Peak Oil and

Climate Change

1999 - ~$10/b 2008 - ~$147/b

James W. MurraySchool of OceanographyUniversity of Washington

IEA World Energy Outlook - Nov 2008“The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable.”

with special acknowledgement to David Rutledge (Cal Tech)

AGU-Joint AssemblyToronto

26 May 2009

ConclusionWe know enough to see that Resource limitationNeeds to be an IPCC scenario

Outline

• The 4th UN IPCC Assessment Report SRES Scenarios• Oil Reserves• Hubbert’s peak

– The history of US oil production– How much oil and gas will the world produce?

• The Coal Question• Discussion

– Future carbon-dioxide levels– Conclusions

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Oil Production in the IPCC Scenarios

• Gb = billions of barrels 1 barrel = 42 gallons = 159 liters• In 13 scenarios, oil production is still rising in 2100• In none of the scenarios did oil production decrease because of

resource limitation. None consider Peak Oil!• Oil production is never going to be more than today.

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What is Peak Oil?

It’s not about Reserves!

It’s all about the Production Rate!

We are not close to running out of oil

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Iran

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OPEC Oil “Proven” Reserves!

• 430Gb rise in reserves, no adjustment for 193Gb produced since 1980• These questionable reserves are 45% of world oil reserves used by IPCC!• A recent leak of Kuwait Petroleum Company documents showed the

actual reserves are only 48Gb (official reserves are 102Gb)• 1980 Kuwait reserves adjusted for production since then are 55Gb

From BP Statistical Review

Not provenby anybody!

Gb = billions of barrels

M. King Hubbert

• Geophysicist at the Shell lab in Houston

• In 1956, he presented a paper with predictions for the peak year of US oil production

Oil Wells Peak - Oil Fields Peak - Regions Peak - The World will peak

Everyone agrees that world oil will peak – controversy on the date

A modellogisticdistribution

US Oil Consumption today is about 20 million barrels of oil/day

ANWAR will not save us!

Typo:Million!

Hubbert’s Peak

• From his 1956 paper• Hubbert drew bell-shaped curves by hand, and added up barrels by

counting squares• For the larger estimate, he predicted a peak in 1970• Hubbert has been much criticized there is no consideration of

supply and demand curves, prices, or policy, and new technologies

US Crude-Oil Production

• Production is bell-shaped, like the curves Hubbert drew• Average price after the peak was 2.6 times higher than before

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P/Q = mQ + aQ for which P/Q = 0 is 198 gigabarrels of oil. Also called Qt (maximum cumulative production)Half of this is 99 which occurred in 1973

A model for exponential growth in a finite system

The Logistic Curve or Rate Plot

Lower 48

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Another Approach: Cumulative Oil Production

• EIA data from 1859• Fit for cumulative normal gives the ultimate production and the time for 90% exhaustion

90% exhausted in 2011

225Gb ultimate

31Gb remaining

Includes48 + Alaska

USGS/MMS assessment 189Gb

Historical Projections for US Oil

The power of Hubbert Linearization is that it uses past behavior of a system to indicate possible future performance rather than relying on the overoptimistic opinions of resource “experts”

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Hubbert

McKelvey

Maximum Cumulative Production (Qt) Will Be 2165 Gigabarrels

½ Qt = 1083 Gb

Historical Fits for World Oil and Gas Ultimate Cumulative

Ultimate Cumulative Production of Oil + Gas = 605 GtoeMaximum cumulative through 2100 for an IPCC scenario is

2,600 Gtoe 16

Who are the experts that IPCC turn to?Energy Information Agency (EIA) - DOEInternational Energy Agency (IEA) – ParisUS Geologocal Survet (USGS) - Washington

Their models for future emissions are driven by demand (not supply).

EIA, IEA and IPCC assume that supply will meet demandUSGS assumes much oil yet to be found

The EIA forecasts in 2008 projects a 30% increase in oil production between now and 2030 (from 85 to 97 mb/d) ( = +12 mbd).

The hard truth is that increasing energy supply at all will be difficult.

To have growth we need to balance decline of exisiting fields with discovery of new oil

Existing oil fields are declining at - 6.7% per year (IEA 2008)

For 2005 to 2030 the world needs 45 mbd of new production – just to maintain flat production

The projected growth requires discovery of 45 + 12 = 57 mbd of new oil!

