[Peakoil] How close is peak oil? | Climate Spectator

Sat Apr 30 07:51:32 UTC 2011

Search Climate Spectator       
Log inFree Registration        a Business Spectator publication        
HomePolicy & ScienceSmart EnergyGreen BusinessCleanTechEnviro-MarketsGreen DealsCommentaryQ&A
How close is peak oil?
Published 6:53 AM, 29 Apr 2011
Updated 8:02 AM, 29 Apr 2011
Tags
International Energy Agency, peak oil, Smart Energy, International (outside Australia)
Login or register to post comments

Giles Parkinson
It seems politicians everywhere are suddenly waking up to the implications of peak oil. When will it arrive? Has it already passed? What does it mean for prices? And what do those prices mean for economic growth, and geopolitical risk? Most are finding that whatever action they are thinking of taking now, they should have been doing decades ago.
This week, US President Barack Obama has been pressuring Congressional leaders to remove $US40 billion of subsidies to the oil industry as he begins to rebuild the foundations of his clean energy policy that aims to rid the country of its dependence on foreign oil.
This has been a stated goal of every US President since Nixon, yet – as Ted Turner and T. Boone Pickens pointed out last week – the power and the influence of Big Oil has meant nothing has happened. Now, surprisingly, Obama appears to be gaining some sort of support from the Republicans.
Actually, it shouldn't surprise at all. As Pickens said last week, peak oil may have already passed. “Oil’s a finite resource and it’s running out,” he told a National Press Club luncheon in Washington. “In the fourth quarter of this year, demand is projected to be 90 million barrels a day and I don’t think the world can produce 90 million. If they can’t, the only way you can kill demand is with price.” He expects that price to soar to $US400 a barrel within a decade.
Not many people will argue against it. The world’s biggest oil producer, Saudi Arabia, may quibble about the numbers, but the kingdom’s rulers are realistic enough to start planning massive investments in nuclear and renewable energy technologies that will wean their domestic energy requirements off a reliance on oil, and free up more reserves to sell into a depleted and price-inflated market in the future.
And the change in that market could be quite dramatic. The International Energy Agency, formed as a response to the oil crisis of the early 1970s, barely recognised the existence of peak oil until last November, when it declared it may already have passed – at least in terms of conventional supplies - in 2006! 
This reappraisal, it says, was the result of the most detailed survey ever carried out of 800 oil fields, which concluded that the decline rate in existing fields is very, very deep. So sharp, says IEA chief economist Fatih Birol, that the world would need to develop four new Saudi Arabia’s over the next 25 years just to maintain current production levels. And there is considerable about whether deep lying and unconventional sources such as tar sands can provide that much oil.
“It is a huge, huge challenge that we continue to underline,” he told ABC Radio’s Science program last week. “And on top of that, this would mean that the world's reliance in terms of oil supply would be on a very few number of countries in the Middle East. So you have both the financial aspect, you have the geological aspect, and you have the geopolitical aspect of the growing reliance on oil. I am afraid that there will be more and more intersection between oil and geopolitics. This is the first worry. The second worry is the sudden increase in the oil prices. This is not good news for anybody."
On the same program, Jeremy Leggett, the author of "Half Gone," a book about peak oil, and head of a UK-based industry group that is trying to get its mind around the implications of peak oil, has an even more dispiriting message.
“We think that this problem is actually as bad, if not worse, than the credit crunch. It's going to come down on a world economy that is oil dependent, nay, oil addicted, as a great surprise when oil supply begins to descend, maybe even collapse. This is a huge whistle that we are trying to blow.
“There are so many problems with conventional oil and unconventional oil that on the massive balance of probabilities, by 2015 at the latest in the view of the industry task force, there will be a descent of global oil production. That will cause a crunch, it will cause the price to go through the roof, it will cause price volatility and all the downsides that come with a fabulously expensive and, in some cases, simply unavailable oil.”
Are our politicians worried? Yes. Prepared? No. Obama clearly sees the implications, but without Republican support cannot act. China is betting heavily on electric vehicles as part of it’s solution. Australia, which exports a heap of coal and gas, but imports most of its transport fuels, faces a similar challenge.
The Australian Conservation Foundation issued a report this week noting that state and federal governments are spending at least four times more on building roads and bridges than on public transport infrastructure. Its study found that while $11.3 billion was spent on road construction around the country in 2008-9, $5 billion was given away as subsidies by the Federal government through the Fuel Tax Credits program and another $1 billion was spent through the Fringe Benefits Tax to encourage the private use of company cars. Just $3.3 billion was spent on rail construction in 2008-9. The Greens have used this study to call for a national strategy that helps the country break its reliance on oil.
The only obvious winners are electric and hybrid car makers and EV network operators. Their business is almost entirely an arbitrage play on rising oil prices. Given the current forecasts – the IEA predicted itself that sales of conventional gasoline cars will be negligible by 2050 – it’s looking something like a sure bet.
Tags:International Energy Agency, peak oil, Smart Energy, International (outside Australia)
Comments on this article
Peak Oil - Natural Gas - Login Or Register To Post Comments
Submitted by Greg Dixon on Sat, 2011-04-30 14:56.
I'm with you Gray Canning, why all the concentration on electric vehicles when natural gas is so abundant in Aus. and matches existing petrol vehicles with only minor modifications? It can protect us from peak oil calamity. In the mid-term hybrid vehicles of NG/electric would be a superb fix for lowering CO2 emissions. 
