The Implications of Peak The Implications of Peak OilOilByBy

Ron. A Leng Ron. A Leng

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Conventional Oil Heavy Deepwater Polar NGL Gas Non-Con Gas

The Challenge for Future The Challenge for Future Agriculture Agriculture

World population is increasing rapidly now 6.5 World population is increasing rapidly now 6.5 billion may rise to 10 billionbillion may rise to 10 billion

Food production has to keep pace with Food production has to keep pace with population population QuantityQuantity Quality,largely a balanced protein ,mineral and Quality,largely a balanced protein ,mineral and

energy intakeenergy intake Protein availability critical for health and well Protein availability critical for health and well

being of people.Requirements for essential being of people.Requirements for essential amino acids from plant and animal proteinamino acids from plant and animal protein

Factors in future trends in Factors in future trends in animal agricultureanimal agriculture

Increasing demand for meat and milk[approx 3% Increasing demand for meat and milk[approx 3% /Year in Asia/Year in Asia

World bank forecasts that this will be met from World bank forecasts that this will be met from improved industrial pig and poultry production [huge improved industrial pig and poultry production [huge increase in the requirements for grains]increase in the requirements for grains]

Grain price is tied to the cost of oilGrain price is tied to the cost of oil

Oil prices are bound to increase as depletion of Oil prices are bound to increase as depletion of easily recovered reserves occurseasily recovered reserves occurs

Oil use in the world will have to be decreased or Oil use in the world will have to be decreased or made more efficient to meet eventual pollution made more efficient to meet eventual pollution problems problems

All Populations Are Controlled by All Populations Are Controlled by Combination of Factors [The 4Ps]Combination of Factors [The 4Ps]..

PovertyPoverty[Availability and share of [Availability and share of resources] resources]

PollutionPollution [Contamination of the [Contamination of the environment ] environment ]

PredationPredation [Taking the resources of others [Taking the resources of others to survive] to survive]

PestilencePestilence [Overcrowding and insults to [Overcrowding and insults to the environment allows spread of diseasethe environment allows spread of disease

e.g. AIDS]e.g. AIDS]IN HUMAN POPULATIONS THE OVERALL FACTOR IS IN HUMAN POPULATIONS THE OVERALL FACTOR IS

POLITICS.POLITICS.

Frisch & Leng 2002

Human ingenuity has allowed the Human ingenuity has allowed the planet to grow to a population of planet to grow to a population of

6.5 billion possibly rising to 9 6.5 billion possibly rising to 9 billion by:billion by:

Increasing the resource base in terms of energy, water,

land and food-Poverty

Controlling local pollution and have not yet critically polluted the atmosphere-Pollution

Containing and overcoming pestilence, though the present disease pandemics appear to be out of control [HIV infections and SARS]-Pestilence

Minimising predation of resources [though there is still unbalanced uses of resources]-Predation

Climate Change is For Real !

From 1979 to 2003 therehas been significant depletion of the Arctic icecap as shown by satellitephotography

National Geographic Sept. 2004

Just one of the species to become extinct

The potential of global oil production to peak is already causing shock waves through the world’s economy and reshaping geopolitics.

This event will precipitate a cascade of environmental, economic, political and cultural change for which we are totally unprepared

It has the potential to eclipse global warming as the driving force for sustainable development

PEAK OIL--Barely recognised or stuck in “ the too hard basket” by politicians, scientists and world leaders

                                     

  

The Exploitation of Oil Has A Typical Bell Shaped Curve of Depletion. The World Depletion

Curve is Simply The Sum Of All Fields.

North Sea Oil has followed the pattern of

exploitation precisely as predicted by Hubbert [1956]

Tasmanian ScallopsSturgeon and Caviar

Bardi 2005 How general is the Hubert Curve-Lisbon ASPO

Production ForecastProduction Forecast

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Conventional Oil Heavy Deepwater Polar NGL Gas Non-Con Gas

Oil has largely run out for many Oil has largely run out for many countries and there is very little countries and there is very little

to be discoveredto be discovered

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Oil Used Reserves Yet to be found

Discovery TrendDiscovery TrendThe Growing Gap

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Discovered

Futue Discovery

Production

Confirmed by Exxon-Mobil

The United States with 2% of World Oil The United States with 2% of World Oil Reserves Uses 25% of World OilReserves Uses 25% of World Oil

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Oil statistics [% ]

USA OPEC Rest of theWorld

Reserves Production Consumption

A major problem is getting your A major problem is getting your mind around the figures.mind around the figures. This huge This huge find [Australian January 2005] 170 million find [Australian January 2005] 170 million barrel represents 2 days of world suppliesbarrel represents 2 days of world supplies

Summary of World Oil Supplies Summary of World Oil Supplies 11

Oil use in the world has increased to around 80 Oil use in the world has increased to around 80 million barrels/day or 1 billion barrels are used million barrels/day or 1 billion barrels are used every 12 daysevery 12 days

All the major oil fields were discovered long ago All the major oil fields were discovered long ago and many have exceeded and many have exceeded Peak ProductionPeak Production and are and are in decline. Spare capacity is about 2 million in decline. Spare capacity is about 2 million barrels per daybarrels per day

The discovery of large oil fields The discovery of large oil fields [that is>0.5 billion [that is>0.5 billion barrels or 60 days of world requirementbarrels or 60 days of world requirement ] has ] has dwindle to zero, small finds are occurring but not dwindle to zero, small finds are occurring but not at a sufficient rate and global oil production at a sufficient rate and global oil production capacity is contracting by over 1 million barrels capacity is contracting by over 1 million barrels each day every year.each day every year.

