June 23, 2007
American Coal Reserves Not So Big

Heard the oft repeated claim that America has enough coal to last 250 years? A new report from the US National Academy of Sciences (NAS) claims recoverable US reserves are not nearly as large as has been claimed. Though another claim about America as "the Saudi Arabia of coal" might still be accurate. Why? If Matthew Simmons and other "Peak Oil" advocates are right then Saudi Arabia's oil reserves are also greatly exaggerated. The NAS report authors say attempts to spot check old recoverable coal reserves estimates have found far less recoverable coal than expected (PDF from Report Brief).

Present estimates of coal reserves— which take into account location, quality, recoverability, and transportation issues—are based upon methods that have not been updated since their inception in 1974, and much of the input data were compiled in the early 1970s. Recent programs to assess coal recoverability in limited areas using updated methods indicate that only a small fraction of previously estimated reserves are actually recoverable. Such findings emphasize the need for a reinvigorated coal reserve assessment program using modern methods and technologies.

Is this good news or bad news? I see it as good news. Coal is dirty. We have alternatives. The incremental cost difference going from coal to nuclear is probably at most 2 cents per kilowatt-hour (kwh). At the same time, wind and solar photovoltaics are declining in cost and photovoltaics probably can decline in cost by an order of magnitude. So coal has substitutes, at least for electric generation.

Small coal reserves seem more problematic for the coming peak in oil production. Coal-to-liquid (CTL) could help reduce the economic disruption that peak oil will cause to our living standards and lifestyles. Smaller coal reserves mean less CTL gasoline or diesel fuel. However Chevron and Shell research into oil shale extraction could provide another way to supply liquid fuels for that portion of transportation that does not go electric. Though the Natural Resources Defense Council (NRDC) argues that oil shale extraction will use too much of a limited supply of water in the Rocky Mountain states. What I'd like to know: at what price of oil and natural gas would nuclear energy become cheaper as a way to heat up tar sands in Alberta and oil shale in Colorado, Utah, and Wyoming?

The NAS coal report authors have revised US reserves from 250 years to 100 years at current consumption rates and so have reduced reserve estimates to only 40% of previous estimates.

The 250-year estimate was made in the 1970s and was based on the assumption that 25 percent of the coal that had been located was recoverable with current technology and at current prices, said one member of the study group, Edward S. Rubin, a professor of environmental engineering and science at Carnegie Mellon University.

But he said that more recent studies by the United States Geological Survey showed that at least in some areas, only 5 percent of the coal was recoverable with today’s technology and at current prices.

Even the 100 years estimate looks unrealistic given the boom in coal electric power plant construction now going on. But consumption could rise even higher if an oil production peak causes a building boom in coal-to-liquid plants to keep all the cars and trucks moving down the road.

The NAS coal report brief expects extracting difficult seams to cause more environmental and water problems. (PDF).

As mining activities extract coal from deeper and operationally more difficult seams, a range of existing environmental issues and concerns will be exacerbated and new concerns are likely to arise, particularly related to greater disturbance of hydrologic systems, ground subsidence, and waste management at mines and processing plants. Research activities should focus on developing techniques to mitigate the alteration and collapse of rock layers overlying mined areas, to model the hydrological impacts of coal mining, to improve mine mapping and void detection, to increase stability of waste heaps on steep slopes, and to improve the construction and monitoring of coal waste impoundments.

The money available for energy investments is enormous. Take the money spent on oil as a starting point. The current price for London Brent crude is over $71 per barrel and US oil is around $69 per barrel. Well, the United States uses over 20 million barrels of oil per day or over $1.4 billion dollars on oil alone per day. Add in coal, natural gas, nuclear, hydroelectric, and other sources of energy and the US economy spends billions of dollars per day on energy. If coal oil or shale oil can get made for $50 or $60 per barrel (and this seems likely from various reports) then the money can be found to build the capital plant to do the extraction and make the oil.

You can buy access to the full NAS report.

Update: If the Peak Oil pessimists (see here and here for Stuart Staniford on Saudi oil production) are right about an earlier date for a world oil production peak then it is it not too early to start talking about Peak Coal. If an oil peak comes sooner then we will not yet have the technologies needed to switch most transportation away from liquid fuel to electricity. Therefore big money will flow into coal-to-liquid (CTL) to make transportation fuels. As a result, coal reserves will decline much more rapidly.

