUS1

  20. US Shale Oil Bonanza or Hype or both ?? Sevenfold increase in rigs Only 37% increase in production US Oil Rig Count Baker Hughes 1995-June 2013 2001 2007 2013 1995 US monthly oil production EIA 1995-March 2013 US monthly oil production EIA 1995-March 2013

  21. Australian Shale Oil Bonanza or Hype ?? Linc Energy Share price to 21st June 2013 Announcement 23rd January 2013 Arckaringa Basin Coober Pedy Shale Oil “as big as Saudi Arabia” (103-233 billion barrels) August November February May 2012 June 2013

  22. Big fields are found first, and as they decline, they are replaced by smaller and smaller fields soon the additional small fields can not match the decline of the large fields, so the overall production begins its final decline

  23. World Discovery Peaked in 1964 Billion barrels of oil per year After Longwell, 2002 Discovery revisions backdated 3-year moving average Campbell 2012

  24. IEA November 2008 The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned. (IEA’s Fatih Birol) The IEAestimates that the average production-weighted observed decline rate worldwide is currently 6.7% pa for fields that have passed their production peak”.

  25. 2008 Even if oil demand were to remain flat to 2030, 45 m barrels/day of gross capacity -roughly four times the capacity of Saudi Arabia - would be needed just to offset the decline from existing fields

  26. A simple observation -- or why peak will be earlier than most people expect Chris Skrebowski Petroleum Review London ‘Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.’

  27. Australia uses 59,000 megalitres of oil each year a 390m cube Sydney Harbour Bridge is 134 m high 70% of Australia’s oil usage is in transport If Australia’s 20 M tpa wheat crop → ethanol ~ 10%

  28. Australia Million barrels/ day 2012 BP Statistical Review, 2013 Australia uses 1.0 China 10.2 US 18.6 World 86.2 US 1 cubic km oil / year 1 km l l China United States

  29. China – Motor Vehicle Production

  30. China Oil consumption and production kb/day Consumption Imports Production From BP Statistical Review 2013

  31. UK Oil consumption and production kb/day Consumption Imports Production From BP Statistical Review 2013

  32. Indonesia Oil consumption and production kb/day Consumption Imports Production Indonesia left OPEC in 2009 From BP Statistical Review 2013

  33. Saudi Arabia Oil Consumption and Production kb/d Production Exports Consumption From BP Statistical Review 2013

  34. USA Oil consumption and production kb/d Consumption Imports Production From BP Statistical Review 2013

  35. Australia Oil consumption and production kb/d Consumption Imports Production From BP Statistical Review 2013

  36. World Oil Production Forecast ASPO-2013 (Dr Colin Campbell) Gas plant NGL Polar Deepwater (>500m) Heavy and frac. Regular conventional Billion Barrels / year 2012

  37. "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." IEA US-EIA Kenneth E. Boulding, economist 1910-1993 "The only function of economic forecasting is to make astrology look respectable" John Kenneth Galbraith

  38. www.ASPO-Australia.org.au The nation, individual businesses and individuals face serious oil vulnerability risks, both short-term and long-term The supply chain and logistics sector is of course highly vulnerable. Failure to plan now may prove incredibly costly: a“predictable surprise” An oil vulnerability assessment and risk management plan is an essential first step Hint: Check your superannuation is not being invested into urban toll-roads, tunnels and airports. • Try to separate the hype and mythology from the actual evidence of oil vulnerability risks ASPO-Australia can assist, if needed www.ASPO-Australia.org.au Bruce.Robinson@ASPO-Australia.org.au 0427 398 708 08-9384-7409

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