Summary of World Oil Supplies Summary of World Oil Supplies 22

Demand for oil ,particularly by China, India, Demand for oil ,particularly by China, India, Pakistan and some Latin American countries Pakistan and some Latin American countries is increasing at unprecedented rates. Global is increasing at unprecedented rates. Global demand is expected to increase by 1 million demand is expected to increase by 1 million barrels every day each yearbarrels every day each year

Result: Oil will be a scarce and Result: Oil will be a scarce and expensive resource in years to expensive resource in years to comecome

The Greatest Disappearing Act in the WorldOil

There is a lot more to a countries oil reservesthan meets the eye

Few [None?] countries or companies providea transparent picture of their reserves

Lack of transparency of oil Lack of transparency of oil reserves, may hide an imminent reserves, may hide an imminent

oil scarcityoil scarcity The Middle East has 75% of the world’s The Middle East has 75% of the world’s

remaining oil.remaining oil. Ghawar [Saudi Arabia] had 100 billion barrels Ghawar [Saudi Arabia] had 100 billion barrels

of reserves [only 1 field of this size has been of reserves [only 1 field of this size has been discovered]discovered]

Ghawar has been mined, from its beginning, to Ghawar has been mined, from its beginning, to maintain high flow rates by pumping in sea maintain high flow rates by pumping in sea water to lift the oilwater to lift the oil

Ghawar is now pumping a mix of 55 % water Ghawar is now pumping a mix of 55 % water and 45 % oiland 45 % oil

Experience shows that when the water cut gets Experience shows that when the water cut gets to 70-80% water, the field collapses much more to 70-80% water, the field collapses much more rapidly then indicated by the Hubbert modelrapidly then indicated by the Hubbert model

[[M C Ruppert[2004] http://www.yubanet.com/artman/publish/areticle_15732.shtmlM C Ruppert[2004] http://www.yubanet.com/artman/publish/areticle_15732.shtml

Saudi Arabia Is Middle East’s Prime Oil Saudi Arabia Is Middle East’s Prime Oil ProducerProducer

Most Middle East producers Most Middle East producers have passed their prime.have passed their prime. Iran peaked at 6 million Iran peaked at 6 million

barrels/day in 1970s.barrels/day in 1970s. Iraq, Kuwait, Oman, Iraq, Kuwait, Oman,

Syria and Yemen have Syria and Yemen have all passed peak output. all passed peak output.

UAE and Iraq UAE and Iraq mightmight have have growth prospects.growth prospects.

Many giant Middle East Many giant Middle East oilfields are far past Peak oilfields are far past Peak Oil.Oil.

Saudi Arabia has 36% ofSaudi Arabia has 36% of Middle East reserves.Middle East reserves.

Ghawar, the mother of all oil Ghawar, the mother of all oil fieldsfields

Discovered in 1948Discovered in 1948 Huge anticline structure 250km by 30km Huge anticline structure 250km by 30km

widewide 3400 wells3400 wells Reserves when discovered 100 billion barrelsReserves when discovered 100 billion barrels Current production 5 million barrels per day Current production 5 million barrels per day 7% of the Northern tip of the field produces 7% of the Northern tip of the field produces

2 million barrels per day2 million barrels per day 7 million barrels of water pumped in daily to 7 million barrels of water pumped in daily to

recover 5 million barrels of oilrecover 5 million barrels of oil

THE PROBLEM: PEAKING OF WORLD THE PROBLEM: PEAKING OF WORLD CONVENTIONAL OIL PRODUCTIONCONVENTIONAL OIL PRODUCTION

Projection Source

2006-2007 Bakhitari, A.M.S.

2007-2009 Simmons, M.R.

After 2007 Skrebowski, C.

2008 Campbell / ASPO

Before 2009 Deffeyes, K.S.

Before 2010 Goodstein, D.

After 2010 World Energy Council

2010-2020 Laherrere, J.

2016 EIA nominal case

After 2020 CERA

2025 or later Shell----------------------------------------------------------------No visible peak Lynch, M.C.