But I'm not worried about Peak Coal. Coal, tar sands, and oil shale should buy us 2 or 3 decades to migrate to a much more electric economy. I think an early Peak Oil will be very costly if it comes as a surprise to most of industry. But my chief concern about a shift to coal is environmental. Coal is much dirtier.

Even if Peak Oil is still 20 years away Asian economic growth is pushing up the demand for energy so much that a shift to coal for liquid fuels could happen even before Peak Oil. I would rather the non-fossil fuels energy sources drop further in price and start putting a ceiling on energy prices than that coal consumption accelerates even more rapidly.

Share |      Randall Parker, 2007 June 23 11:17 AM  Energy Fossil Fuels


Comments
David Mathews said at June 23, 2007 3:57 PM:

"Is this good news or bad news? I see it as good news."

I agree, Randall. The exhaustion of the coal reserves combined with Peak Oil and the eventual peak of natural gas will serve to end the technological age. The sooner that the technological age ends, the better.

Human civilization is passing away. Ten thousand (or even a hundred thousand) years doesn't amount to much compared to the billions of years that Nature has succeeded on the Earth.

All of humankind's accomplishments are fading away. After a few million years only fossils will remain. Perhaps no one will know, perhaps no one will remember, that Homo sapiens ever dominated the Earth.

Humans have squandered their one opportunity to exist in the Universe. Instead of millions of years existence as an unusual but humble animal the humans have chosen to dominate the planet by exhausting all of its resources and polluting everything else.

This reckless path of self-destruction is an intoxicant. Just like the chain smoker who continues to smoke in spite of terminal lung cancer, humans will continue to destroy the Earth regardless of the apocalypse which must certainly result from these behaviors.

Bigelow said at June 24, 2007 3:20 PM:

Randall,

I know you are a proponent of plug in hybrid electric vehicles and hopefully PHEVs will greatly reduce the demand for liquid fuels quickly. The remaining demand will be met with CTL almost exclusively because tar sands and shale are not going to scale up the way you expect –even in an environmental regulation free atmosphere.


Randall Parker said at June 24, 2007 4:01 PM:

Bigelow,

In the post above I linked to a recent Bloomberg story on the business prospects for shale oil extraction:

Exxon Mobil Corp. and Chevron Corp., the two biggest U.S. energy companies, and Royal Dutch Shell Plc are spending $100 million a year testing new methods to separate the oil from the stone for as little as $30 a barrel. A growing number of industry executives and analysts say new technology and persistently high prices make the idea feasible.

$100 million a year by 3 big oil companies means they think shale's a possibility. As for environment: They aren't digging it up and heating the rocks up here. Their plan is to heat up the rocks in situ. Then as the oil comes out they drill down and suck up the nearby oil.

Also, go to Steve Mut in that link and read what he said about Shell's efforts. Granted, the timeline is long. But if oil peaks soon we could do many projects much faster than we do them today. Oil at over $100 per barrel would motivate a lot of companies.

But oil shale isn't a fast respones to Peak Oil. Shell's process involves heating the rock for 3 to 4 years before extracting oil. Well, before the rock heating even begines they have to do prep work and they'll need a lot of electricity to heat the rock. So where will the electricity come from? New coal and nuclear plants. But those take years too.

As for tar sands scaling up: That's already happening.

The biggest problem I see with Peak Oil is that we won't predict it in advance. If we discover it is happening a year or two after it has started then we have to start the big construction projects years late and we end up going through really tough years before oil substitutes start getting produced in large amounts.

Bigelow said at June 24, 2007 7:23 PM:

Randall,

Food for thought from your two links:
“Steve guesstimated that oil shale production would still be pretty negligible by 2015, but might, if things go really well, get to 5mbpd by 2030.” Steve Mut [Shell]

“Chevron scientists are working with researchers at the Los Alamos National Laboratory in New Mexico to determine which chemicals work best for converting shale to crude oil. Shell's heating technique amounts to "a brute-force approach," said Lestz [Chevron], who is based in Houston.

