Peaking Oil Production : Facts and Challenges
Peaking Oil Production- Facts and Challenges
Yoginder P. Chugh Professor and Director Combustion Byproducts Recycling Consortium - Midwestern Region Southern Illinois University Carbondale, IL 62901 USA
Are we coming to the “End of Oil Age”??
Key Messages Global oil production will peak in the near future and it will be forever unless new oil discoveries are made that can be developed very quickly. The ”peak oil” will not impact energy supplies but will heavily impact availability of “liquid transportation fuels.” The expected economic impact of “peak oil” could be very large on developed and developing economies. Globally we are not prepared to face the impact of “peak oil”. Mitigation measures must begin now with everyone involved to minimize the impacts.
Outline ¾ Peaking Oil Production : What does it
mean? ¾ Global Oil Resources : An Overview ¾ Global Oil : Production and Consumption ¾ Peaking Oil : Timeline Estimates ¾ Challenges and Possible Solutions ¾ Summary and Conclusions
Oil Extraction Cycle In any oil producing region, “easy oil”- best quality oil is extracted first for economic reasons. After about half the oil is extracted, the other half is more difficult to extract. In other words we hit “peak” and then it begins to decline. The bell shaped curve holds true for every oil producing region.
Oil Extraction Cycle
Global Oil Production
An Important Statement We estimate that world oil and gas production from existing fields is declining at an average rate of 4-6% a year. To meet projected demand in 2015, the industry will have to add about 100MMbpd of new production. That is about 80% of today’s production level. In addition, the cost of providing this additional oil and gas is expected to be considerably more than what industry is spending today. Jon Thompson President, ExxonMobil 2003
What does peaking oil mean? Global oil production will peak forever (Peak Oil). Since oil supplies are getting tight relative to demand, price of oil and associated products will rise. We are seeing evidence of this already. When cheap oil is not available, it will have major impacts on our economies and standards of living. Today’s discussion centers around “peaking oil”
Oil Prices and U.S. Recessions: 1969-2003
What are the implications of peaking oil? Relatively cheap oil has been responsible for economic growth in the developed world. Oil peaking will create a severe “liquid fuels” problem for the transportation sector. This will lead to dramatically higher oil prices that will cause economic hardships in the world. Increased efficiency alone will not be sufficient given the increased demand. Large amounts of synthetic liquid fuels required. Doubling oil price from $ 25 to $ 50 per barrel would lower US GDP by about $125 billion (1%)
Global Energy and Oil Resources : An Overview
Order of Magnitude of Energy Resources
Survey of Energy Resources 2004 Oil
15
11
91 19
Europe
North America
Asia
34
42
Middle East Africa
9
South America Oceania
R/P RATIO 41.2 years
RESERVES 148 Gt
PRODUCTION 3.5 Gt/year
CONSUMPTION 3.5 Gt/year
OIL RESERVES 300
120
93
100 100 97
100
200
80
80
73 150 100 50
66 140
63
60
120 100 96 38
75 70 2137
37
35
38
30
1220 1520 1217
42
20 17 19 15 1012 12 11 10 10 10 9
46 40 21 10
0
Ira n Ira Ku q wa it Ve UA ne E zu el Ru a Ka s za sia kh st an Li by Ni a ge ria US Ca A na da Ch in a Q at M ar ex ic Al o ge ria Br az No il rw a An y Az go er la ba ija n Su da n In di a O m an
Ar ab ia
2020
10
0
Sa ud i
Reserves (Billion Barrels)
250
Country Reserves (Billion Barrels)
Years of Remaining Reserves
Total world proven oil reserves (2005) – 1.2 trillion barrels
Years of Reserve Remaining
265
Net Oil Discovery Minus Production
Survey of Energy Resources 2004 Natural Gas
56 >100
40
9
Europe
North America
70
Asia
57
Middle East Africa
29
South America Oceania
R/P RATIO 59.8 years
RESERVES 171 tcm
PRODUCTION 2.6 tcm/year
CONSUMPTION 2.6 tcm/year
Survey of Energy Resources 2004 Coal 247
255
258
Europe
North America
Asia 50
0.4
20
Middle East Africa
79
South America Oceania
RESERVES 909 Gt
PRODUCTION 4.8 Gt/year
CONSUMPTION 4.8 Gt/year
Major Comments No shortage of global energy resources R/P ratio for fossil fuels: – Oil 40 years – Natural Gas 60 years – Coal 200 years Uneven distribution of strategic resources around the world Consumption areas do not all coincide with production areas. New oil discoveries have not been forthcoming around the globe.
