Transcript The Irish Country Ladies Association

Ireland’s Response
to the
Looming World Energy Crisis
by
Colin Campbell
ASPO
Background
1951-7 Studied geology at Oxford
– PhD on Connemara geology
That started a long love affair with Ireland
1958 - Joined the oil industry
– Exploration geologist in Latin America
– 1972- 90 Executive, Europe, Norway
• Pioneered Irish exploration venture 1972-76
1990 Retired - if that is the word
On a mule in Colombia in 1960
Outline
• Geological background
– “You have to find it first”
• Depletion is easy to grasp
– Why and how self-evident reality has been
concealed and confused
• A Devastating Realisation
• Ireland’s Response
News Flash
Oil Price
Brent Crude
$53 New York
October 11
50
45
40
But may crash
with Recession
35
US $ barrel
30
25
20
15
10
5
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
PETROLEUM
GEOLOGY
in
3 Minutes
Extreme Global Warming
gave excessive Algal Growths
90 & 150
million years
ago
Organic debris
And then came the rains
Trough filled by
sediment
Chemical
reactions
converted
organic debris
into oil when
buried & heated
North Sea
Oil Generating
Trends
Where oil is and
where it is not
Migration of Oil
2. Escape
3. Oilfield
1.Dissipation
1
Surface of the Earth
2
Source
3
Oil generation
at 2000m
depth
Geology of an Oilfield
Seal
Critical
Temperature
60-120 0C
Gas
Oil
Sandstone
Reservoir
Water
Migrating Oil
8
A Fixed Quantity
• Oil was formed in the geological past
– You can’t “grow” more
• Running Out? – Not the main issue
– We started running out with the first barrel
– The last barrel is far in the future
• But production begins to decline when
half is gone - THAT IS THE ISSUE
Why we need to know
Oil & Gas now dominate our lives
– 40% of traded energy is oil
– >90% transport fuel is oil
• Trade depends on transport
– Much electricity from gas
• Critical for agriculture
– fuelling the tractor
– synthetic nutrients and pesticides
– pumping irrigation
Why were n’t we told?
• Oil companies reported “financial reserves” to
meet strict stock exchange rules
• They under-reported & revised upwards over time
– A comforting but misleading image of steady growth
– No conspiracy, just simple commercial prudence
– Those days are over - the Shell debacle
• OPEC over-reported as they competed for quota
based on reserves
• PUBLIC NUMBERS - VERY UNRELIABLE
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Abu
Dhabi
28.0
29.0
30.6
30.5
30.4
30.5
30.0
31.0
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
92.2
Dubai
Iran
Iraq
1.4
1.4
1.3
1.4
1.4
1.4
1.4
1.4
4.0
4.0
4.0
4.0
4.0
4.0
4.3
4.3
4.0
4.0
4.0
4.0
4.0
4.0
4.0
58.0
57.5
57.0
55.3
51.0
48.5
47.9
48.8
92.9
92.9
92.9
92.9
92.9
92.9
89.3
88.2
93.0
93.0
89.7
89.7
89.7
89.7
89.7
31.0
30.0
29.7
41.0
43.0
44.5
44.1
47.1
100
100
100
100
100
100
100
100
112.0
112.5
112.5
112.5
112.5
112.5
112.5
Kuwait Neutral
Zone
65
6.1
66
6.0
65
5.9
64
5.7
64
5.6
90
5.4
90
5.4
92
5.3
92
5.2
92
5.2
92
5.0
95
5.0
94
5.0
94
5.0
94
5.0
94
5.0
94
5.0
94
5.0
94
5.0
94
5.0
94
5.0
94
5.0
94
5.0
Saudi
Arabia
163
165
165
162
166
169
169
167
167
170
258
258
258
259
259
259
259
259
259
261
261
261
261
Venezuela
18
18
20
22
25
26
26
25
56
58
59
59
63
63
65
65
65
72
73
73
77
78
78
OPEC
Reserve
Revisions
Change
From
Remaining
Reserves
To
Total Found
Cumulative Discovery, Gb
Reality and Illusion
2500
Illusion
2000
1500
Inflexion due to
falling Discovery
Reality
1000
500
0
1930
1950
1970
1990
2010
2030
Discovery Gb
30
10000
25
8000
20
6000
15
4000
10
5
2000
0
0
1930
1950
1970
1990
2010
2030
2050
Production kb/d
US-48
Peak to Peak 40 years
Egypt
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1930
1000
800
600
400
200
0
1950
1970
1990
2010
2030
2050
Production kb/d
Discovery Gb
Peak to Peak 30 years
Peak to Peak 32 years
6
1800
1600
1400
1200
1000
800
600
400
200
0
Discovery Gb
5
4
3
2
1
0
1930
1950
1970
1990
2010
2030
2050
Production kb/d
Indonesia
Discovery Gb
35
14000
30
12000
25
10000
20
8000
15
6000
10
4000
5
2000
0
0
1930
1950
1970
1990
2010
2030
2050
Production kb/d
Russia
Peak to Peak 27 years
United Kingdom
5
3000
4
2500
2000
3
1500
2
1000
1
500
0
0
1930
1950
1970
1990
2010
2030
2050
Production kb/d
Discovery Gb
Peak to Peak 25 years
Real Discovery Trend
60
60
Past
50
Future
Production
Gb
40
30
40
30
Past discovery
by ExxonMobil
20
Past after
10
0
1930
50
ExxonMobil
1950
1970
1990
2010
2030
20
10
0
2050
Draining the tanks - Regular Oil
Surprise
?