Raytheon Co., the maker of Tomahawk missiles and the first microwave ovens, is developing a process that would use radio waves to cook the shale.” Bloomberg News

Garson O"Toole said at June 24, 2007 9:31 PM:

Randall Parker mentions a report about coal from the US National Academy of Sciences (NAS) and provides a link with the phrase “You can buy access to the full NAS report.” When I follow the link given it leads to a page where it appears that you do not have to buy access to the report. The entire prepublication version seems to be available online for free reading. It would be great if all reports that are funded by government tax dollars were placed online for free access in an easily downloadable and accessible format such as html that also allows easy indexing by search engines.

The free online version is browser-readable and is at least 156 pages long since the front matter is at least 12 pages and the body is at least 144 pages. There is a PDF that can be purchased for downloading for $42.30 and the web page says its size is 198 pages. So there is a discrepancy in page count, but the free online version does not look like a summary.

cancer_mn said at June 25, 2007 12:51 AM:

you are cluttering up a really good blog with posts on col reserves and stupid peak oil.

rsilvetz said at June 25, 2007 12:57 AM:

What a joke of a report. Do we remember that one of the world's largest *untapped* reserves of low-sulfur coal is sitting useless in National Park thanks to that rat Clinton?

Rob said at June 25, 2007 5:44 AM:

Do the estimates of coal for X number of years take into account that coal use will greatly increase if we make liquid fuel from it, use it as plastic feedstock, etc?

Randall Parker said at June 25, 2007 8:18 PM:

Bigelow,

Canada's oil tar sands production is going to surge:

A January 2007 speech by Finance Minister Jim Flaherty in Beijing boasted that production in Alberta was on its way to 4.6 million barrels a day by 2015.

Few in the industry admit to such a high target, since the current level is 1 million barrels a day. "It is technically possible to do 5 million," says Pierre Alvarez, president of the Canadian Association of Petroleum Producers. "But 3 million looks more feasible."

However, it's a secret that seems hard to keep. Six months after the Houston meeting, in his first speech abroad, Harper called Canada "a new energy superpower.''

Flaherty's recent budget prepared the ground for rapid expansion of the tar sands by creating a new office of projects management whose mandate is to cut in half the approvals time for major resource projects – exactly what was called for at the Houston meeting. "Two plus two seems to equal four here, but the media missed it," says Dan Woynillowicz, senior policy analyst at Alberta-based enviro org the Pembina Institute and author of Oil Sands Fever.

Flaherty's prediction ups a prediction by Canadian Prime Minister Stephen Harper that by 2015 Canada will be producing 4 million barrels a day from oil tar.

Still, his lowball estimate doesn't square with Prime Minister Stephen Harper's effort to tout the country's potential as an energy superpower. In New York this fall, the Prime Minister said oil sands production was expected to hit four million barrels a day by 2015.

But on a recent trip to China, Finance Minister Jim Flaherty played a little Texas hold 'em with the oil sands estimates, seeing Mr. Harper's four-million-barrel forecast and raising it another 600,000....

The Canadians are seriously entertaining the idea of building CANDU nuclear power plants to melt the tar instead of using such huge amounts of natural gas (which also could get exported for huge bucks.

cancer_mn,

Even the Peak Oil optimists think we are going to peak in the 2020s or 2030s. Those are the optimists, the oil companies. Most of us are going to live to see Peak Oil. It is part of our future. It will have a big impact on our lives. The sooner it happens the bigger the impact. We should think about it.

Nick said at June 26, 2007 2:21 PM:

"If an oil peak comes sooner then we will not yet have the technologies needed to switch most transportation away from liquid fuel to electricity. "

Randall, it looks very much like we have them now. Take a look at gm-volt.com . What they say fits with what I've seen elsewhere, and it looks to me like the battery cells are ready now, the battery packs will be ready in a year, and the car 2 years after that. GM is fast tracking the Volt, and I think they're hoping to beat the 3 year timeline.

The barrier to EV's (and PHEV's, the practical path to EV's) has always been the battery. There are several reputable battery manufacturers who say that their battery cells are ready now. The delay is the engineering for the battery pack, and there are no breakthroughs needed for that. GM has two candidates competing for the Volt, and there are more out there, so I think there's no question that the chemistry is ready.

GM says they expect to sell in large volumes immediately. Serial PHEV's could be ramped up pretty quickly to replace ICE vehicles, should we choose to - it could be done in 10 years, with a major effort.