Global Oil : Production and Consumption
Global Oil Production
Global Oil Discoveries
U.S. Oil Discovery and Oil Production 1970 1930
Historical OPEC Spare Production Capacity
World Petroleum Consumption, 1960-2025
US Oil Consumption by Sector 1973-2003
U.S. Oil Imports and Transportation Shares of Oil Consumption, 1973 and 2003
What does it all mean?? The demand is continuously growing. Production trends indicate peaking. New discoveries of oil are not forthcoming. Spare capacity of OPEC countries is also declining. US and perhaps around the globe transportation sector is the major consumer of oil. History tell us that high oil prices have led to recessions in the USA.
Peaking Oil : Timeline Estimates
Predictions of World Oil Production Peaking Projected Date Source of Projection 2006-2007
Bakhitari
2007-2009
Simmons
After 2007
Skrebowski
Before 2009
Deffeyes
Before 2010
Goodstein
Around 2010
Campbell
After 2010
World Energy Council
2010-2020
Laherrere
2016
EIA (Nominal)
After 2020
CERA
2025
or later Shell
No visible Peak Lynch
Challenges and Possible Solutions
Options and Challenges ¾ Conservation ¾ Improved oil recovery ¾ Heavy oil and oil sands ¾ Gas-to-Liquids ¾ Liquid fuels ¾ Fuel switching to electricity ¾ Other fuel switching ¾ Hydrogen
Some Important Facts Global oil consumption-2003- 80 MMbpd U.S. oil consumption in 2003- 20 MMbpd Major oil consumption sector in the USTransportation (67%) US has 210 million automobiles and light trucks. Replacement life of automobiles and trucks- 9-14 years
Conservation -- 1 Automobiles and light trucks target. ¾ Fuel efficiency technologies. ¾ Diesel engine is 30% more efficient than
gasoline engine. US air emission requirements have not encouraged use of diesels. ¾ Europe has large use of diesel LDVs- 5570% in some countries. ¾ Hybrid systems based on diesel-gasolinebattery systems (40-80% more efficient)
Conservation -- 2 ¾ Government-mandated vehicle fuel
efficiency requirements are needed. ¾ Improved aircraft design in distant future may improve fuel efficiency 25-50%.
Improved Oil Recovery (IOR) Include hydraulic fracturing, horizontal drilling, water injection, advanced reservoir characterization to improve flow and recovery of liquid hydrocarbons. Enhanced oil recovery (EOR) has the largest potential. In this method, carbon dioxide, nitrogen or light hydrocarbons are injected into reservoirs as solvents to move residual oil. It is expensive.
The Timing of EOR Applications
Improved Oil Recovery ¾ Opportunity for tertiary recovery. ¾ Enhanced oil recovery (EOR) using carbon
dioxide, nitrogen, or light hydrocarbons are injected into oil reservoirs. ¾ CO2 flooding has been most successful and can increase oil recovery by 7-15%. ¾ EOR is applied only after peak production from a reservoir. It can only increase total recoverable oil.
Heavy Oil and Oil Sands ¾ Largest deposits of unconventional oils are
in Canada and Venezuela with smaller amounts in Russia, Europe, and the US. ¾ Canadian and Venezuela may allow economic recovery of 600 billion barrels and delay peaking oil production. ¾ Production cost for unconventional oils are much higher than for conventional oil. ¾ Oil sands production results in significant CO2 production.