2000

2010

2020

2030

SAIC / MISI

2007-2008 is most likely time 2007-2008 is most likely time for massive increase in oil for massive increase in oil

pricesprices Production will drop by 3-4 million barrels/dayProduction will drop by 3-4 million barrels/day New capacity coming on line will increase by 8 New capacity coming on line will increase by 8

million barrels/daymillion barrels/day Spare capacity would be 4 million barrels/daySpare capacity would be 4 million barrels/day Therefore 3-4 years of increasing demand, Therefore 3-4 years of increasing demand,

which is likely to be 1 million barrels /day each which is likely to be 1 million barrels /day each year, will wipe any potential surplus and year, will wipe any potential surplus and severe oil shortages will occursevere oil shortages will occur These predictions do not allow for a sudden These predictions do not allow for a sudden

drop in Saudi Oil or disruption to supply by drop in Saudi Oil or disruption to supply by war, terrorism or political upheaval etcwar, terrorism or political upheaval etc

Peak Oil means supply never Peak Oil means supply never grows grows

and probably begins to declineand probably begins to decline..•Demand then exceeds supply.

•Prices rise (but supplies do not).

•Fierce energy competition ensues among key users.

•Economic rationing will divert supplies to highest price purchasers and highest need areas.

Lifestyles have to change to accommodateless supply.

Matthew Simmons, Simmons & Company Intl.2005

Price Shocks - the first Price Shocks - the first signssigns

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Prices rise then crash with recessions

Shocks as production capacity limits breached

Five times whatit costs to produce

Conclusions for global resource depletion

Bell Shaped”, or “Hubbert” curve is approximately valid

Curve shape may be asymetric (technology factors?)

Prices start rising before peak

Rise of prices is exponential and strongly oscillating

The CIBC answerThe CIBC answer

Assessed the likely supply shortfall Assessed the likely supply shortfall and the oil price needed to reduce and the oil price needed to reduce demanddemand

2006 1.0mn b/d and 2006 1.0mn b/d and $61/barrel$61/barrel 2007 2.8mn b/d and 2007 2.8mn b/d and $70/barrel$70/barrel 2008 4.8mn b/d and 2008 4.8mn b/d and $80/barrel$80/barrel 2009 6.7mn b/d and 2009 6.7mn b/d and $90/barrel$90/barrel 2010 8.9mn b/d and 2010 8.9mn b/d and $101/barrel$101/barrel

Who gets hurt if oil Who gets hurt if oil becomes scarce and prices becomes scarce and prices

rise rise Everyone[ particularly the poor]Everyone[ particularly the poor]

USA uses 30% of the world’s oil and imports 25% USA uses 30% of the world’s oil and imports 25% of that from Saudi Arabia will be the worst hitof that from Saudi Arabia will be the worst hit

The underdeveloped and developing countries The underdeveloped and developing countries that will be denied developmentthat will be denied development

The oil producers who may be invaded for oil The oil producers who may be invaded for oil security security [The oil grab][The oil grab]

The end of oil means more expensive goods

  Most significant effects of Most significant effects of scarce and expensive oil.scarce and expensive oil.

Gradual, permanent cut-off of fuel for transport and Gradual, permanent cut-off of fuel for transport and for industrial machinery. Global trade will greatly for industrial machinery. Global trade will greatly decline. decline.

Decline in agricultural production--depends heavily Decline in agricultural production--depends heavily on fertilizers and chemicals made from oil.on fertilizers and chemicals made from oil. massive food shortages, increased by competition for food massive food shortages, increased by competition for food

crops as feedstock for bio-fuels such as vegetable oil and crops as feedstock for bio-fuels such as vegetable oil and alcoholalcohol

Shortages of 500,000 other goods made from oil.Shortages of 500,000 other goods made from oil.

Therefore, reduction of virtually all business and Therefore, reduction of virtually all business and government activity. Very serious unemploymentgovernment activity. Very serious unemployment

Where are the likely most Where are the likely most sensitive areassensitive areas

Environment and global warming[greater Environment and global warming[greater use of coal]use of coal]

All forms of transportAll forms of transport Car makers and subsidiariesCar makers and subsidiaries TourismTourism Food/goods transportFood/goods transport Natural resource movement [coal,ores etc] Natural resource movement [coal,ores etc] Wars on terror [USA spends approx $20/barrel for Wars on terror [USA spends approx $20/barrel for

protection of its supply]protection of its supply] All food producing systemsAll food producing systems Social structures Suburbs v City v Self Social structures Suburbs v City v Self

Sustaining communitiesSustaining communities

The most serious area may be The most serious area may be a downturn in agriculture and a downturn in agriculture and

food production 1food production 1 In the developed countries. Reduced industrial scale In the developed countries. Reduced industrial scale

farming with single crop such as corn and soybean. farming with single crop such as corn and soybean.

Return to permaculture incorporating microbial Return to permaculture incorporating microbial activities for fertilisers and recycling of nutrients activities for fertilisers and recycling of nutrients

[requiring more people in agriculture][requiring more people in agriculture]

Social restructuring of rural, city and suburban Social restructuring of rural, city and suburban communitiescommunities

Production of home grown fuels and competition for Production of home grown fuels and competition for food, feed and feedstock for local consumption and food, feed and feedstock for local consumption and exportexport

The most serious area may be The most serious area may be a downturn in agriculture and a downturn in agriculture and

food production 2food production 2 Developing countries: Developing countries:

down turn in staples down turn in staples greater need for small greater need for small integrated systems integrated systems dependent on recycling dependent on recycling of nutrientsof nutrients

What happens when What happens when another Rwanda or another Rwanda or Dufur[2.4 million Dufur[2.4 million refugees presently refugees presently without support] erupts without support] erupts in a future world with in a future world with few food reserves?few food reserves?