As background, it's important to realize that EV's have always been available as a substitute for ICE's, they've just never been able to compete with really, really cheap oil. As battery costs fall, and oil rises, the lines are crossing right now, and everything really is different. GM says that they think so, and I believe they mean it.

Randall Parker said at June 26, 2007 8:10 PM:

Nick,

Suppose that we hit Peak Oil next year. Sure, GM can rush electric cars into production. But we havea couple hundred million non-electric cars on the road. If world oil production starts dropping 10% per year then I do not see how electric cars will suffice.

Move ahead 10 years and have Peak Oil happen then and the picture is rosier. Move ahead another 10 years and the picture is rosier still. But it seems to me right now we are highly dependent on oil.

Of course, we can bicycle, car pool, move closer to our jobs. switch to jobs that are closer to home, telecommute, and make countless other adaptations to declining oil production. Civilization won't collapse. But Peak Oil happening in the short term would cause a deep recession and perhaps stagflation with rising prices and high unemployment.

Shipping costs would cut into trade over various scales of distance. Highly oil-dependent industries would be very hard high. I'm thinking oil, chemicals, textiles, construction, and other industries that use a lot of energy.

The rise in demand for coal for heat and coal-to-liquid would push up the cost of coal and hence of electricity. The same mechanism would happen for natural gas. Farmers would face much higher costs and food prices would rise.

I've been doing drafts on a post about Peak Oil. I'm thinking about it every day currently. Would welcome any thoughts you have on it.

Bigelow said at June 27, 2007 6:21 AM:

Randall,
US demand for oil is just about 22 million barrels per day.

“It is projected that petroleum consumption in the United States will increase by 1.5 percent annually, reaching 27.9 million barrels per day by the year 2025.” http://www.eia.doe.gov/neic/infosheets/petroleumproducts.htm (revised 09/05) I imagine that projection is based on business as usual.

Producing 4 mbpd from tar sands by 2015 and 5mbpd from shale by 2030 comes up a bit short.

Transition to electric vehicles will not be timely if as you pointed out Peak Oil happens soon. Even if we act like already. Yet the auto companies still stall! Nick said: “The delay is the engineering for the battery pack, and there are no breakthroughs needed for that.”

To make the automotive world act faster the author Edwin Black is pushing a Green Fleet Initiative. Will favoring a “green shipper” help?

“Fleets -- governmental, commercial and private -- have a compelling volume purchasing power no automaker can ignore. Carriers in 2004 operated 675,000 trucks; the top ten include such firms as UPS, Federal Express, and Yellow Roadway. UPS alone deploys some 80,000 brown trucks daily as it makes 13 million deliveries every 24 hours. Only about 1,000 of UPS's massive fleet ran on compressed natural gas as of mid-2006. Within Federal Express's 70,000-vehicle fleet, the company operated 30,000 medium-duty trucks. Less than 100 were hybrid diesel as of mid 2006.

Some six million additional vehicles are owned by private commercial fleets.” http://www.canada.com/edmontonjournal/news/opinion/story.html?id=60d0951d-3db4-4f79-8997-894cc1bc72a0&p=1

A few days ago Google announced plans to turn its 100+ corporate fleet into PHEVs. Fleets have the aggregate demand that auto companies will jump through hoops for. What if the Post Office put PHEVs out for bids? I haven’t called UPS or FEDX’s fleet managers and applied a bit of consumer persuasion, but it couldn’t hurt.

Paul Dietz said at June 27, 2007 6:34 AM:

The fraction of coal that is recoverable could be greatly increased if in-situ gasification is adopted. This would work nicely with synfuels, since it not only gets to otherwise inaccessible coal, but avoids the cost of a separate gasifier to produce the syngas.

Nick said at June 27, 2007 8:30 AM:

Randall, a few thoughts. I'll post more later.

An immediate 10% decline in oil production is more pessimistic than any projections I've seen.
Consumption is rising primarily in Chindia, and in oil exporting countries. Rising prices are likely to make overall world consumption level off, with stable consumption in OECD countries; falling consumption in developing countries, with concomitant economic pain there; and slower consumption growth in exporting countries as they reduce domestic subsidies to maximize export revenues.

