Peak Oil/Coal and Uncertainty of Climate Change 19992004 James W. Murray School of Oceanography University of Washington with special acknowledgement to.

Peak Oil/Coal and

Uncertainty ofClimate Change

1999 2004

James W. MurraySchool of OceanographyUniversity of Washington

with special acknowledgement to David Rutledge (Cal Tech) and Jim Hansen (Seattle)

The Smith SchoolOxford University

5 October 2011

IEA WEO 2010“The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially. What is needed is nothing short of an energy revolution

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CO2 emission Scenarios

From ∑ Oil + Gas + CoalThese scenarios drive almost all climate change research

The Link Between Peak Oil and Climate Change

Today’s Conclusions

Evidence is increasingly strong suggesting that energy resource limitationwill be a serious issue.

Peak Oil has occurred or will occur soon.Why? existing oil fields are declining at ~5-7% per year (~5 mbd)New discoveries are not keeping up.

Even so production rate, not reserves, are what matter for our economy

Oil and Coal Reserves are much less than assumed by the IPCC.Increased supply from other sources is neither scalable or timely.

We know enough to see that Resource Limitation needs to at least be an IPCC Scenario

“uncertainty about climate change must include uncertainty about the source of CO2“

Some Definitions

IEA – International Energy Agency (International, Paris)EIA – Energy Information Agency in US Department of Energy (US DOE)CERA – Cambridge Energy Research Association (Dir: Daniel Yergin)IPCC – Intergovernmental Panel on Climate ChangeSRES – Special Report on Emission SceneriosOPEC – Oil Producing and Exporting CountriesNon-OPECUSGS – US Geological SurveyMMS – US Mineral Management ServiceWEC – World Energy CouncilEWG – Energy Watch GroupANWAR – Alaska National WildlifeASPO – Association for the Study of Peak Oil

Useful websites:www.theoildrum.comwww.aspo-us.comwww.energybulletin.netwww.peakoil.net

Definitions of OilIEA reports Crude + condensate + natural gas liquids= 82 mbdEIA reports Crude + condensates= 74 mbd

NGL = propane, butaneCondensates = low density HC liquids (C2 to C12)

Production Today World Liquid Fuels = ~85 mbd (includes crude oil, lease condensates natural gas liquids, ethanol, CTL, GTL)World Crude Oil = ~74 mbd* (includes lease condensates)

Recent History of Production Predictions

2004 IEA to 121 mbd by >20302005 IEA to 115 mbdby >20302005 EIA to 120 mbd by >20302006 IEA to 116 mbd by >20302006 EIA to 118 mbd by >20302006 CERA to 130 mbd by >20352008 EIA Projection 97 mbd2008 CERA to 112 mbd by 2017 to 118 mbd by 20302009 IEA to 105 mbd by 20352010 IEA to 96 mbd by 20352011 Yergin to 110 mbd by 2030 (WSJ 17 Sept 2011)

Christophe de MargerieCEO Total SA2007 <100 mbd2008 <95 mbd2009 <90 mbd

IEA Predictions

May, 2005

to June 2010

The price of oil has increased almost continuously since 1999.

SRES A1 AIM scenarios expect $43 in 2020 then $73 in 2100

Today: WTI = $77 Brent = $101

18.7% / yr

Economists argument - resource constraints will be abated by technology and substitution (e.g., Helm, 2011)

But This confuses substitution for increasing production at a higher price

Peak Oil Paradox: Growth in the economy requires increasing oil supplyBut Increasing oil supply will require higher prices which tend to undermine growth.

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 and temperatures– Summary

The UN Panel on Climate Change (IPCC)

• The UN Intergovernmental Panel on Climate Change publishes assessment reports that reflect the scientific consensus on climate change

• The 4th report (AR4) was released in 2007– Over one thousand authors– Over one thousand reviewers– Nobel Prize

• Report discusses climate simulations for fossil-fuel carbon-emission scenarios

• There are 40 scenarios, each considered to be equally valid, with story lines and different government policies, population projections, and economic models

AR5 will only have 3 “scenarios”

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Oil Production in the IPCC Scenarios

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

resource limitation• Today’s Crude Oil Production is 28 Gb y-1

28

182 mbd

Based on Rogner , 1997

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CO2 emission Scenarios

From ∑ Oil + Gas + CoalThese scenarios drive almost all climate change researchA2 = BAU

What is Peak Oil? There are not many Peak Oil hypotheses

It’s not about Reserves!