The need for fuel for cooking could result in deforestation and erosion in countries such as Nigeria

Human population Human population explosion coincided with explosion coincided with the increasing availability the increasing availability of “Cheap Oil”of “Cheap Oil”

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Future food production will need to Future food production will need to be based on lower inputs of fossil be based on lower inputs of fossil

fuelsfuels Chicken, pork, fish will Chicken, pork, fish will

become expensive. Reduced become expensive. Reduced industrial production more industrial production more alternative feed systems alternative feed systems

Ruminant, horse, rabbit Ruminant, horse, rabbit meat from cellulose biomass meat from cellulose biomass will be more attractive [crop will be more attractive [crop residues]residues]

Fruits ,vegetables produced Fruits ,vegetables produced with permaculture with permaculture principles will predominateprinciples will predominate

Crop and animal protein Crop and animal protein production will need to be production will need to be integratedintegrated

It’s still down the track but It’s still down the track but needs to be planned nowneeds to be planned now

World Cereal Stocks [Estimated World Cereal Stocks [Estimated total carryover of cereals]total carryover of cereals]

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FAO Rome 2004

World cereal grain production: World cereal grain production: total and per persontotal and per person

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GLOBAL CONSUMPTION OF BEEF, PORK AND GLOBAL CONSUMPTION OF BEEF, PORK AND POULTRYPOULTRY1968 - 20031968 - 2003

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Pork

Poultry Meat

Beef

Trends in the world use of Trends in the world use of cereal grain as feed for cereal grain as feed for

livestocklivestock

592 636 660

925

0100200300400500600700800900

1000

Feed grain requirements[Million MT]

1983 1993 1997 2020

Developed world Developing world Total

Delgado et al 2002

In the USA approximately 1400 liters In the USA approximately 1400 liters of oil equivalents are expended to of oil equivalents are expended to

feed each citizen; energy consumption feed each citizen; energy consumption

is broken downis broken down 31% manufacturing inorganic fertilizers31% manufacturing inorganic fertilizers 19% operation of field machinery19% operation of field machinery 16% transportation 16% transportation 13% for irrigation13% for irrigation 8% raising livestock [not feed lot feed]8% raising livestock [not feed lot feed] 5% crop drying5% crop drying 5% pesticide production5% pesticide production 8% other inputs8% other inputs

Does not include energy costs of packaging, refrigeration,transport to outletsand energy for cooking

World ethanol production by World ethanol production by country. USA is likely to become the country. USA is likely to become the world’s largest producer using maize world’s largest producer using maize

as the feedstockas the feedstock

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EUIndiaThailandChinaCanandaUSABrazil

Berg C[2003]World biofuel production Int. Sugar J, 1 [1] 5-15

Ethanol Inducing Policies are Ethanol Inducing Policies are being applied widely in the being applied widely in the

worldworld

How the US Farm policy is seen by How the US Farm policy is seen by Peter Nicholson Australian July 31Peter Nicholson Australian July 31st st

20032003

Fuel on their minds

Nicholson, Australian August 2004

Major powers jockey for positionand risk all-out war before the

2007-8 Oil Cliff [ MC Ruppert 2005.Writing in the wilderness publications].

Australia’s available energy supply Australia’s available energy supply in years at current production in years at current production

levels.levels.Australia is in a particularly dire situation considering Australia is in a particularly dire situation considering the alarming decline in Australia's self-sufficiency in crude othe alarming decline in Australia's self-sufficiency in crude oil, which forecasters say means we will have to import mostil, which forecasters say means we will have to import most of our crude oil and petroleum products from overseas by 2 of our crude oil and petroleum products from overseas by 2008.008.Which corresponds with Which corresponds with ASPOASPO's predicted global peak. 's predicted global peak. http://www.energybulletin.net/newswire.php?id=698http://www.energybulletin.net/newswire.php?id=698

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Source :Securing Australia’s Energy Future[2003]

Oil-shakers?Oil-shakers?

Australia’s proven reserves were downgraded by 50% for oil and 60% for gas in a recent government document yet we go on exporting

Use of energy for grain production"modern" vs "traditional" systems

Source: Pretty 1995

USA (rice)USA (maize)

UK (wheat)Philippines (rice)

China (rice)Latin A (rice)

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"Modern"

"Traditional"

Transport is 95% dependent on inexpensive oil: However the infrastructure can still be helpful!!!

70% of oil demand is for transport in USA80% in Australia

The future price of grain will The future price of grain will favour the ruminant?favour the ruminant?

