1. Peak Oil: The World Greatest
Challenge
NASA
http://en.wikipedia.org/wiki/Image:Moscow_traffic_congestion.JPG http://upload.wikimedia.org/wikipedia/commons/c/ce/Oil_well.jpg
en.wikipedia.org/wiki/Image:Ceratium_hirundinella.jpg en.wikipedia.org/wiki/Image:Oil_platform.jpg
3. General Observations
• Prediction is hard, especially about the future!
• Peak oil will happen in stages T1-T4
• The global situation will set the stage
• Australia is lucky with large reserves of natural gas,
although not where we want it. Potential for
mitigation
• Climate Change is a lot scarier than Peak Oil and
they have a common solution set
ASPO-Australia
4. What Is Peak Oil?
• The date an area’s oil production reaches its
maximum
• Means that about half the oil has been produced
– Does not mean “running out of oil”
– Does mean a continuous decline in production
• When oil half gone, the flow of oil begins to fall
– Not like a gas tank
– Oil in the ground is not in a pool but in tiny
droplets
– Droplets move slowly through the earth due to
pressure
– At halfway point pressure drops – flow decreases
5. Peak Oil Discoverer: Dr. King Hubbert
1903-1989
• Shell Oil Geologist/ Petroleum Scientist
• 1949 – projected short historical oil period
– Triggered by 1930 U.S. discovery peak
• 1956 – predicted 1970 as U.S. Peak Oil year
– Came as predicted
• 1969 – predicted World Peak Oil year 2000
– 1970-80 demand decline delayed it
6. Dr. Colin Campbell – King Hubbert 2006
• Geologist/ Petroleum Scientist
• Worked for most major oil companies
• Founder, Association for Study of Peak Oil
– Wrote “The Coming Oil Crisis” in 1997
• Estimates World Peak for regular oil in 2010
• Published two other books
– “Essence of Oil and Gas Depletion”
– “Oil Crisis”
7. Matthew Simmons
• Oil Investment Banker
– Backed many oil and gas drilling
projects
• Advisor to President Bush
• Challenges Saudi Reserve Estimates
– Thinks Saudi oil may soon peak
• Author, “Twilight in the Desert: The
Coming Saudi Oil Shock and the World
Economy”
• Given 100s of talks to government and
business
8. Talk outline
Origin – How do oil and gas form?
Practical: Non-Renewable Energy
Exploration and Production –
How do we find oil and gas and how is it produced?
Practical: Prospector Game
Politics – Why are oil and gas important?
9. Origin (1): Chemistry
en.wikipedia.org/wiki/Image:Petroleum.JPG en.wikipedia.org/wiki/Image:Octane_molecule_3D_model.png
Hydrocarbon
• Oil and gas are made of a mixture of
different hydrocarbons.
• As the name suggests these are large
molecules made up of hydrogen atoms
Crude Oil attached to a backbone of carbon.
10. Origin (2): Plankton
cache.eb.com/eb/image?id=93510
Plant plankton Animal plankton
would fit on a pinhead!
10,000 of these bugs
en.wikipedia.org/wiki/Image:Ceratium_hirundinella.jpg en.wikipedia.org/wiki/Image:Copepod.
• Most oil and gas starts life as microscopic plants and animals
that live in the ocean.
12. Origin (4): On the sea bed
upload.wikimedia.org/wikipedia/en/0/04/Plankton.jpg
When the plankton dies it rains
down on sea bed to form an
organic mush
en.wikipedia.org/wiki/Image:Nerr0328.jpg
If there are any animals on the
Sea bed sea bed these will feed on the
organic particles
14. Origin (6): Cooking
As Black Shale is buried, it is heated.
Organic matter is first changed by the
Kerogen increase in temperature into kerogen,
which is a solid form of hydrocarbon
Around 90°C, it is changed into a liquid
Oil state, which we call oil
Gas
Around 150°C, it is changed into a gas
www.oilandgasgeology.com/oil_gas_window.jpg A rock that has produced oil and gas in
this way is known as a Source Rock
15. Origin (7): Migration
www.diveco.co.nz/img/gallery/2006/diver_bubbles.jpg
• Hot oil and gas is less dense than
the source rock in which it occurs
• Oil and gas migrate upwards up
through the rock in much the same
way that the air bubbles of an
underwater diver rise to the surface
Rising oil
• The rising oil and gas eventually gets
trapped in pockets in the rock called
reservoirs
16. Exploration and Production:
Oil Traps
• Some rocks are permeable
Impermeable and allow oil and gas to freely
pass through them
• Other rocks are impermeable
and block the upward passage
of oil and gas
• Where oil and gas rises up
into a dome (or anticline)
capped by impermeable rocks
Dome Trap it can’t escape. This is one
Permeable type of an Oil Trap.
17. Exploration and Production:
Reservoir Rocks
• The permeable strata in an oil trap
is known as the Reservoir Rock
• Reservoir rocks have lots of
interconnected holes called pores.
These absorb the oil and gas like a
sponge
This is a highly magnified picture of
As oil migrates it fills up the pores
a sandy reservoir rock (water-filled
(oil-filled pores shown in black)
Earth Science World Image Bank Image #h5innl pores are shown in blue)
18. How long will current reserves
Reserve Adds: last?
