Crude: The Story of Oil By Sonia Shah November 18-20, 2006

1. Crude: The Story of Oil By Sonia Shah November 18-20, 2006

2. Crude is the product of the decayed remains of billions of sea creatures. Foraminifera fossils commonly found in crude oil

3. Oil seeping to surface, Iraq

4. Spontaneous combustion of natural gas seep in Iraq: the “everlasting fire” of Biblical times

5. U.S.’s first oil well,1859Titusville, PA

6. Crude is uniquely energy intense Energy in 1 gallon of oil equal to = 5 kilograms of the best coal =more than 10 kg of wood =more than 50 days of full-time human labor =100 times more energy than its extraction requires

7. First market for crude = kerosene lighting • “Give the poor man his cheap light” John D. Rockefeller, Standard Oil • Octane was waste

8. Kerosene market crumbled after Edison invented light bulb in 1879; but Standard Oil was swimming in oil A forest of oil derricks, California

9. The first “horseless carriages” • Automobile races held to entice skeptical public

10. Per person per mile • Cars require three times more energy than trains • Cars require 30 times more energy than bicycles

11. The paving of the United States • 1907: less than 200,000 miles of U.S. roads had any kind of surfacing • Today, nearly 4 million miles of paved highway alone

12. 1955: 50 million cars owned by Americans • 1975: 100 million cars • 1990: one car owned per licensed driver • Today, a new car is bought in the US every 3 seconds • We consume crude 100,000 times faster than it can accumulate underground

13. M. King Hubbert delivering his speech to the American Petroleum Institute, 1956 • Minutes beforehand, employer Shell urged him to tone down his findings

14. The first oil shock • 1960: Organization of Petroleum Exporting Countries formed • OPEC countries govern access to over half of the world’s conventional oil • 1971: US oil production peaks • 1973: OPEC embargoes oil to US and Netherlands • Price of oil rises from $3/barrel to $12/barrel in six months • Between 1970-1980 consumer prices double

15. Lining up for access to the pump

16. “Any means necessary” • The Carter Doctrine: the US will defend access to Persian Gulf oil using any means necessary • Oil is lifeblood of US economy • 70 percent of weight of US army = fuel

17. Into the cold and the deep

18. A new generation of technology

19. North Sea and Alaskan oil decline • North Sea oil peaks in mid-1980s • Alaskan oil peaks in 1988 • $10 billion needed to rehabilitate North Slope • 300 million gallons of toxic sludge in North Sea

20. New oil: an heroic effort • Over 2,000 icebergs • 15,000 ton rig sank in 1982 • New rig built with 400,000 tons of concrete and 69,000 tons of steel • Submerged with 400,000 tons of iron • Total production = 0.5 billion barrels Hibernia

21. A method of mining the last of the world’s crude: FPSO

22. Association for the Study of Peak Oil & Gas

23. Declining discoveries of new oil • Since 1960, the size of new oil finds has declined • Since 1980, the rate of discovery of new oil finds has declined • Last year, one new barrel of oil found for every 6 consumed, despite industry spend of $238 billion on oil exploration • Flow of oil from known oilfields declines 3 to 5 percent a year

24. Fuelling petro-demand • Increasing oil demand in China and India is “crucial to the long-term growth of oil markets,” according to the DOE • World Bank spends 15 times more on fossil fuel projects than renewable energy • World Trade Organization accepted China’s membership contingent on slashing tariffs on car imports

25. Bicycles banned in Shanghai • 40,000 new miles of highway planned in India • Developing countries led by China and India expected to consume 90 percent as much oil as industrialized countries by 2020

26. Asian Brown Cloud A 2-mile thick cloud of toxic pollution permanently hanging above Asia

27. “Dutch Disease”: The curse of crude • Oil production in Algeria, Angola, Congo, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Peru, Qatar, and Trinidad Tobago coincided with a decline in the standard of living • Per capita income in Saudi Arabia dropped from $28,000 in 1981 to ~$10,000 in 2004 • War in Angola, Colombia and elsewhere paid in petro-dollars

28. The end of cheap oil: a new era?

29. Challenges for oil industry • Public disapproval of high prices and profits in industry • Declining discoveries of new, conventional oil • Declining production of old oil • Record profits from high oil prices • $10 trillion invested in current oil and gas infrastructure • Minimal investments in renewables • Increasing investment in natural gas • Increasing investment in unconventional oil resources

30. 300 billion potentially recoverable barrels of oil • Globally, 2.5 trillion barrels oil locked in tar sands • Cost of extraction in 1980: $30/barrel (compared to Saudi oil at $2/barrel) • Cost of extraction today: $5-7/barrel Tar sands: Open-pit mining, Alberta

31. Turning tar sands into oil • Burns up to a fifth of Canada’s natural gas supply • Emits 6 times more C02 than producing a barrel of conventional oil • Requires 6 barrels of freshwater for each barrel • Threatens Alberta’s forests with acid rain

32. Crude’s royal successor: natural gas • Exxon invested $7 billion in new project to turn natural gas into diesel • Half of BP’s $8 billion investment in alternative and renewable energy is in natural gas

33. Natural gas: an “environmentally friendly” fossil fuel? • Burning natural gas emits less carbon dioxide than burning oil • Unburned natural gas (methane) absorbs 23 times more heat than carbon dioxide • With 3 percent leakage, using natural gas has same climate-warming effect as burning oil • With 6 percent leakage, using natural gas has worse effect on atmosphere than burning coal • Most recent data suggests present leakage of at least 2.3 percent

34. Keeping old oilfields alive beyond planned obsolescence

35. “Our biggest problem is not the end of our resources.That will be gradual. Our biggest problem is a cultural problem.We don’t know how to cope with it.” —M. King Hubbert

36. Toward a sustainable energy future • Appropriate price signals • Energy literacy • Challenging power of oil industry • Modelling a post-oil society

37. Based on Crude: The Story of Oil By Sonia Shah November 18-20, 2006