Transcript Will Global Oil Shortages Occur in the Short-Medium Term? Bruce Robinson, Convenor Perth, 5th September 2013 Estimates of world oil production volume Much higher than today Higher.

Will Global Oil Shortages Occur
in the Short-Medium Term?
Bruce Robinson, Convenor
Perth, 5th September 2013
Estimates of world oil
production volume
Much higher than today
Higher than today
Similar to today
Less than today
Much less than today
Five years
2018
Ten years
2023
Twenty years
2033
Estimates of world oil
production volume
Five years
Ten years
Twenty years
2018
2023
2033
Much higher than today
Higher than today
Similar to today
Less than today
Much less than today
2
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
Finance Sector
Health Sector
Social Services Sector
Regional and city
Defence and Security
Conservation and Environment
Remote & indigenous communities
Active transport (bicycle & walking)
Agriculture, Fisheries and Food
Biofuels
Construction Industry
Public transport sector
Economics
Tourism
Children and Peak Oil
Young Professionals working group
3
Outline
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
● 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 ??
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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.
Revised edition, 2008
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
Peak Oil is probably a "Predictable Surprise" which is being ignored
6
Optimism bias
Strategic misrepresentation
Sydney Morning Herald, 10th July 2008
8
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.
.
9
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.
10
11
Possible causes of
sudden fuel shortages
in Australia
Trouble 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 hitting
a 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 Aramco
Oil and Money Conference, London, October 2007
...predicted a 10 year plateau
a structural ceiling determined by geology
Price
$/barrel
Production
M b/day
100
90
80
70
The economic mantra is that as prices rise, production will increase.
Clearly not true from these data.
13
Murray and King, January 2012 481 433-435
and “Peak Oil and Energy Independence: Myth and Reality
Murray & Hansen,
EOS, American Geophysical Union, July 2013
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15
Oil prices to double by
2022, IMF paper warns
(West Australian May 2012)
May 2012
October 2012
IMF study: Peak oil could do serious
damage to the global economy
Washington Post October 27, 2012
The May 2012 IMF paper shows
US-EIA oil supply forecasts
from 2002 to 2010
2002
Figure 1: US-EIA forecasts
World Total Oil Supply (Mbd)
2001-2010
The later estimates are far lower
than earlier guesses
2010
"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
20
'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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www.csiro.au/resources/FuelForThoughtReport.html
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US oil peak 1970
mb/d
USOil
Oil Production
Production
US
2012
19101910-2011
– 2012
(EIA)
(million
barrels/day)
million barrels / day
10
8
Now 48%
self-sufficient
??
6
4
2
0
1910
1930
1950
US EIA Field Production of Crude Oil MCRFPUS1
1970
1990
2010
24
1,600
US Shale Oil
Bonanza or Hype or both ??
1,400
Sevenfold
increase in rigs
US Oil Rig Count
1,200
Baker Hughes 1995-June 2013
1,000
800
600
400
200
0
28/10/95
1995
24/7/98
19/4/01
2001
14/1/04
10/10/06
6/7/09
2007
1/4/12
2013
Only 37%
increase in
production
250,000
200,000
150,000
100,000
50,000
US
US monthly
monthly oil
oil production
production
EIA
EIA 1995-March
1995-March 2013
2013
0
Oct-1995
Apr-2001
Oct-2006
Apr-2012
25
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)
http://earlywarn.blogspot.it/2013/07/us-oil-rig-count-and-oil-production.html
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
already
Source “Drill, Baby, Drill”, Hughes 2013
postcarbon.org/reports/DBD-report-FINAL.pdf
Australian Shale Oil
Bonanza or Hype ??