Ruminants have the capacity to use Ruminants have the capacity to use biomass not used by monogastric animalsbiomass not used by monogastric animals

Ruminant production is at a low efficiency Ruminant production is at a low efficiency in most countries with tremendous scope in most countries with tremendous scope to improveto improve

The supply of supplements needed to use The supply of supplements needed to use the biomass will arise from by-products of the biomass will arise from by-products of the feed and fuel industriesthe feed and fuel industries

Ruminants are multi-purpose for Ruminants are multi-purpose for power,food products power,food products

The price of steak from grain fed The price of steak from grain fed ruminants must be measured in terms ruminants must be measured in terms

of oil costs involved in growing the of oil costs involved in growing the feed, managing and marketing the feed, managing and marketing the

meatmeat

I kg of beef requires approximately

5.7 litres of oil. Or to produce this

little beauty at 600kg live weight

1075 litres of oil

National Geographic June 2004

Oil Utilization Per Capita in Developed Oil Utilization Per Capita in Developed and Developing Countries and Developing Countries

[China/Indonesia/Africa/South America][China/Indonesia/Africa/South America]

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1.5-2.5

0.75-1.55

0-.75

Half the world’s children are Half the world’s children are living in poverty and the living in poverty and the

situation will worsen with the situation will worsen with the end of cheap oilend of cheap oil

35 countries faced food emergencies in 2004 caused bydrought or conflict or both

The worst effected were in Africa [Eritrea, Burundi, Congo, Ethiopia, Mozambique, Zambia] and Haiti and North Korea

End of cheap oil will ensure that this worsens as costs of food production and competition forcrops or land for food, feed and feedstock intensifies reducing world cereal grain stocks

Millions of the World’s Millions of the World’s Children are Undernourished Children are Undernourished

9 28 39 53

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Developed Developing Near East/ N AfricaLatinAmerica/ Caribbean SubSaharan Africa Asia/ PacificChina India

Permaculture and clean Permaculture and clean energyenergy

Composting for fertilizer Mandela urban garden

Worm farm Wind farm

Livestock

Biodigestor

Pond

Crops, trees, shrubs

ManureEffluent

IrrigationFeed

Family

BiogasExcreta

The ecological farm

The future resides in capturing solar energy and harnessing it to fuel our

needs for energy

Solar energy trapped on 1% of the world’s surface is enough

Hydrogen economy—A false Hydrogen economy—A false economyeconomy

To replace UK’s oil burning vehicles with greener hydrogen powered carswould require erection of 100,000 wind turbines or 100 new nuclear power stations

Source; A an J Oswald, Warrick University www.iom3.org/materialsworld

The Sea Current OptionThe Sea Current Option A huge source of renewable and sustainable energy A huge source of renewable and sustainable energy

is in the kinetic energy of sea currents.is in the kinetic energy of sea currents. There are a number of propeller systems, There are a number of propeller systems,

oscillating vane and aerofoil systemsoscillating vane and aerofoil systems These solutions are trying to adapt wind These solutions are trying to adapt wind

technology directly to a dense slow moving technology directly to a dense slow moving fluid. fluid.

Deflecting Vane Technology is by far the most Deflecting Vane Technology is by far the most efficient. It increases energy density upstream efficient. It increases energy density upstream from the turbine by a factor of 3from the turbine by a factor of 3

callaghan@eircom.netcallaghan@eircom.net

Utilisation of Silicon as an Utilisation of Silicon as an intermediary between renewable intermediary between renewable

energy and hydrogenenergy and hydrogenTransportation and storage

Reactive Silicon Powder

Silicon oxide or sand

HydrogenElectrolysisOf water

Electricity

+air

Renewable energy is used to generate electricity to electrolyse water and hydrogen is produced. Silicon from sand is generated using the hydrogen as an energy source. Silicon is safely transported and hydrogen or ammonia is generated by reaction with air . Efficiency 66%

Energy Wind SolarWaveThermal gradientsBiomass etc

Silicon nitride

+water

Ammonia+ sand

Hydrogen

+water or alklali Hydrogen+sand

Energy source for the reaction

The way ahead is to buy time by The way ahead is to buy time by reducing world consumption of reducing world consumption of

fuel.fuel. Massive education effortMassive education effort Allow world prices to rise modestlyAllow world prices to rise modestly Develop sustainable farming systems Develop sustainable farming systems

maximising the use of microbes and maximising the use of microbes and recycling of nutrientsrecycling of nutrients

Take a cut in standard of livingTake a cut in standard of living More fuel efficiency less More fuel efficiency less

cars/capita-more public transport cars/capita-more public transport Massively invest in alternative, Massively invest in alternative,

renewable energy resources nowrenewable energy resources now Reduce flagrant use of oil resourcesReduce flagrant use of oil resources

Sir Richard Branson, Greg Sir Richard Branson, Greg Norman John TravoltaNorman John Travolta

More amicable approach to resource More amicable approach to resource sharing and detente [terrorism?]sharing and detente [terrorism?]

Rationalise world trade-de-Rationalise world trade-de-emphasise globilisationemphasise globilisation

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Depletion Protocol Campbell- Depletion Protocol Campbell- 2005 Lisbon2005 Lisbon

Cut oil imports to match world Cut oil imports to match world Depletion Rate.Depletion Rate. World price would moderateWorld price would moderate

allowing poor countries to buy minimal needsallowing poor countries to buy minimal needs avoiding profiteering by oil companies & avoiding profiteering by oil companies &

M.EastM.East Force consumers to face realityForce consumers to face reality

Experience from Kyoto Protocol-- not Experience from Kyoto Protocol-- not a chance [my thoughts]a chance [my thoughts]

The father of the peak oil movement,the American geologist M. King Hubbert, said that an economic model based oninfinite growth but fueled by finite naturalresources is doomed.

