Will Global Oil Shortages Occur in the Short-Medium Term? Bruce Robinson, Convenor
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Will Global Oil Shortages Occur in the Short-Medium Term? Bruce Robinson, Convenor Perth, 5th September 2013 Estimates of world oil production volume Five years 2018 Ten years 2023 Twenty years 2033 Much higher than today Higher than today Similar to today Less than today Much less than
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Will Global Oil Shortages Occur in the Short-Medium Term? Bruce Robinson, Convenor Perth, 5th September 2013. 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 - PowerPoint PPT Presentation
Transcript of Will Global Oil Shortages Occur in the Short-Medium Term? Bruce Robinson, Convenor
Will Global Oil Shortages Occurin the Short-Medium Term?
Bruce Robinson, Convenor
Perth, 5th September 2013
Estimates of world oil production volume
Five years 2018
Ten years 2023
Twenty years 2033
Much higher than today
Higher than today
Similar to today
Less than today
Much less than today
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Estimates of world oil production volume
Five years
2018
Ten years
2023
Twenty years
2033
Much higher than today
Higher than today
Similar to today
Less than today
Much less than today
3
www.ASPO-Australia.org.auAn Australia-wide network of professionals working to reduce oil vulnerability
Working groupsOil & Gas industry Urban and transport planning Finance SectorHealth Sector Social Services SectorRegional and cityDefence and SecurityConservation and EnvironmentRemote & indigenous communitiesActive transport (bicycle & walking)Agriculture, Fisheries and FoodBiofuels Construction IndustryPublic transport sectorEconomicsTourism Children and Peak OilYoung Professionals working group
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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. Planning should include serious consideration of "Peak Oil" scenarios
3. Oil vulnerability assessment of key suppliers, clients and contractors would be a valuable precaution
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.
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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
Revised edition, 2008
Peak Oil is probably a "Predictable Surprise" which is being ignored
Optimism bias Strategic misrepresentation
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Sydney Morning Herald, 10th July 2008
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Doomsday warning on fuel stock Cameron Stewart February 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.
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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.
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Possible causes of sudden fuel shortages in AustraliaTrouble in the Middle East involving Iran
(a) An Israeli or US attack on Iran as part of the nuclear debate
or (b) Spreading of the current Syrian conflict to involve others especially Iran or Saudi Arabia
20% of the world’s oil is shipped through the Strait of Hormuz, which is some 50 km wide. Iran has threatened to close the Strait if it is attacked. The US has said it would not allow a closure, but hittinga supertanker with a land-based missile at close range is not hard.
The 1973 and 1979 oil shocks resulted from the removal of some 3-7% of the world’s oil from global supplies. A reduction of 20% would be far more serious.
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Dr. Sadad I. Al Husseini, ex Saudi AramcoOil and Money Conference, London, October 2007
...predicted a 10 year plateaua structural ceiling determined by geology
The economic mantra is that as prices rise, production will increase. Clearly not true from these data.
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90
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Price$/barrel
Production M b/day
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Murray and King, January 2012 481 433-435and “Peak Oil and Energy Independence: Myth and Reality
Murray & Hansen, EOS, American Geophysical Union, July 2013
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May 2012
Oil prices to double by 2022, IMF paper warns
(West Australian May 2012)
IMF study: Peak oil could do serious damage to the global economyWashington Post October 27, 2012
October 2012
Figure 1: US-EIA forecasts World Total Oil Supply (Mbd)2001-2010
2010
2002The May 2012 IMF paper showsUS-EIA oil supply forecasts from 2002 to 2010
The later estimates are far lower than earlier guesses
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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
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BITRE 117 David Gargett
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Tuesday 13 July 2010
'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
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23www.csiro.au/resources/FuelForThoughtReport.html
24US EIA Field Production of Crude Oil MCRFPUS1
1910 1930 1950 1970 1990 20100
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4
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10 US Oil Production1910-2011
(million barrels/day)
US oil peak 1970
? ?
mb/d
Now 48% self-sufficient
2012US Oil Production 1910 – 2012 (EIA)
million barrels / day
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28/10/95 24/7/98 19/4/01 14/1/04 10/10/06 6/7/09 1/4/120
200
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1,200
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Oct-1995 Apr-2001 Oct-2006 Apr-20120
50,000
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250,0001995 2001 20132007
US Shale Oil Bonanza or Hype or both ??