35
15 years
• Exploration 30
• Reserves Growth 10 years
Production (bn bbl)
25
• Nonconventionals 21 years
31 years
20
15
1000 bn bbl
10
10% Decline
5% Decline
5
3% Decline
25 bn bbl 0
1.5% Up, 5% down
A 40 year supply?
p.a. 10 20 30 40 50 60
Years
19. Exploration Potential – Discovery Trend
100
• Decreasing trend in volumes
Discovered Volumes (bnbbl)
90 Discovered
80 Produced found from the early 60’s (peak)
70 to the early ’90’s.
60 • Slight increasing trend over
50 the last decade.
40
30
• Production exceeds
20 discoveries for last ca. 20 years
10 • Are these numbers
0 consistent?
1950 1960 1970 1980 1990 2000
Discovered Volumes (bnbbl)
25
Kashagan
• Reversal in discovery decline largely due to 20 Deepwater
the deepwater exploration theme – will this Other
15
continue?
• Is Kashagan unique or are there other 10
supergiants?
• Are the peak years of ’99 and ’00 5
anomalous?
0
Data based on those of IHS Energy 1990 1995 2000
20. Nonconventional Oil
Resource Type and Distribution
Canada
36%
(Extra)-
Heavy Oil
Oil Shale
Others
9%
USA Bitumen
32%
MidEast
1%
Africa
Venezuela 3%
19%
7 trillion bbl Oil-in-Place
Data from IEA 2004 (WEO)
21. Distribution, Maturity of Conventional Oil
N.America FSU
Europe 330 bnbl
360 bnbl 80 bnbl
AsiaPacific
Africa 130 bnbl
190 bnbl
MidEast
810 bnbl
World
S.America
200 bnbl
Produced
Reserves • Most regions of the world are either at
or past the mid-point of depletion
2100 bnbl • MidEast (and FSU and Africa) have
produced <50% of their known resource 2
22. Oil – “Black Gold”
• Provides 40% of our primary energy
– 95% of all transportation fuel is from oil
– Huge part of life – not just gas in the car
• Fossil fuels are the basis of Industrial Agriculture
– Oil is feedstock for herbicides and pesticides
– With natural gas fertilizers, there are 10 calories of fossil
fuel inputs for each food calorie output
• Raw material for many plastics
• Basis of 300,000 manufactured products
• Cheap oil makes globalization possible
– In U.S. average food product travels 1500 miles
23. Why Is Peak Oil So Important?
• Core assumptions
– Our economy “runs on oil” – oil “fuels our economy”
– We measure our material welfare (income) by the economy
– To paraphrase – our income is based on oil consumption
• Economy grows when oil consumption increases
• Economy shrinks when oil consumption decreases
• Implies major societal change when demand exceeds supply
– Oil prices will rise rapidly but shortages will still occur
– Could have long-term recessions
24. The Money Implications of Peaking
Inflation Adjusted Monthly Crude Oil Prices 1946-Present
• $40-$90+ oil lasted from early 1970s – mid-1980s
• Oil shortfall was approximately 3%
• North Sea, Alaska & Mexico discoveries increased supply
• There are no new regions to explore now
25. World Population – Billions in 2000 Years
• Invention of the steam engine – 1698 (Thomas Savery)
• First oil well – 1859
• Earliest major fossil fuel was coal
26. World Population – Billions 1900-2000
• First half 1.5 Billion to 2.3 Billion – 150% increase
• Second half 2.5 billion to 6 Billion – 240% increase
• Spurt in growth correlates with switch from coal to oil
27. World Oil Usage – Billion Barrels/Year
• Production vs. Population
28. All Energy per Capita Projected Decline
• Slide/cliff – Declining fossil fuels meet growing population
• From 10.4 boe/c/yr to 3.3 boe/c/yr is 4.5% decline
– 3 % source decline, 1.5% population growth
• Remember population – and fuel – in 2030 =~4x 1930
29. Government View 2005 – DOE Report
• As peaking is approached…the economic, social, and political
costs will be unprecedented.
• …peaking will be extremely complex, involve literally trillions of
dollars and require many years of intense effort.
• Peaking…will cause protracted economic hardship in the
United States and the world.
• …the problem of the peaking of world conventional oil
production is unlike any yet faced by modern industrial society.
30. Alternative transport fuels?
• Renewables • Natural gas
• Biofuels • Coal
• Conventional oil • Nuclear
• Unconventional • Hydrogen
oil
31. Conclusions
• Transport over 40% of final energy
use in Australia
• Transport heavily dependent on
liquid fuels (oil)
• The age of cheap oil is almost over
• Short-term urgency in planning for
post-oil age
• More mitigation options in cities than
in rural areas
32. What to do?
• Commonwealth to become involved
• “Do nothing” not an option
• No magic bullet
• ASPO Australia advocates
– community engagement,
individualised marketing, fuel tax
escalator, tradeable fuel allocation
system
• Leadership required
• Buy time!
33. Presented by:
BEED II
• Mabalay Jona
• Miguel Jobelle Keith
• Valdoz Kim Adalen
• Gacutan Katrina
• Jovero Jonalyn
• Paulo MilJoice
• Aripal Philana