My best guess is that the world, and the US, will be on a consumption/production plateau for about 5-7 years, then start dropping about 2-3% per year due to producer depletion. This is a scenario where PHEV's can easily grow fast enough to compensate for the loss of production. Keep in mind that vehicles 6 years old or younger account for 50% of miles travelled, because newer vehicles are driven more. This effect would increase if gas prices rose dramatically.

The worst case scenario is an artificial disruption, such as Saudi civil war, or US-Iran war, that halts exports from the ME. That would give us the consumer conservation, deep depression, stagflation scenario. It's possible, but unlikely.

IMO the greatest risk is that the US will be badly weakened by the roughly 200B/year trade deficit with the ME, which in 10 years will transfer $2T in wealth!

Long distance shipping costs are a very small % of product costs (well below 1%). Water shipping in particular will be unaffected: fuel cost is in the range of only .1-.2% of product costs; an insignificant 25% cut in water travel speeds reduces energy consumption by 50%; and wind power can be added as a modular addition to reduce fuel consumption. long haul trucking in the US will be hurt, and rail and water shipping will expand, but I don't see much effect on global trade, except for relatively few very low-density items, like some produce.

Wind power is already providing 25% of new electrical generation capacity. This can expand to 100% in 5 years with some effort (mostly additional transmission), and likely will expand to 100% in less than 10. After that it can start eating into existing coal, oil & gas consumption for electrical generation. Solar is less than 10 years behind wind's growth curve.

I don't see coal for I/C or residential building heating: heat pumps make much more sense. CTL is in every way inferior to PHEV's: it's lead time is longer, it's more expensive in both capital and operation, it uses 6x as much coal per mile as a PHEV run on coal generated electricity. I'm sure some CTL will happen, but I don't see it as being all that big, given it's CO2 problems.

Coal will help transitionally, but we have enough, and there are enough alternatives, that I don't see coal prices rising much, or problems with coal supply. I think coal consumption will peak well before production does.

Nick said at June 27, 2007 12:00 PM:

Re peak oil predictions: the credible ones range from 2006 to 2015. The most credible, IMO, is Skrebowski's 2011-2012, though he may underestimate depletion a bit. OTOH, "above ground factors" are limiting production, and pushing peak out.

My best guess is that Saudi Arabia could raise output, but at the cost of long-term production, and that rising prices will flatten out the peak.

Randall Parker said at June 27, 2007 6:24 PM:

Bigelow,

I do not think attitudes in the auto industry are the main problem. If auto companies build cars that are more fuel efficient yet cost more (which is the story of hybrids in a nutshell) then people will only buy them if gas prices are high enough to goad them into it. In fact, people underweight the value of hybrids by expecting irrationally too short a payback period for them.

The bigger problem is that all of industry and private individuals do not know when Peak Oill will happen. If they knew with a high level of exactness and certainty private individuals and companies would take a great many decisions in advance and we'd all be far better prepared for it. The problem is the uncertainty. (and I personally have read many articles at The Oil Drum and elsewhere looking for more certainty btw)

The longer we go before Peak Oil the better prepared we'll be because we'll have better tech. Later is better. The other part of better: Predictive ability. 2020 with a high degree of certainty would be great. We could get ready for that. We'd have the tech and the time to do the massive capital investments that take years to build new facilities. (e.g. 4 year time to build a nuke)

Randall Parker said at June 27, 2007 6:58 PM:

Nick,

Our views are fairly close. I see a role for CTL for a few reasons:

A) Existing auto fleet. At frightfully high costs of gasoline then some vehicles will get converted to PHEV in the aftermarket. But most will still need fuel.

B) Long distance trips - including cars, trucks, trains, ships, and airplanes.

C) The non-transportation uses of liquid fuel. For example, look at all the houses that get No. 2 heating oil delivered for winter heating. Some can switch to heating pumps. But not sure if that always makes sens in Minnesota, Maine, North Dakota, and other very cold places.

D) The price of oil will go so high that capitalists will rush to invest in CTL. Look, CTL is already profitable now but the capitalists still fear a surge in oil production that'll leave them with huge losses. I expect oil shale and more oil tar sands production for the same reason.