Gas-To-Liquids Natural gas may be liquefied (LNG) and shipped in pressurized containers. Japan, Korea, Spain, and USA were the largest importers of LNG in 2003. F-T processes may be used to produce high quality liquid fuels for use with existing equipment. About 1.0 MMbpd is expected to be produced by 2015
Liquid Fuels from US Domestic Resources Coal, oil shale, and biomass can be used to produce liquid fuels. Coal to liquid fuels requires coal gasification, clean up of gases, and production of liquid fuels using F-T process. Liquid fuels may be from coal at about $35/barrel. Oil shale resources abundant in western USA. Biomass is used extensively to produce “ethanol” a fuel additive to enhance liquid fuels.
Fuel Switching to Electricity Develop electric powered transportation equipment. Large number of train routes could be fitted for use of electric power. Hydrogen has potential for use as an alternative fuel to petroleum based liquid fuels for transportation applications.
Implementation Impacts
Summary and Conclusions
Summary and Concluding Remarks --1 ¾ World oil demand will grow about 2% year,
driven primarily by transportation sector. ¾ Peaking of world oil production will occur over 10-20 years. However, the timing is uncertain. ¾ Peaking will negatively impact world economies. ¾ Peaking of oil will occur relatively rapidly and presents a unique challenge. ¾ Peaking oil production is a “liquid fuels” problem not an “energy crisis” issue.
Summary and Concluding Remarks --2 ¾ Dealing with impacts of peaking oil production
will require at least 1-2 decades. ¾ Supply and demand sides both need to be considered to deal with impacts. ¾ World governments and their cooperation will be necessary to deal with problem of peaking oil. ¾ Negative impacts can be dealt with but mitigation efforts globally must begin now. ¾ Environmental issues/rules will play a strategic role in sustainable development
Thank you folks!!
Yoginder P. Chugh Professor and Director Combustion Byproducts Recycling Consortium - Midwestern Region Southern Illinois University Carbondale, IL 62901 USA
Are we coming to the “End of Oil Age”??
Key Messages Global oil production will peak in the near future and it will be forever unless new oil discoveries are made that can be developed very quickly. The ”peak oil” will not impact energy supplies but will heavily impact availability of “liquid transportation fuels.” The expected economic impact of “peak oil” could be very large on developed and developing economies. Globally we are not prepared to face the impact of “peak oil”. Mitigation measures must begin now with everyone involved to minimize the impacts.
Outline ¾ Peaking Oil Production : What does it
mean? ¾ Global Oil Resources : An Overview ¾ Global Oil : Production and Consumption ¾ Peaking Oil : Timeline Estimates ¾ Challenges and Possible Solutions ¾ Summary and Conclusions
Oil Extraction Cycle In any oil producing region, “easy oil”- best quality oil is extracted first for economic reasons. After about half the oil is extracted, the other half is more difficult to extract. In other words we hit “peak” and then it begins to decline. The bell shaped curve holds true for every oil producing region.