It’s all about the Production Rate!

We are not close to running out of oil

The Prime Directive:Never predict the future price of oil or the date of world peak oil. You will onlybe wrong and discredited.

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OPEC Oil “Proven” Reserves!

• Accurate reserve estimates for OPEC countries are closely guarded state secrets• Values for 1983 are probably accurate (for 1983)• No adjustment for 193Gb produced since 1980• These questionable reserves are 45% of world oil reserves used by IPCC!• Kuwait Example: 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 and Fields Peak --- Regions Peak --- The World will peakEveryone agrees that world oil will peak – controversy on the date

A modellogisticdistribution

Examples: Rapid Depletion is Normal

Both developed by private companies, using the best available technology, with virtually no restrictions on drilling, yet both regions show clearly defined production peaks. Furthermore, the initial declines in both cases corresponded to sharply rising oil prices. Contrary to conventional wisdom, Peaks Happen, even in the best of circumstances.

DECC 2Q 2011Gas 25%Oil 16%

Mexico’s Cantarell Oil Field

Cantarell oil fieldlocated 80 km offshore in the Bay of Campeche.

MexicoWas the #2 supplier of oil to the USNow is #4

Cantarell from >2,000 in 2005to 860,000 in Jan 2009to 588,000 in July 2009

Both Mexico and the USare in trouble. Mexico:Sale of oil = 40% of federal budget

US:Net exports are decreasing fast

US Oil Consumption today is about 20.5 million barrels of oil/dayANWAR will not save us! US Production today is 5.5 mbd.

Case Study:

Apply the Principals of Hubbert’s Modelto the US to see how this works

Hubbert’s Peak

• From Hubbert’s 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 1973• Hubbert has been much criticized there is no consideration of

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

Lower 48 only, Alaska not a state until 1959

US Crude-Oil Production

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

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Production

The model fit to the real data is not bad. The model predicts 1973. The real maximum occurred in 1970

Hubbert’s Model - US Case Study

P/Q = mQ + aQ for which P/Q = 0 is 198 gigabarrels of oil. Also called Qt (maximum cumulative production) (URR)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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• 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 189Gb remaining

Historical Projections for US Oil

The power of Hubbert’s Linearization is that it uses past behavior of a system to indicate possible future performance

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Hubbert

USGSMcKelvey

Can we apply this approach to estimate ultimate global oil production?

Rate Plot from 2005:Maximum Cumulative Production (Qt) = 2165 Gigabarrels

½ Qt = 1083 Gb

Cumulative production of SRES A1 family = 3400Gb A2 family = 2900 Gb B family = 2790 Gb

World Crude Oil Production May Have Peaked in May 2005

IEA stillpredicts an increase(May 19, 2009)

MBD

Year

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

Their economic models for future emissions are driven by demand (not supply)Price is not a factor.

The EIA forecasts in 2008 projects a 30% increase in oil production between now and 2030 (from 85 to 97 mb/d) (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 – 5 % per year (IEA 2008; Exxon, CERA, ASPO)

For 2010 to 2030 the world needs 70 mbd of new production – just to maintain flat production

The projected growth requires discovery of 70 + 12 = 82 mbd of new oil!

Existing Oil Fields are in Decline

82 mbd ÷ 9 mbd = 9+ 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

US

MiddleEast

Canadian Tar Sands

1.2 mbd in 2008; projected 2.4 mbd in 20204 barrels of water for each barrel of oil2 tons tar sands = 1 barrelBig energy demandEROI = ~6:1 gold (natural gas) to lead (oil)

surface mining (~20%)in-situ (~80%)

Hugh resource = 1.7 trillion barrels

Neither scaleable nor timely

Natural Gas – Shale Gas is overhyped!Shale Gas is the big news – in the US the Barnett, Haynesville, Fayetteville and Marcellus formations get the big news.