Electric and public transport - Login Or Register To Post Comments
Submitted by Damien Quinnell on Fri, 2011-04-29 16:14.
Agree totally with Bill and John.
Plug in electric hybrids are the way to go. See the Volvo V60 as a case in point, hopefully coming next year. Reported fuel consumption of only 1.9L/100kms.
Eastern sea board high speed rail is also a must. Rather than build a second airport in Sydney, build something that won't be affected by rising oil prices and will keep us moving when domestic airline prices hit the roof.
Electric cars - Login Or Register To Post Comments
Submitted by Bill Gresham on Fri, 2011-04-29 14:42.
We don't need to build ANY more coal fired power stations if electric cars are charged off-peak. Use greenpower and we don't even need to shovel more coal into those existing power stations. Even considering the premium for greenpower, electric cars are still about a quarter the cost to run as the ICE equivalent. And if petrol prices rise as predicted then electric cars will be even sweeter.
And yes, James, bring on the high speed rail and light rail and all the other good public transport. Electric cars and good public transport are BOTH essential. 
IT ISN'T IMPOSSIBLE - Login Or Register To Post Comments
Submitted by John Davidson on Fri, 2011-04-29 14:05.
If the price of fuel goes up by a factor of 4 we can keep the fuel cost of running a car the same as it is now by reducing fuel consumption/km by 75%.  So how hard is this?
ABS says that the average fuel consumption of cars was  11.4 litres/100 km in 2007.  This means that we are talking about reducing average fuel consumption to 2.85 litres/100 km.  This is slightly less than what the best conventional cars are achieving at the moment.
In addition, a plug in hybrid with enough battery capacity to handle the daily commute will reduce fuel consumption by about 80% unless there is an unusual level of recreational driving. 
Then there are less conventional approaches such as building lightweight cars designed to avoid accidents rather than being strong enough to withstand serious accident.  And...
It is not impossible to absorb large increases in fuel price as long as we get on with doing the things that will dramatically reduce fuel consumption per km.
electric vehicles - really? - Login Or Register To Post Comments
Submitted by James Sleeman on Fri, 2011-04-29 13:54.
OK - so over time we convert the bulk of our car fleet from petrol to electric power. So how many more coal power stations will be built to provide the electricity to recharge the car batteries - we are supposed to be cutting carbon emissions not increasing them? Politically and environmentally nuclear power generation is on the nose as a low emission generation technology. I don't see how it is feasible to see EVs as a panacea. It is a mistake to delay investing in high speed rail along the eastern seaboard or developing fast reliable public transport.
Peak energy is not yet in sight - Login Or Register To Post Comments
Submitted by Donald Cooper on Fri, 2011-04-29 13:19.
While oil takes around a billion years to replenish, there is a similar or greater amount of energy within the troposphere which requires around eight days.
My site www.vortexengineer.com outlines the concept.
So far so good - Login Or Register To Post Comments
Submitted by Frank Aquino on Fri, 2011-04-29 12:29.
Don't you get sick of hearing people debate peak oil? It's a bit like the designers of the Titanic debating how many life boats they can get away with. Of course we'll deplete oil to below economic volumes. Of course we will. A five-year-old who gets down to his last two lollies can work that out when mum doesn't replace them. We should be applauding the fact we've accepted there's a problem that needs solving, before having reached our last two lollies. What to do about it? Legislating metro driving to be electric-only by 2020 might be a good start.
So far so good - Login Or Register To Post Comments
Submitted by Frank Aquino on Fri, 2011-04-29 12:29.
Don't you get sick of hearing people debate peak oil? It's a bit like the designers of the Titanic debating how many life boats they can get away with. Of course we'll deplete oil to below economic volumes. Of course we will. A five-year-old who gets down to his last two lollies can work that out when mum doesn't replace them. We should be applauding the fact we've accepted there's a problem that needs solving, before having reached our last two lollies. What to do about it? Legislating metro driving to be electric-only by 2020 might be a good start.
Unconventional Oil - Login Or Register To Post Comments
Submitted by Keith Linforth on Fri, 2011-04-29 12:18.
Agree with Neil, Linc  and others have solutions that will be part of the overall energy mix in the future.  This assumes that the way is not obstructed by political nonsence and so called green pet projects.  Alternatively the technology will be exported off shore to high energy users in America and Asia.
Peak Oil is a bogey - Login Or Register To Post Comments
Submitted by Roger Clifton on Fri, 2011-04-29 12:18.
Peak oil does have technical solutions.
.
Oil itself is a category, defined by the technology of its extraction, rather than by geology. In the crust there is a variety of reduced matter, much of which we call coal and some of which exudes tar, oil and gas as it degrades towards graphite.
.
The extra cost of refining coal to oil did not stop Germany going to war in the 1940s, and it would not stop the world economy nowadays. However such conversions dump even more fossil carbon into the atmosphere than if we had pumped liquid oil into the refineries.
.
It may be more useful to ask, what controls the refineries and who would gain from a "peak oil" scare?
Unconventional Oil - Login Or Register To Post Comments
Submitted by Neil North on Fri, 2011-04-29 11:56.
An alternative source of synthetic crude oil is through conversion of coal.  This is not exactly new technology as it uses the well established Fisher-Trops process. A twist on this though is to use underground coal gasification to get the feed gas for the FT reactors without taking the coal out of the ground. One australian company,Linc Energy, seems to be leading the world in this and already has an operational pilot plant running in QLD. It will be a long time before coal runs out. Their estimated production cost is only $30 a barrel, partly because they use coal deposits which are otherwise useless.