Oil Extraction Cycle
Global Oil Production
An Important Statement We estimate that world oil and gas production from existing fields is declining at an average rate of 4-6% a year. To meet projected demand in 2015, the industry will have to add about 100MMbpd of new production. That is about 80% of today’s production level. In addition, the cost of providing this additional oil and gas is expected to be considerably more than what industry is spending today. Jon Thompson President, ExxonMobil 2003
What does peaking oil mean? Global oil production will peak forever (Peak Oil). Since oil supplies are getting tight relative to demand, price of oil and associated products will rise. We are seeing evidence of this already. When cheap oil is not available, it will have major impacts on our economies and standards of living. Today’s discussion centers around “peaking oil”
Oil Prices and U.S. Recessions: 1969-2003
What are the implications of peaking oil? Relatively cheap oil has been responsible for economic growth in the developed world. Oil peaking will create a severe “liquid fuels” problem for the transportation sector. This will lead to dramatically higher oil prices that will cause economic hardships in the world. Increased efficiency alone will not be sufficient given the increased demand. Large amounts of synthetic liquid fuels required. Doubling oil price from $ 25 to $ 50 per barrel would lower US GDP by about $125 billion (1%)
Global Energy and Oil Resources : An Overview
Order of Magnitude of Energy Resources
Survey of Energy Resources 2004 Oil
15
11
91 19
Europe
North America
Asia
34
42
Middle East Africa
9
South America Oceania
R/P RATIO 41.2 years
RESERVES 148 Gt
PRODUCTION 3.5 Gt/year
CONSUMPTION 3.5 Gt/year
OIL RESERVES 300
120
93
100 100 97
100
200
80
80
73 150 100 50
66 140
63
60
120 100 96 38
75 70 2137
37
35
38
30
1220 1520 1217
42
20 17 19 15 1012 12 11 10 10 10 9
46 40 21 10
0
Ira n Ira Ku q wa it Ve UA ne E zu el Ru a Ka s za sia kh st an Li by Ni a ge ria US Ca A na da Ch in a Q at M ar ex ic Al o ge ria Br az No il rw a An y Az go er la ba ija n Su da n In di a O m an
Ar ab ia
2020
10
0
Sa ud i
Reserves (Billion Barrels)
250
Country Reserves (Billion Barrels)
Years of Remaining Reserves
Total world proven oil reserves (2005) – 1.2 trillion barrels
Years of Reserve Remaining
265
Net Oil Discovery Minus Production
Survey of Energy Resources 2004 Natural Gas
56 >100
40
9
Europe
North America
70
Asia
57
Middle East Africa
29
South America Oceania
R/P RATIO 59.8 years
RESERVES 171 tcm
PRODUCTION 2.6 tcm/year
CONSUMPTION 2.6 tcm/year
Survey of Energy Resources 2004 Coal 247
255
258
Europe
North America
Asia 50
0.4
20
Middle East Africa
79
South America Oceania
RESERVES 909 Gt
PRODUCTION 4.8 Gt/year
CONSUMPTION 4.8 Gt/year
Major Comments No shortage of global energy resources R/P ratio for fossil fuels: – Oil 40 years – Natural Gas 60 years – Coal 200 years Uneven distribution of strategic resources around the world Consumption areas do not all coincide with production areas. New oil discoveries have not been forthcoming around the globe.
Global Oil : Production and Consumption
Global Oil Production
Global Oil Discoveries
U.S. Oil Discovery and Oil Production 1970 1930
Historical OPEC Spare Production Capacity
World Petroleum Consumption, 1960-2025
US Oil Consumption by Sector 1973-2003
U.S. Oil Imports and Transportation Shares of Oil Consumption, 1973 and 2003
What does it all mean?? The demand is continuously growing. Production trends indicate peaking. New discoveries of oil are not forthcoming. Spare capacity of OPEC countries is also declining. US and perhaps around the globe transportation sector is the major consumer of oil. History tell us that high oil prices have led to recessions in the USA.