Ironically, there’s also a saying fromoil-rich Saudi Arabia that goes:"My father rode a camel. I drive a car. My son flies a jet airplane. His son willride a camel."

Planning for the transition is much more important then debating whether it will start in 2005 or 2025

UNE’s Opportunities –• Leadership in Resource economics/management• Biotechnology- Agriculture and food production• Sustainable permaculture [integrated farming systems]• Renewable energy [biomass, solar (Hydro,wind, sea)]

The World Needs To Rapidly Develop New Energy Sources

Thank you for your attention and good luck to the young

The End

We believe oil markets may have entered the early stages of what we have referred to as a 'super spike' period ...Resilient demand has caused us to revise up our super-spike range to $50-$105 per bbl up from $50-$80 per bbl previously.Goldman-Sachs Global Investment Research 2005

The combination of the news that there's nonew Saudi Light coming on stream for the next seven years plus the 27% projected declinefrom existing fields means Hubbert's Peak has arrived in Saudi Arabia.Bank of Montreal 2005

A March 2005 report for the U.S. Department of Energy entitled “The Mitigation of the Peaking of World Oil Production” stated: “Without timely mitigation, world supply/demand balance will be achieved through massive demand destruction (shortages), accompanied by huge oil price increases, both of which would create a long period of significant economic hardship worldwide.

“Waiting until world conventional oil production peaks before initiating crash program mitigation leaves the world with a significant liquid fuel deficit for two decades or longer.”

World nuclear powerWorld nuclear power

The first nuclear power stations began The first nuclear power stations began operating in 1950operating in 1950

31 countries have 440 commercial nuclear 31 countries have 440 commercial nuclear power stations producing 364,000MWeof power stations producing 364,000MWeof total capacitytotal capacity

56 countries operate 284 research reactors56 countries operate 284 research reactors 220 reactors power ships and submarines220 reactors power ships and submarines 50 new reactors are in construction or are 50 new reactors are in construction or are

planned including 20 in Chinaplanned including 20 in ChinaSource WMC and Nuclear Energy Agency R Gottliebsen Australian 29-30 Jan 2005

Nuclear power the bridging Nuclear power the bridging fuel?fuel?

As the price of oil sky rockets As the price of oil sky rockets governments abandon their nuclear –governments abandon their nuclear –

free resolutionsfree resolutions

World Uranium ResourcesWorld Uranium Resources

Kazakhstan15%

Canada14%

Rest Australia10%

WMC Australia35%

South Africa6%

Nambia4%

Utbekistan3%

Russia2%

Rest of World11%

Source WMC and Nuclear Energy Agency R Gottliebsen Australian 29-30 Jan 2005

World Energy Generation By World Energy Generation By FuelFuel

Oil10%

Coal39%

Gas15%

Nuclear16%

Hydro19%

Other1%

Source WMC and Nuclear Energy Agency R Gottliebsen Australian 29-30 Jan 2005

Australia is in a particularly dire situation considering the the alarming decline in Australia's self-sufficiency in crude oil, which forecasters say means we will have to import most of our crude oil and petroleum products from overseas by 2008.Which corresponds with ASPO's predicted global peak.

TThree key facts are of hree key facts are of overriding importance to world overriding importance to world

events today.1 events today.1 FACT ONE - Crude oil prices have doubled since 2001, but oil companies have increased their budgets for exploring new oil fields by only a small fraction. Likewise, U.S. refineries are working close to capacity, yet no new refinery has been constructed since 1976. And oil tankers are fully booked, but outdated ships are being decommissioned faster than new ones are being built.http://www.ems.org/rls/2004/01/28/oil_supply_short.html

Source M C Ruppert[2005] www.fromthewilderness.com.

TThree key facts are of hree key facts are of overriding importance to world overriding importance to world

events today. 2 events today. 2 FACT 2.The rate of major new oil field discoveries has Fallen dramatically in recent years. [Global discovery peaked in the 1960s. Per capita energy production peakedin 1979. -Ed] There were 13 discoveries of over 500 millionbarrels in 2000, six in 2001 and just two in 2002, accordingto the industry analysts IHS Energy. For 2003, not a singlenew discovery over 500 million barrels has been reported. Murray Duffin, Energy Pulse, November 17, 2004

Source M C Ruppert[2004] www.fromthewilderness.com.

TThree key facts are of hree key facts are of overriding importance to world overriding importance to world

events today.3events today.3

FACT 3. For China and India to reach just one-quarter of the level of US oil consumption, world output would have to rise by 44 percent. To get to half the US level, world production would need to nearly double. That's impossible. The world's oil reserves are finite. And the view is spreading that global oil output will soon peak.-- The Christian Science Monitor, January 20,

Source M C Ruppert www.fromthewilderness.com.