Existing Oil Fields are in Decline

57 ÷ 9 = ~6+ new Saudi Arabias

The red box shows the average amount estimated to be discovered by the USGS each year between 1995 and 2025.

Urban Legend – we can drill more to get more oilOil discoveries have been declining since 1964

The world’s oil provinces have been well explored. Future discoveries will be limited to smaller structures and deeper formations

What about coal?

There are supposed to be hundreds of years of supply of coal!

Big 3 Reserves:US (27%)Russia (17%)China (13%)thenIndia, Australia, South Africa

Remarkably the data-quality is very poor globallybut especially for China and SE Asia and FSU

We also have a big problem with coal.The Reserves may not be as large as We’ve been led to believe.

"Present estimates of coal reserves are based upon methods that have not been reviewed or revised since their inception in 1974, and much of the input data were compiled in the early 1970s.

Only a small fraction of previously estimated reserves are actually minable reserves."

from the National Academy of Sciences Report on Coal, June, 2007

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• Mt = millions of metric tons• The average price after the peak is 2.4 times

higher than before• Britain now imports 74% of the coal it burns

UK Coal Production

Rate Plot for British Coal

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Projections vs Reserves for World Coal

• UN IPCC scenarios assume 18Tboe is available for production

Region Projection Gt Reserves Gt

Eastern US 37 96

Western US w/o Montana 33 79

Montana 68

Central and South America 16

China 88 189

South Asia 68

Australia and New Zealand 50 77

Former Soviet Union 36 226

Europe 21 44

Africa 16 30

World (at 3.6boe/t) 435 (1.6Tboe) 903

from D. Rutledge

• The scenario report SRES (2000) references the 1995 and 1998 WEC surveys• Downward trend in proved recoverable reserves• The IPCC chose to use additional recoverable reserves and they also chose

1998 (3,368Gt) instead of 1995 (680Gt) — additional recoverable reserves are now 19 times smaller than in 1998

Where Does the IPCC Get Its Coal Numbers?World Energy Council survey

Proved recoverable reserves, Gt

Additional recoverable reserves, Gt

1992 1,039 702

1995 1,032 680

1998 984 3,368

2001 984 409

2004 909 449

2007 847 180

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Many independent groups are coming to the same conclusion

Uppsala – Kjell Aleklett Peak Coal in 2030 (examples follow)http://www.tsl.uu.se/uhdsg/Publications/Coalarticle.pdf

Energy Watch Group (EWG-Germany) Peak Coal in 2025http://www.energywatchgroup.org/files/Coalreport.pdf

Institute of Energy (IFE)Kavakov and Peteves (2007) The Future of Coalhttp://ie.jrc.ec.europa.eu/

Richard Heinberg Post Carbon Institute (book in progress)http://www.richardheinberg.com/museletter/195

Historical fits for Oil, Gas, and Coal Ultimate Production

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Cumulative coal

Half-Way 2019

Reserves BP for oil and gas

WEC for coal

Cumulative oil, gas, and coal

Fits for ultimate

Projection

Projection

Ultimate Production of oil + gas + coal = 938 Gtoe

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Comparing with the IPCC Scenarios

• This projection has lower emissions than any of the 40 IPCC scenarios• This is still true even with full coal reserves

Projection

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Carbon-Dioxide Levels

• Simulations with the program MAGICC from Tom Wigley at the National Center for Atmospheric Research (NCAR) in Boulder

• This program was used in the earlier UN IPCC Assessment Reports• The program modified to use Rutledge projection for fossil-fuel emissions• profiles are business-as-usual for other greenhouse gases

Projection

50% Stretch-out for Fossil Fuel Burning

460ppm

440ppm

1) Supply Limitation will be seriousExisting scenarios and energy policies are based on emissions - not supplyWe know enough to see that Resource Limitation needs to be an IPCC ScenarioPeak Oil has occurred or will occur soon. Coal Reserves are significantly less than assumed by the IPCC.

2) Coal is thought of as a solution to energy needs – This will be a disaster for climate change without CO2 sequestration. Is CO2 sequestration realistic?