Peaking Oil : Timeline Estimates
Predictions of World Oil Production Peaking Projected Date Source of Projection 2006-2007
Bakhitari
2007-2009
Simmons
After 2007
Skrebowski
Before 2009
Deffeyes
Before 2010
Goodstein
Around 2010
Campbell
After 2010
World Energy Council
2010-2020
Laherrere
2016
EIA (Nominal)
After 2020
CERA
2025
or later Shell
No visible Peak Lynch
Challenges and Possible Solutions
Options and Challenges ¾ Conservation ¾ Improved oil recovery ¾ Heavy oil and oil sands ¾ Gas-to-Liquids ¾ Liquid fuels ¾ Fuel switching to electricity ¾ Other fuel switching ¾ Hydrogen
Some Important Facts Global oil consumption-2003- 80 MMbpd U.S. oil consumption in 2003- 20 MMbpd Major oil consumption sector in the USTransportation (67%) US has 210 million automobiles and light trucks. Replacement life of automobiles and trucks- 9-14 years
Conservation -- 1 Automobiles and light trucks target. ¾ Fuel efficiency technologies. ¾ Diesel engine is 30% more efficient than
gasoline engine. US air emission requirements have not encouraged use of diesels. ¾ Europe has large use of diesel LDVs- 5570% in some countries. ¾ Hybrid systems based on diesel-gasolinebattery systems (40-80% more efficient)
Conservation -- 2 ¾ Government-mandated vehicle fuel
efficiency requirements are needed. ¾ Improved aircraft design in distant future may improve fuel efficiency 25-50%.
Improved Oil Recovery (IOR) Include hydraulic fracturing, horizontal drilling, water injection, advanced reservoir characterization to improve flow and recovery of liquid hydrocarbons. Enhanced oil recovery (EOR) has the largest potential. In this method, carbon dioxide, nitrogen or light hydrocarbons are injected into reservoirs as solvents to move residual oil. It is expensive.
The Timing of EOR Applications
Improved Oil Recovery ¾ Opportunity for tertiary recovery. ¾ Enhanced oil recovery (EOR) using carbon
dioxide, nitrogen, or light hydrocarbons are injected into oil reservoirs. ¾ CO2 flooding has been most successful and can increase oil recovery by 7-15%. ¾ EOR is applied only after peak production from a reservoir. It can only increase total recoverable oil.
Heavy Oil and Oil Sands ¾ Largest deposits of unconventional oils are
in Canada and Venezuela with smaller amounts in Russia, Europe, and the US. ¾ Canadian and Venezuela may allow economic recovery of 600 billion barrels and delay peaking oil production. ¾ Production cost for unconventional oils are much higher than for conventional oil. ¾ Oil sands production results in significant CO2 production.
Gas-To-Liquids Natural gas may be liquefied (LNG) and shipped in pressurized containers. Japan, Korea, Spain, and USA were the largest importers of LNG in 2003. F-T processes may be used to produce high quality liquid fuels for use with existing equipment. About 1.0 MMbpd is expected to be produced by 2015
Liquid Fuels from US Domestic Resources Coal, oil shale, and biomass can be used to produce liquid fuels. Coal to liquid fuels requires coal gasification, clean up of gases, and production of liquid fuels using F-T process. Liquid fuels may be from coal at about $35/barrel. Oil shale resources abundant in western USA. Biomass is used extensively to produce “ethanol” a fuel additive to enhance liquid fuels.
Fuel Switching to Electricity Develop electric powered transportation equipment. Large number of train routes could be fitted for use of electric power. Hydrogen has potential for use as an alternative fuel to petroleum based liquid fuels for transportation applications.
Implementation Impacts
Summary and Conclusions
Summary and Concluding Remarks --1 ¾ World oil demand will grow about 2% year,
driven primarily by transportation sector. ¾ Peaking of world oil production will occur over 10-20 years. However, the timing is uncertain. ¾ Peaking will negatively impact world economies. ¾ Peaking of oil will occur relatively rapidly and presents a unique challenge. ¾ Peaking oil production is a “liquid fuels” problem not an “energy crisis” issue.
Summary and Concluding Remarks --2 ¾ Dealing with impacts of peaking oil production
will require at least 1-2 decades. ¾ Supply and demand sides both need to be considered to deal with impacts. ¾ World governments and their cooperation will be necessary to deal with problem of peaking oil. ¾ Negative impacts can be dealt with but mitigation efforts globally must begin now. ¾ Environmental issues/rules will play a strategic role in sustainable development
Thank you folks!!