But while the initial production rates are very high the first year decline rates are extremely steep. Example below from the Barnett Fm. in Texas

Environmental issues (ground water contamination) associated with hydraulic fracturing (fracking) are a major issue.

Arthur BermanAt $7.00/Bcfrequires 1.5 Bcf.Avg Barnett = 0.95

Producers claim2.2 to 2.3 Bcf/well

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 (last update 1992) and SE Asia and FSU

See World Energy Council (WEC) Reports

We 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. Recent programs to assess reserves in limited areas using updated methods indicate that only a small fraction of previously estimated reserves are actually minable reserves."

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

The world’s proven reserves of coal are decreasing fast!

Whenever coal reserves are updated the reserve estimates are revised downward (significantly).

Not due to production, but rather more thorough geological surveys.

Example: World Reserves by WEC decreased from 10 trillion tons to 4.2 trillion tons in 2005

Example: Gillette in Wyoming from 20.9 billion tons to 9.2 billion tons (2009)

The energy content of coal mined is decreasing.

Types of coal (four types – different energy content)Anthracite (30 MJ/kg)Bituminous (19 – 29 MJ/kg)Sub-bituminous (8-25 MJ/kg)Lignite (5-14 MJ/kg)

The high energy coal is running out

US passed peak anthracite in 1950 peak bituminous in 1990

Total energy content of US coal peaked in 1998Total energy content of world coal should peak in 2025

Another Problem is Energy ContentIPCC reports energy units (ZJ)

42 GJ = ton of oil equivalent6.12 GJ = one barrel of oil

Energy Watch Group (2007) Coal: Resources and Future production

ReservesSo-called proven reserves are anything but.A key message is how fast they have beenrevised downward (55% in last 25 years).

Major new discoveries are unlikely

China (largest producer) The R/P ratio55 yrs from 1992 at 1992 rates (now >3x faster)

EWG states that China will peak in ~10 yrsChina is now a net coal importer

China’s reliance on coal means growth will end!

USA (“the Saudi Arabia of coal”)Large Reserves but many are of low qualityand high sulfur

Volume will increase for another 10 to 15 yearsbut net energy will decrease

Global PictureSix countries hold 90% of reservesRarely is coal exported

The world coal energy peak will occur ~2025

Compare with IEA WEO scenarios Reference scenario is unrealistic Alternative scenario is feasible

Many independent groups are coming to the same conclusion

David Rutledge – Cal Techhttp://rutledge.caltech.edu

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 (2009)“Blackout : Coal. Climate and the Last Energy Crisis”New Society Publishers

Höök et al (2008)

Can we apply Hubbert’s approach to coal?

UK

Germany

Japan

Rate Plot for British Coal

Historical Projections for UK Coal

• Reserve numbers are available before projections stabilize• Produced 18% of the 1871 Royal Commission reserves + cumulative• Criteria were too optimistic ― 1-ft seams, 4,000-ft depth (Deffeyes’ law)

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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

From Aleklett

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Future Fossil-Fuels Production

50% in 2022

D. Rutledge

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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

D. Rutledge

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• 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• profiles that come with the program are modified to use our 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 serious and soon!Existing scenarios and energy policies are based on emissions - not supplyProduction rate matters not size of reserves

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 Limitation will Buffer Economic Recovery.Something like $300B/year taken out of the economy. But for average household = $169/month

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

Once it is clear that oil production has peaked is there are reason to believe that exports will not be limited?

Conclusions: A slow-motion train wreck

Bakken Shale – unconventional play

Productive SS sandwiched between shale Source rocks, 6-15 ft thick, porosity = ~10%permeability ~0.05 md. Fracking incteases this to ~0.66 md

Bakken Reserves

NPR = 11 to 20 bbUSGS = 3.65 bb (technically recoverable estimates)North Dakota (state) = 2.1 bbBlanchard = 1.5 bb

National Petroleum Reserve – Alaska (NOR-A)

USGS (<2002) = 9.3 bbUSGS (2002) = 10.5 bbUSGS (2010) = 0.896 bb