Filling at 3.75 p.a
150 Yet-to-Find
920 Produced
1700 DISCOVERED
780 Remaining
Emptying at 22 p.a.
One in - Six out
Billion
barrels
Where is it?
Regular Oil
ME.Other
East
Produced
W. Europe
Reserves
Yet-to-Find
Africa
L. America
N. America
Eurasia
ME Gulf
-250
-150
-50
50
150
250
350
450
All Oil & Gas
All boundaries fuzzy
50
Production, Gboe/a
Non-con Gas
40
30
Gas
NGLs
Polar Oil
Deep Water
Heavy
20
Regular
10
0
1930
1950
1970
1990
2010
2030
2050
The Devastating Realisation
So, oil will soon be in terminal decline
• Gas follows a few years later
• Colossal Impact
–
–
–
–
Economy - stockmarket crash inevitable
Society
Politics
Environment
• We are totally unprepared
End of the First Half of Oil Age
• First half lasted 150 years, stimulating
–
–
–
–
Industry
Transport & trade
Agriculture & people
Growth of financial capital
• Second Half dawns, meaning decline of oil
– And all that depends on it
– Including Financial Capital
• Spelling Recession - Depression
Population
Billions of People
6
5
?
First Oil Well
4
3
2
1
0
0
500
1000
1500
Anno Domini
2000
2500
But World begins to wake up
• This has been evident for years but denied
– We faced malign influence of Economists with
outdated principles and practices
– Now at last, high prices force admission by
• World Energy Council
• International Energy Agency - obliquely
• Even BP (long bent on denial) now confesses
• US prefers military conquest of oil to
cutting excessive demand
What this means for Ireland
Small population but high per-capita oil use
–
–
–
–
USA- 27 barrels a year per person
Ireland- 15.6
Europe Average- 13.1
India- 0.9
Gas - critical for electricity
• Slim chance of finding more oil or gas
Ireland’s Electricity
• Priority in the early days of the Republic
– Shannon Hydro-electric scheme
– Rural electrification by ESB
• Electricity came to Ballydehob in 1951
• It was a National Priority
• But then the CELTIC TIGER stalked in
by dead of night & sold out to the Market
Ireland’s Electricity fuel
40%
Gas
31%
Coal
0.4
0.31
0.14
0.11
0.03
14%
11%
Oil
Peat
85% Imported !
3%
Renewables
Gas Supply
• At first, Kinsale Head field supplied enough
• Then tapped into the UK hypermarket
– UK over-produced and prices fell
• But the Celtic Tiger could easily afford it
• Now we plan to half-privatise the ESB
– stimulating yet more consumption
– The Regulator tries even to cut costs to consumer
• But without a thought for the future.
Gas - the unexpected cliff
Hidden Spare Capacity
No market signal
of cliff
Production Plateau
Ireland’s gas balance
Gm3
UK net export ends
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
1980
Kinsale
+
1990
**With flat demand**
At
High
Risk
Corrib
2000
2010
Import
Production
2020
2030
Where will gas come from ?
• Britain becomes a net importer - from
• Norway
• Siberia
• Central Asia, Middle East, N. Africa…….
• Many hungry transit countries in between
– Ireland at the end of the line
• Will Britain re-export to Ireland ?
– When she needs all she can get
– and at what price?
A Grave Crisis in the Making
• This is a major crisis in the making
– the lights will go out unless something is done
– An economic recession affecting everyone
• The Government seems blissfully ignorant
– Misplaced faith that the market must deliver
– Relies on bad advice form IEA, EU
• It needs to use the short time left to prepare
• Everyone needs to know and contribute
Plan of Action
• Fund a small office to study properly
• Launch a programme of public education
• Don’t wait for Brussels
– It is an investment giving Ireland a strong
competitive edge
• Take a lead in a World Depletion Protocol
• Back the 2005 Lisbon Initiative
Solution-1 : Stop waste
Domestic and industrial energy audits
– Charges to penalise waste & reward savings.
• A modest cheap ration but high price for excess
– Better insulation & industrial heat recovery
– Disallow energy costs as a charge against tax
• Stop tax-free aviation fuel
– More public transport
Solution-2: Turn to Renewables
•
•
•
•
•
•
•
A solar collector on every roof
Capture massive tidal and wave energy
Wind-power and hydro-power
Biomass - wood pellets from forestry
Geothermal
Heat pumps & modern light bulbs
Even nuclear ? (New small fail-safe plants)
Solution-3: Secure sources
• Don’t close coal power - clean it
• Negotiate with Norway (and other places)
for privileged access to oil and gas.
– Ireland’s needs are modest and could be met
• Pay premium to-day for security tomorrow
– might still be time to buy into oil and gas fields
• Fill the tanks on Whiddy Island
• Build terminal for Liquefied gas
Consequences - Silver Linings
•
•
•
•
A new regionalism
Local markets
New attitudes : return to the land
People live in better harmony with
• themselves
• each other
• the Environment in which Nature has ordained them
to live
The Celtic Fox thrives in Ireland:
The Tiger belongs to the Zoo