Peak Oil : IEA's predictions seeming more and more infeasible with time
25 Nov, 2009 10:28 am
Enlarge text
Reduce text sizeOn November 9, the Uppsala University in Sweden published a report titled "The Peak of the Oil Age - The Uppsala World Energy Outlook". The report performs an analysis of the oil production forecast done by the International Energy Agency in 2008. One day before the release of the IEA 2009 edition of its World Energy Outlook report, the team of researchers notably pointed to a world oil supply in 2030 some 26 Mb/d lower than the IEA's predictions. Dr Michael Lardelli, one of the co-authors of the study, answers Scitizen's questions.
 |
What was your reaction after the Guardian cited earlier this month an anonymous whistlelblower alleging that the IEA had been distorting its true view on peak oil over US pressure in order to prevent public panic?
Personally I was surprised that the whistleblowers should reveal this information on the IEA distortions. I wonder if it was a coincidence that the "Peak Of The Oil Age" paper was released on the very same day that the allegations came out? Certainly, word was spreading that the Global Energy Systems group in Uppsala had reanalysed the IEA data and their result implied that the peak of oil production was last year, and that a scientific publication was being prepared. Professor Aleklett who leads the Global Energy Systems group had presented this story in numerous venues in early June of this year. One would expect this to create some tension within the IEA. On the other hand, the WEO 2009 report was due for release two days later with little change in the production volume prognosis so the whistleblowers may have been prompted by the fact that the IEA's predictions were seeming more and more infeasible with time.
As the study proves evidence that we have reached Peak Oil, do you think it will once and for all cut short the discussion?
Unfortunately not. The so-called "Economic theory of energy" has too strong a hold on our business and political elite. This is the idea that high energy prices will stimulate new energy production which will ultimately cause energy prices to fall again. This theory "works" while the energy profit on energy extraction is high as it has been for oil in the past. However, as the size and abundance of newly discovered oilfields decreases, (as it has been doing since the 1960s) it becomes more and more difficult to find and extract oil. The energy profit decreases as does the rate of oil production. (Remember that Peak Oil is about rate of production, not how much is left.) For the next decade I expect you will hear governments and businesses crying that what is needed is massive investments in order to maintain or raise oil production. The IEA is already making these noises in WEO 2009. But the fact that the money does not exist for the necessary level of investment is just a reflection of the fact that our civilisation has insufficient spare energy to divert back into energy production. Looked at another way, the necessary price per barrel to make new oil development worthwhile/profitable is approaching the oil price at which economic activity is damaged. Until our leaders understand energy laws rather than economic theory they will not truly believe in peak oil.
To what extent should policy makers and investors then rethink their future plans for economic growth ?
In the past the IEA has based its predictions of future oil production on the expected level of future economic growth. The reason for this is that economic growth (increased real economic activity, not the illusion of rising stockmarkets due to inflationary low interest rates and money printing) requires an increased rate of energy use. Now that oil production is set to decrease (and, by the way, the energy profitability of oil production will decrease even faster but this was not mentioned in the paper) we will necessarily see a decrease in economic activity unless new sources of energy can be found. Unfortunately, even if alternative sources of energy exist, the infrastructure to harvest and utilize them at a sufficient rate to replace the energy from oil does not exist. So contraction in economic activity is inevitable. Also unfortunately, as the energy available to society decreases, it will become more and more difficult to build the infrastructure to harvest and utilize alternative sources of energy.
Can renewables fill the gap of oil depletion in time to retain our quality of life?
If by "quality of life" you mean our rampantly consumerist and growth-fixated society that is currently supported by an enormous abundance of cheap energy from fossil fuels then the answer is no. It is not only oil decline that threatens this society but also declining availability of other resources that are essential for our high-tech civilisation - such as rare earth metals, helium (from natural gas production) and, crucially, phosphate which is irreplaceable in industrial agriculture. A "business-as-usual" continuation of our society's current trajectory is impossible whether we want to accept that idea or not. (Mother Nature does not negotiate and infinite economic growth on this finite planet was always going to be impossible.) Hydroelectricity aside, renewable sources of energy provide only about 1% of world energy production. If we threw our every available effort into energy conservation and building a renewable energy infrastructure (a wartime, crash-program effort requiring great privation in the general community as energy is diverted to the crash program) then we might (?) be able to maintain our technological society. The now famous "Hirsch Report" prepared by consultants for the US Department of Energy analysed what would be needed to mitigate the effect of a peak in oil production and found that a crash program of measures would need to be begun 20 years before the peak occurred. Instead we have arrived at the peak totally unprepared.
Besides, the study is rather pessimistic about the commercial viability of non-conventional oil (oil sands, extra-heavy oil, GTL, CTL)...
Yes, the problem is the rate of production, not the size of the resource. For example, the production of oil from oil sands requires huge energy inputs and is limited by a number of other physical factors. This was analysed in a paper titled, "A Crash Program Scenario for the Canadian Oil Sands Industry" published in Energy Policy by the Global Energy Systems group in 2006.
Did you take cognizance of the WEO 2009? What does it seem to you?