Just what is peak oil ? - Login Or Register To Post Comments
Submitted by Barry White on Fri, 2011-04-29 11:46.
Some are not clear on exactly what peaked in 2006.
In 2005-2006 crude oil production peaked.
This is oil straight out of the ground that can be sold to refinaries.
In July 2008 Crude oil plus all liquids production peaked causing the spike to $147 a barrel that triggered the Great Financial Crash,
The liquids are unconvention sources such as condensed gas that comes up with oil in some cases, processed bitumin from the tar sands in Canada, ethanol and similar bio fuels.
These liquids plus crude oil are what peaked in 2008.
At present production is on a bumpy plateau and now that the peak has been recognised everyone is watching for the first signs of depletion as production starts to fall.
Estimates vary from 2011 to 2015. It depends on who is doing the calculation and whether they believe the Saudi Arabians.

CNG is a short-term solution only - Login Or Register To Post Comments
Submitted by Bernard Walsh on Fri, 2011-04-29 11:30.
Yes, there's lots of natural gas around right now.  How long do you think it will last if it starts getting burned in place of all of the petroleum fuels we use today?
So we'd be up for the conversion costs to CNG-fuelled vehicles & refuelling infrastructure now, and then in maybe 20-40 years time, we'd be up for the cost of replacing them all over again.
I agree that CNG has a role to play, particularly in the transport & resource sectors (diesel engine conversion to CNG is very simple, as I understand it), but we shouldn't waste our money (or the natural gas resources!) on converting the entire passenger car fleet.
Compressed Natural Gas Vehicles - Login Or Register To Post Comments
Submitted by Gray Canning on Fri, 2011-04-29 10:41.
With Australia's abundance of natural gas supply and extensive network is odd that BRC Fuel Maker's PHILL unit, which is a natural gas compressor that can fill converted cars from your home is not available in Australia.

Related Articles
Playing resource roulette
Tags: Australia, centre for policy development, CleanTech, climate change
5
Solar vs Nuclear: Clash of the numbers
Tags: nuclear power, photovoltaics, solar power, Europe
58
Peak projections
Tags: peak oil, Smart Energy, International (outside Australia)
12
Busting the renewables price myth
Tags: carbon emissions, climate change, IEA, International Energy Agency
22
Archive

Welcome to Climate Spectator!
Green business, clean technology, carbon markets and climate change policy. Learn more

Sponsored Links

Copyright 2011 Business Spectator Pty Ltd        
About Climate Spectator Advertising Contact License/buy our content Privacy policy RSS Feeds Terms & Conditions 
Network Partners: CrikeyEureka ReportSmartCompanyBusiness SpectatorStartupSmart

Phone: 02 6241 7659, Mobile: 04 3365 2400, Skype: antonybbarry
Email: tony at Tony-Barry.emu.id.au, antonybbarry at me.com, antonybbarry at gmail.com
http://www.facebook.com/people/antonybbarry
http://tony-barry.emu.id.au

-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://act-peakoil.org/pipermail/peakoil/attachments/20110430/30c28701/attachment-0001.htm 