Hydrogen is seen as the next Hydrogen is seen as the next fuel for mobile vehicles but fuel for mobile vehicles but

there are no free gifts 1there are no free gifts 1

Life expectancy of a very Life expectancy of a very expensive fuel cell engine is expensive fuel cell engine is only 200 hours. Commercial only 200 hours. Commercial hydrogen is produced from hydrogen is produced from natural gas which is also in natural gas which is also in decline [Ruppert 2004]decline [Ruppert 2004]

Hydrogen is seen as the next Hydrogen is seen as the next fuel for mobile vehicles but fuel for mobile vehicles but

there are no free gifts 2there are no free gifts 2

Oil would be needed in every phase of our conversion to Oil would be needed in every phase of our conversion to hydrogen powered locomotion or any other form of hydrogen powered locomotion or any other form of alternative fuel engine for that matter] toalternative fuel engine for that matter] to

Mine melt and transport the oreMine melt and transport the ore

Transport the metals to the factories and the goods to Transport the metals to the factories and the goods to marketmarket

To provide the electricity to manage the construction side[ To provide the electricity to manage the construction side[ for example every tyre “contains’ approx 25 litres of oil]for example every tyre “contains’ approx 25 litres of oil]

To make the paint plastics and solvents neededTo make the paint plastics and solvents needed

Hydrogen is seen as the next Hydrogen is seen as the next fuel for mobile vehicles but fuel for mobile vehicles but

there are no free gifts 3there are no free gifts 3

Oil would be needed in every phase of our conversion to Oil would be needed in every phase of our conversion to hydrogen powered locomotion or any other form of hydrogen powered locomotion or any other form of alternative fuel engine for that matter] toalternative fuel engine for that matter] to

Transport the workers too and from the factories and at Transport the workers too and from the factories and at times to construct the factories themselves and provide times to construct the factories themselves and provide residences for the workers where new installations are residences for the workers where new installations are requiredrequired

Since these developments may only be feasible with cheap Since these developments may only be feasible with cheap labour in developing countries there would be massive labour in developing countries there would be massive infrastructure costs e.g. roads, ports, sea going ships etcinfrastructure costs e.g. roads, ports, sea going ships etc

In 1970s in the USA a 5% imbalancebetween supply and demand createda shortfall in petrol

At that time high price was less of a worrythan availability

Such a small % difference was enough toadversely effect the economy ,flow of goods and mobility of people

The 1973 Arab oil embargo created a massiveprice rise and economic dislocation world wide.

Explosion of oil price ushered in a decade of STAGFLATION in which inflation soared and economies stagnated.

Result was double-digit unemployment,inflationbank interest rates

Strategic significance of America’s oil shale resources US Department of Energy [Johnson, Crawford and Bunger 2004] 2004

Strategic significance of America’s oil shale resources US Department of Energy [Johnson, Crawford and Bunger 2004]

If Peak Oil occurs suddenly the US will likely experience all the negative effects seen in the 1970s

The comfortable supply situation of the past decadegives an impression that the favourable trends can continue indefinitely. The danger is that we are lulled into a false sense of security

The top five decliners in The top five decliners in 20032003

CountryCountry ProductionProduction

[Mb/day][Mb/day]Peak YearPeak Year DeclineDecline

[%][%]

USAUSA 7.57.5 19851985 -1.4-1.4

NorwayNorway 3.33.3 20012001 -2.1-2.1

VenezuelaVenezuela 2.92.9 19981998 -7.8-7.8

UKUK 2.22.2 19991999 -8.9-8.9

IndonesiaIndonesia 1.21.2 19911991 -8.5-8.5

About to go into declineAbout to go into decline(Increasing Type 3 (Increasing Type 3

losses)losses) Denmark producing 0.4mn b/d goes in 2005Denmark producing 0.4mn b/d goes in 2005 Malaysia producing 0.9mn b/d goes in 2005Malaysia producing 0.9mn b/d goes in 2005 China producing 3.4mn b/d goes in 2005/06China producing 3.4mn b/d goes in 2005/06 Mexico producing 3.8mn b/d goes in 2005/06Mexico producing 3.8mn b/d goes in 2005/06 Brunei producing 0.2mn b/d goes in 2006/07Brunei producing 0.2mn b/d goes in 2006/07 India producing 0.8mn b/d goes in 2006/07India producing 0.8mn b/d goes in 2006/07 Collectively 9.5mn b/d or 12.3% of productionCollectively 9.5mn b/d or 12.3% of production

Source: BP Statistical Review of World Energy 2004

Distribution of proved natural gas reservesat end of 2003

Source: BP Statistical Review of World Energy 2004

Distribution of proved natural gas reservesat end of 2003

Source: BP Statistical Review of World Energy 2004

Distribution of proved oil reserves 2003

OIL RESERVES ISSUE

Fleet Size Median Cost to Replace Lifetime Half the Fleet

(Years) (2003 $)

Automobiles 130 million 17 $1.3 trillion

Light Trucks, 80 million 16 $1 trillionSUVs,etc.

Heavy Trucks, 7 million 28 $1.5 trillionBuses, etc.