$3.00
Linc Energy
Share price to 21st June 2013
$2.50
$2.00
Announcement 23rd January 2013
Arckaringa Basin Coober Pedy
$1.50
$1.00
Shale Oil
“as big as Saudi Arabia”
(103-233 billion barrels)
$0.50
$0.00
May0 2012
50
August
100
150
November
200
February
250
June 2013
28
Big fields are found first, and as they decline, they are replaced by smaller and smaller fields
soon the additional small fields can not match the decline of the large fields,
so the overall production begins its final decline
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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
World Discovery Peaked in 1964
Billion barrels of oil per year
After Longwell, 2002
60
50
Discovery revisions backdated
3-year moving average
Campbell 2012
40
30
20
10
0
1930
1950
1970
1990
2010
2030
32
IEA November 2008
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)
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”.
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2008
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
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A simple observation -- or why peak will be earlier
than most people expect
Chris Skrebowski
Petroleum Review
London
‘Global production falls when loss of output from countries in
decline exceeds gains in output from those that are expanding.’
Expansion
Decline
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http://peak-oil.org/2013/02/commentary-the-export-capacity-index/
Australia uses 59,000,000,000 litres of oil each year
a cube of 390 metres in size (2012)
70% of Australia’s oil usage is in transport
If Australia’s 20 M tpa wheat crop → ethanol = ~10%
Perth’s Central Park
building is 249 m high,
to top of tower
Million barrels/ day 2012
BP Statistical Review, 2013
Australia uses
1.0
China
10.2
US
18.6
World
86.2
US 1 cubic km oil / year
Australia
l
China
1 km
l
United States
38
China – Motor Vehicle Production
China
kb/day
Oil consumption and production
12,000
Consumption
10,000
8,000
Imports
6,000
4,000
Production
2,000
0
1965
1975
1985
From BP Statistical Review 2013
1995
2005
2015
UK
kb/day
Oil consumption and production
3,000
2,500
2,000
Consumption
1,500
Imports
Production
1,000
500
0
1965
1975
1985
From BP Statistical Review 2013
1995
2005
2015
Indonesia
kb/day
Oil consumption and production
1,800
Consumption
1,600
1,400
Imports
1,200
1,000
Production
800
600
Indonesia left OPEC in 2009
400
200
0
1965
1975
1985
1995
2005
2015
From BP Statistical Review 2013
42
Saudi Arabia
kb/d
Oil Consumption and Production
14,000
Production
12,000
10,000
8,000
Exports
6,000
Consumption
4,000
2,000
0
1965
1975
1985
1995
2005
2015
From BP Statistical Review 2013
43
USA
kb/d
Oil consumption and production
20,000
Consumption
15,000
Imports
10,000
Production
5,000
0
1965
1975
1985
1995
2005
2015
From BP Statistical Review 2013
44
Egypt Oil consumption and production
1000
800
Production
600
400
Consumption
200
0
1965
1975
1985
1995
2005
2015
Egypt imports 40% of its food, and 60% of its wheat (2010)
In the past, oil exports paid for its food imports
45
Australia
Oil consumption and production
kb/d
Consumption
1,000
800
Imports
600
Production
400
200
0
1965
1975
1985
1995
2005
2015
From BP Statistical Review 2013
46
World Oil Production Forecast
ASPO-2013 (Dr Colin Campbell)
Gas plant NGL
Billion
Barrels / year
Polar
Deepwater (>500m)
30
Heavy and frac.
Regular conventional
20
10
2012
0
1950
1970
1990
2010
2030
2050
47
"Anyone who believes exponential
growth can go on forever in a finite
world is either a madman or an
economist."
IEA
US-EIA
Kenneth E. Boulding,
economist
1910-1993
"The only function of economic
forecasting is to make astrology
look respectable"
John Kenneth Galbraith
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www.ASPO-Australia.org.au
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
Try to separate the hype and mythology from
the actual evidence of oil vulnerability risks
Hint:
Check your superannuation is not being
invested into urban toll-roads, tunnels
and airports.
ASPO-Australia can assist, if needed
www.ASPO-Australia.org.au
[email protected]
0427 398 708
08-9384-7409
Estimates of world
oil production
volume
Much higher than
today
Higher than today
Similar to today
Less than today
Much less than
today
Five
years
2018
Ten
years
2023
Twenty
years
2033
X
XX
X
X