3) Energy will pass climate change as the hot button issueWe have to get our energy plan in order before we can move forwardon climate change

4) Energy Supply will Buffer Economic recoveryRecessions correlate with price rise results in energy > 5.7% of GDPSee Jeff Rubin (2009) (formerly CIBC)

5) Security Issue:Seven nations control 75% of world’s oil exports. There will be shifts in global power and wealth

Conclusions:

James Hamilton (UCSD) – Recessions generally correlate with the price of oil.If energy expenditures rise faster than income, then the share of income for otherthings must decline

Oil Expendituresas a % of GDP

Energy as a buffer on economic growth

Summary Table: IPCC SRES versus Rutledge

All values given in Gigabarrels of Oil Equivalents (Gtoe)

1990 Identified Additional Additional Additional Cumulative Resources Recoveries w/Technology OccurrencesIPCCOil+Gas 120 + 612 = 732 262 (low) 679 (high) 690 >20,107 (with marine CH4 hydrates)Coal 124 + 545 = 669 1905 3571

Rutledge Ultimate CumulativeOil+Gas+Coal = 938 Oil + Gas = 605 (from 938 – 666)

Comparable to 732 from aboveCoal = 333 Comparable to 669 above

IPCC values in ZJ, converted to Gtoe using 42 GJ/toe and 0.5 toe/t for coalZJ = 1021 J For oil: 7.33 barrels per metric ton

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CO2 emission Scenarios

From Oil + Gas + Coal

These Scenarios drive almost all climate change research

MAGICC Simulations for CO2 and Temperature

• Written by Tom Wigley at the National Center for Atmospheric Research (NCAR) in Colorado

• This program has been used in the IPCC assessments• Simulation parameters

– IPCC “most likely value” temperature sensitivity: 3C/2CO2 concentration (“likely” range is 2.0 to 4.5)

– Aslam Khalil’s recent measurements for CH4 equilibrium concentration: 1,750ppb

– Tom Wigley’s P50 values (IPCC scenario medians) for other greenhouse gases: deforestation CO2 , N2O, NOx, VOCs, SO2, C2F6, HFCs, SF6

– Our projection for CO2 emissions from oil, gas, and coal burning.

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Economists say – as price goes up, more oil will be producedElasticity has become virtually zero. It’s a market where supply rules.

from Kenneth Deffeyes

Coal Resources for the IPCC Scenarios (Tboe), from Nakicenovic

Rutledge projection

IPCCMaximum scenario

use to 2100

IPCCReservesIdentified

Recoverable with technological

progress

1.3(at 3.6boe/t)

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WECProved

Recoverable Reserves

Additional Recoverable

Reserves

1998 4.0 13

2001 4.0 1.4

2004 3.7 1.5

2007 3.4 0.7

• IPCC scenario coal resources are based on WEC survey categories

• IPCC resources have not been adjusted for the new WEC surveys 38

Important Reading that will change your outlook

Matt Simmons (2005) Twilight in the Desert

James Kunstler (2005) The Long Emergency

Jeff Rubin (2009) Why the World is About to get a Whole Lot Smaller: Oil and The End of Globalization

Important web-site

www.theoildrum.com

“We are all extraordinary skeptical of the "peak oil" stuff. We know of no reliable information that suggests that we're going to be running significantly short of any fossil fuel in this century…It certainly won't happen with any significant price on carbon.”

“We've done a few 300-year scenarios that have some shortages in them, but even that may not be realistic. This is especially so with coal!”

“The Chinese say they have enough coal for centuries…The idea that we're only going to reach 450 ppm is not defensible, especially when we're already around 385 ppm. Do we really think there is only another 60 years of fossil fuel left? I don't think so.”

PNNL Climate Modelers

…but, see my figures!

“The scenarios are intended to exclude catastrophic futures that involve large scale environmental or economic collapses. In such scenarios GHG emissions might be low because of negative economic growth, but it seems unlikely they would receive much attention in the light of more immediate problems. Hence, this report does not analyze such futures.”

IPCC

Mad Max Excluded

Nested Assumptions

Energy scarcity is a myth

Fossil Fuels are superabundant

No reason to hoard or fight over them

Globally traded from haves to have-nots

Coal can be converted to anything

Fuel will remain cheap for a century

Supply versus Demand on International Market

See: www.gasbuddy.com

What controls the price of oil?

Backwardation – during price increaseContango – is not a place in Chile!

Tanker StoragePossible Driver of a Future Price Crash