US Oil Rig Count Baker Hughes 1995-June 2013
US monthly oil productionEIA 1995-March 2013
Sevenfold increase in rigs
Only 37% increase in production
US monthly oil productionEIA 1995-March 2013
http://earlywarn.blogspot.it/2013/07/us-oil-rig-count-and-oil-production.html
You can see (via the black line) that there's about a two year offset between the start of the drilling boom and the start of the production surge. If the levelling off in the drilling boom is similar, we might expect production to level off some time in 2014. (Stuart Staniford, 2013)
US shale oil production is limited by(a) The decline rate of wells is very high, so continual drilling is needed just to maintain production
(b) Only the “sweet spots” are really good
(c) Most “sweet spots” are highly drilled alreadySource “Drill, Baby, Drill”, Hughes 2013postcarbon.org/reports/DBD-report-FINAL.pdf
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0 50 100 150 200 250$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Australian Shale Oil Bonanza or Hype ??
Linc EnergyShare price to 21st June 2013
Announcement 23rd January 2013 Arckaringa Basin Coober Pedy
May 2012 August November February June 2013
Shale Oil“as big as Saudi Arabia” (103-233 billion barrels)
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Big fields are found first, and as they decline, they are replaced by smaller and smaller fieldssoon the additional small fields can not match the decline of the large fields, so the overall production begins its final decline
21st August 2013 Oil & Gas UK said it now expected average output to fall to between 1.2m and 1.4m barrels of oil and gas per day (boepd) this year, down from 1.54m boepd in 2012.
In 2003, production stood at almost 4m boepd, but has fallen every year since
August 11th 2013
1930 1937 1944 1951 1958 1965 1972 1979 1986 1993 2000 2007 2014 2021 2028 20350
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World Discovery Peaked in 1964Billion barrels of oil per year
Discovery revisions backdated3-year moving averageCampbell 2012
After Longwell, 2002
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The IEA estimates that the average production-weighted observed decline rate worldwide is currently 6.7% pa for fields that have passed their production peak”.
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)
IEA November 2008
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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
2008
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A simple observation -- or why peak will be earlier than most people expect
‘Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.’
Decline
Expansion
Chris SkrebowskiPetroleum ReviewLondon
http://peak-oil.org/2013/02/commentary-the-export-capacity-index/
Australia uses 59,000,000,000 litres of oil each yeara cube of 390 metres in size (2012)
Perth’s Central Park building is 249 m high, to top of tower
70% of Australia’s oil usage is in transportIf Australia’s 20 M tpa wheat crop → ethanol = ~10%
China United States
1 kml l
Australia38
Million barrels/ day 2012 BP Statistical Review, 2013Australia uses 1.0 China 10.2US 18.6World 86.2 US 1 cubic km oil / year
China – Motor Vehicle Production
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
2,000
4,000
6,000
8,000
10,000
12,000
kb/day China Oil consumption and production
Consumption
Production
From BP Statistical Review 2013
Imports
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
500
1,000
1,500
2,000
2,500
3,000
kb/day UK Oil consumption and production
Consumption
Production
From BP Statistical Review 2013
Imports
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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
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Indonesia Oil consumption and production
From BP Statistical Review 2013
kb/day
Production
Consumption
Indonesia left OPEC in 2009
Imports
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From BP Statistical Review 2013
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
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Consumption
Production
kb/d Saudi Arabia Oil Consumption and Production
Exports
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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
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10,000
15,000
20,000
USA Oil consumption and production
Consumption
Production
From BP Statistical Review 2013
kb/d
Imports
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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
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400
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1000Egypt Oil consumption and production
Consumption
Production
Egypt imports 40% of its food, and 60% of its wheat (2010)In the past, oil exports paid for its food imports
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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20150
200
400
600
800
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Australia Oil consumption and production
From BP Statistical Review 2013
Consumptionkb/d
Production
Imports
471950 1957 1964 1971 1978 1985 1992 1999 2006 2013 2020 2027 2034 2041 20480
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World Oil Production ForecastASPO-2013 (Dr Colin Campbell)
BillionBarrels / year
2012
Gas plant NGL
Polar
Deepwater (>500m)
Heavy and frac.
Regular conventional
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Kenneth E. Boulding, economist1910-1993
"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." IEA
US-EIA
"The only function of economic forecasting is to make astrology look respectable" John Kenneth Galbraith
We all face serious oil vulnerability risks, both short-term and long-term, but there are some oil industry upsides as well.
Failure to plan now may prove incredibly costly: a “predictable surprise” An oil vulnerability assessment and risk management plan is an essential first step
www.ASPO-Australia.org.au
ASPO-Australia can assist, if neededwww.ASPO-Australia.org.au
[email protected] 0427 398 708 08-9384-7409
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
Estimates of world oil production volume
Five years 2018
Ten years 2023
Twenty years 2033
Much higher than today
Higher than today Similar to today X Less than today X Much less than today
X XX