I have not had access to the full WEO 2009 report but have only seen the executive summary that is available free online. It is notable for its focus on climate change and the need to move away from use of fossil fuels. The executive summary also notes that, "The financial crisis has cast a shadow over whether all the energy investment needed to meet growing energy needs can be mobilised." In other words, the outlook for investment into future oil (and other energy) production is now worse than when the WEO 2008 report was released upon which the "Peak Of The Oil Age" paper was based. Nevertheless WEO 2009 still states, "Oil demand (excluding biofuels) is projected to grow by 1% per year on average over the projection period, from 85 million barrels per day in 2008 to 105 mb/d in 2030" which is similar to the WEO 2008 report. You should realise that the reanalysis of WEO 2008 data that was presented in "Peak Of The Oil Age" used the extremely optimistic assumption that, in effect, the weighted average rate of depletion from oilfields yet to be developed will be similar to the highest rates seen in the past. By "depletion" I am talking about the "depletion rate of remaining recoverable resources" parameter defined by the Global Energy Systems group, not the percentage annual decline in production from oilfields. The figure of 75 Mb/d of oil production in 2030 published in "The Peak Of The Oil Age" is a very, very optimistic best case. It is only about 13% lower than today's rate. Real production in 2030 will probably be considerably lower than that.
The study is available online as PDF.
Interview by Clementine Fullias
Add to Facebook
Add to Yahoo ! MyWeb
Add to Furl
Add to Del.icio.us
Add to Digg
Add to Google Bookmarks
Add to Newsvine
An article in the Washington Post this weekend, together with a must-read interview in The Independent, a paper I used to read regularly when I lived in London, reminded me of an observation I made several years ago concerning the similarities between Peak Oil and Y2K. Having spent a fair amount of time in my former corporate role planning for the serious outcomes the latter might have produced, I don't intend this as a slam on the former. Without rehashing the technical arguments behind either phenomenon, it's worth spending a few minutes thinking about the consequences of a growing belief that we might be only a few years away from the end of oil, as we know it. Whatever one's take on the validity of the Peak Oil argument, it has already evoked noteworthy consequences, both positive and negative.
Laurel Graefe, a senior economic researcher working for the Federal Reserve Bank of Atlanta has written an excellent overview of peak oil, ?The Peak Oil Debate?. I consider this a must-read piece, as much for armchair oil experts as beginners, and as much for who published this as what it contains. This should be very high on your list of ?brother-in-law? documents, the ones you can safely recommend to co-workers, neighbors, or, well, your brother in law.
It is demand for oil that may peak as governments adapt to the problems of global warming, security of supply and an amplitude of market volatility that could bring economic ruin to nations and then the world. Oil-demand may be reduced preemptively to the production peak (peak oil) through more efficient vehicle technologies and finding alternative energy sources. Ultimately electricity is seen as the best "supply vector" for delivering energy to users. Probably it is a game of "tag" between reducing demand and falling supply; whichever comes first will win-out.
Leading UK companies have launched a report, The Oil Crunch: Securing the UK?s Energy Future, warning that cheap, easily available oil is likely to end by 2013, posing a grave risk to the UK and world economy.
This is a short article on community transformation in a time of preparation for a post cheap oil future. On the face of it, post-peak oil and climate change don't share many common threads, beyond being derided as hysterical prognostications by some of their non-believers. However, climate change is finally starting to be taken seriously by some of its former nay-sayers. We shall have to wait and see whether post-peak oil will continue to be dismissed as a crackpot conspiracy theory.
The Energy Watch Group released a report last week, stating that peak oil was reached in 2006. Scitizen sought the professional view of Dr Peter Jackson, Director of the CERA (Cambridge Energy Research Associates), whose position is that peak oil has not been reached. As well, we speak to Mr Jorg Schindler, the main author and Managing Director of Ludwig-B?lkow-Systemtechnik GmbH, about the report.
The Energy Watch Group released a report last week, stating that peak oil was reached in 2006. Scitizen speaks to Mr Jorg Schindler, the main author and Managing Director of Ludwig-B?lkow-Systemtechnik GmbH, about the report. As well, we sought the professional view of Dr Peter Jackson, Director of the CERA (Cambridge Energy Research Associates), whose position is that peak oil has not been reached.
The price of oil has risen to almost $100 a barrel - a figure unthinkable from almost one fifth of that five years ago. Whatever economic reasons may be postulated for this, the underpinning cause is the fact of a decline in the resource of cheap oil. Oil is not running out, per se, but we can expect the price of oil to increase inexorably, and hence the cost of everything, since literally everything, not only fuel depends on cheap oil, including food. M.King Hubbert made a prediction of this for US oil in 1956, and his "Hubbert Peak Theory" in which oil production follows a logistic function, maximising at the point when half the original resource has been used-up (beyond which it declines relentlessly), which proved correct for the production of oil in the US in 1970, appears to apply also the world reserve of oil, which has in all probability, now peaked. A civilization (global village) that has been built on cheap oil must inevitably change, since there are no alternative technologies, including hydrogen, that can be imported to rescue it in time to replace oil. In all likelihood, it will transform into a system of small communities.
| [1] | Comment by Canada Guy
- 4 Dec, 2009 04:37 pm The Age of Oil has driven our growth over the past 100 years. The entire basis of our modern civilization is built on oil and other fossil fuels. It has enabled the industrial revolution, a massive increase in population, and our current standard of living in the West. One way or another, the passing of this Age will change us forever. http://www.watchinghistory.com/2009/12/age-of-oil.html |
Alert Moderator
| |
Author
Michael Lardelli is Senior Lecturer in Genetics at The University of Adelaide. Since 2004 he has been an activist for spreading awareness on the impact of energy decline resulting from oil depletion....
Read more
Read more
More on the Subject