Aircraft 8,500 22 $.25 trillion

SAIC / MISI

U.S. TRANSPORTATION FLEETSU.S. TRANSPORTATION FLEETS

Europe and Australia by night – same scale, same brightness

How about the real world?

The Crude Oil case:

• Limited amount of resource• Global Exploitation• No suitable replacement

Regional cases, e.g US-48 may not be relevant

0.0

0.2

0.4

0.6

0.8

1.0

1 11 21 31 41 51 611965 202520051985

1.0

0.0

0.2

0.4

0.6

0.8

Geoscience Australia, APPEA, ABARE

Australia’s oil production and consumption1965-2030

Million barrels/day

Actual Forecast

Consumption

Production

P50

Australia“A wide brown land”“The Tyranny of Distance”

Annual rainfall

3200

1600

mm

800

400

Perth to Sydney 3300 km

BigMostly aridMostly low fertility soils20 M people Already exceeding sustainable population

Remoteness classificationMajor citiesInner regionalOuter regionalRemoteVery remote

Very remote

Major cities

Outer regional

Remote

Inner regional

3 separate countries Remote Regional Urban 3% 31% 66%

The More Rural The Population The More Rural The Population The Lower The Energy The Lower The Energy

RequirementsRequirementsCountryCountry Energy Energy

Use [10Use [1012 12

kcal]kcal]

Per Per Capita Capita

Use[ 10Use[ 1066 kcal]kcal]

% % populatiopopulatio

n in n in Agric.Agric.

USUS 1840018400 7777 2.62.6

BrazilBrazil 600600 44 3737

IndiaIndia 900900 11 6262

KenyaKenya 1212 0.60.6 7575

The fossil fuel used in The fossil fuel used in producing a hectare of corn producing a hectare of corn

[approx 7200kg/ha][approx 7200kg/ha]

020406080

100120140160180

Litres per ha of corn

Petrol Diesel LPG Methane Total

Volume used / Ha of corn

Patzec 2004

Future world fuel availability Future world fuel availability

Oil extraction from wells will be physically unable to Oil extraction from wells will be physically unable to meet global demand (the evidence is from the oil meet global demand (the evidence is from the oil industry itself). industry itself).

Alternative energy sources e.g. nuclear and natural Alternative energy sources e.g. nuclear and natural gas will fall far short of compensating for expected gas will fall far short of compensating for expected shortages of oil. There is simply not enough time to shortages of oil. There is simply not enough time to convert over to them. convert over to them.

Massive disruptions to transportation and the Massive disruptions to transportation and the economy are expected commencing from about economy are expected commencing from about 2005-2010 onward as the global decline of petroleum 2005-2010 onward as the global decline of petroleum begins. begins.

  Simmonds 2004

In Developed Countries, e.g. The In Developed Countries, e.g. The US, Oil Is Used Largely As A US, Oil Is Used Largely As A

Transportation FuelTransportation Fuel

SectorSector Millions Barrels Oil Millions Barrels Oil Consumed Daily Consumed Daily

TransportationTransportation 11.711.7

Industrial FeedstockIndustrial Feedstock 4.64.6

Residential and Residential and Commercial UseCommercial Use

1.11.1

Electric Utilities Electric Utilities 0.30.3

TOTALTOTAL 17.717.7

World Cereal Stocks [Estimated World Cereal Stocks [Estimated total carryover of cereals]total carryover of cereals]

0

100

200

300

400

500

600

700

Millions of tonnes

'98 '99 '00 '01 '02 '03 '04

FAO Rome

"The Australian government released 2004 figures indicating that the countriesremaining commercial reserves of crude and condensate total 1.491 billion bbl, less than half of its previous estimate. The government reported gas reserves of 29,000 bcf, one-third of its previous estimate." Fleay B [2004]http://stcwa.org.au/journa/150105/110612461517030.html

The end of Australian oil maybe closer than we thought-and exporting Australian gas tobuy overseas oil could well turn out to bean even shorter term strategy then expected CSIRO Sustainability News Letter 49 2005

A Planet and Its Inhabitants A Planet and Its Inhabitants Under Stress 1Under Stress 1

Pollution and climate change with Pollution and climate change with potential abrupt environmental warmingpotential abrupt environmental warming

Oil Production could peak [has peaked] Oil Production could peak [has peaked] and world supplies will start to decline with and world supplies will start to decline with massive effects on human activitymassive effects on human activity

Water –by 2025, 60% of the world’s people Water –by 2025, 60% of the world’s people are likely to be living with insufficient are likely to be living with insufficient waterwater

A Planet and Its Inhabitants A Planet and Its Inhabitants Under Stress 2Under Stress 2

Food production is likely to be constrained Food production is likely to be constrained by lowered oil and water by lowered oil and water availability[ about 1 billion people are availability[ about 1 billion people are presently malnourished] presently malnourished]

Loss of biodiversity with extinction of large Loss of biodiversity with extinction of large numbers of organismsnumbers of organisms

Continuing population increase mainly in Continuing population increase mainly in the resource poor countriesthe resource poor countries