A long plateau before the decline: I hope so. A plateau will feature even higher oil prices than we have now and those prices will push the public toward PHEVs and major house insulation. Also, corps will invest big in conservation. I think a sustained period of gradual oil price rises beyond current prices will give the markets the needed signals. A faster rise will drive us into stagflation and make the transition much more painful.

Nick said at June 29, 2007 9:38 AM:

I agree, some CTL will happen.

A better strategy for the society as a whole would be investment in electrification. That would allow sufficient reduction in oil & gas use that the remaining would be adequate for legacy vehicles & structures that couldn't be easily converted. Note that ground-source heat pumps work very well in cold places, though you do need some access to open ground to make it economic - it wouldn't work that well in London. OTOH, the UK is still temperate enough that air heat pumps are almost always adequate. Also, heat pumps that work in lower air temperatures are being developed. Also, don't forget thermal solar for water & space heating, which is economic in some cold climes. Most trains can be be electrified. Long haul truck shipping should go to intermodal trains.

But, oil prices will be high enough to make it profitable. Heck, it's in the works already, despite the resistance to active federal subsidies due to CO2 concerns. And, it will provide some diversity of supply, which isn't bad. It's just not going to expand coal use dramatically, as some have been projecting. Further, I expect coal for electric generation to fall as wind, nuclear & solar expand, so coal supplies will be entirely adequate.

Randall Parker said at June 29, 2007 7:09 PM:

Nick,

What I wonder about heating: When will materials breakthroughs yield super cheap superinsulation?

One of the failures of the market is that housing (especially apartments) are not built to the most cost effective levels of insulation. The loss of oil for insulation won't be as bad if people embrace insulation improvements in a big way.

As for electrification: I expect people will shift to heat pumps when heating oil starts costing $4, $5, $6 and more per gallon.

Randall Parker said at June 30, 2007 9:33 AM:

Nick,

What we need are better technologies to make electrification easier to do. I suspect that the rising cost of fossil fuels will make electrification more attractive. But electricity is already much cheaper per mile for transportation except for the fact that the batteries cost so much. If one just compares energy used moving vehicle down the road then Engineer-Poet says that electricity is like 75 cents a gallon gasoline. Though that depends on vehicle size.

Electric trains: Can that work long haul? Or does it only work on more heavily travelled urban train lines?

K said at June 30, 2007 4:31 PM:

re: apartment insulation and superinsulation. Apartment owners usually have no incentive to insulate. Renters pay the utilities.

At climate extemes the generalization begins to fail; the energy needed to keep an apartment cool or warm becomes so expensive that even renters quickly learn to, shall we say, dodge the draft.

I am not sure how improvement should be tackled. Possibly by building inspection and a direct tax added to the real estate tax. It would be based upon energy efficiency. The local utilities could provide the data on total energy used in a given building. And the square footage is known.

The government bureaus already exist - always a good thing. Expanding is more effective than starting. And results are measurable not abstract.


Nick G said at June 30, 2007 6:16 PM:

Randall,

For home heating, insulation, heat pumps (air & ground exchange), and solar thermal all are cost-effective now in more or less most cases. As far as I can tell, the main problems are 1) contractor and builder conservatism (building & trades are astonshingly slow to try new things), 2) the maket failure/disconnect between both residential & I/C builders and their customers, 3) a failure to recognize that high energy prices are long term, and 4)for homeowners, the disproportionate time & personal energy required for such projects, and 5) a relative scarcity of capital combined with a too short time horizon. I agree, when the savings become really important to home budgets, people will move.

"What we need are better technologies to make electrification easier to do."

Yes. In fact, EV's have always been more or less competitive with ICE's, just not as convenient. You can buy deep cycle lead-acid batteries for about $65/kwh. At 400 cycles at 80% depth of discharge that's 20 cents per KWH discharge, and at 4 miles per KWH that's only 5 cents per mile. With electricity at 10 cents/KWH, that's a total of 7.5 cents per mile. The average vehicle on the road gets 23 MPG which costs 14 cents per mile at $3.25/gallon, or twice as expensive as electricity. Even $1.72 gasoline puts electricity at parity with an ICE. And, that's using lead-acid!!!

You can see that only relatively very cheap gasoline, and the inconvenience of battery replacement and short range stood in the way of EV's.

Now, li-ion's like the A123systems' promise to eliminate the inconvenience of battery replacement and short range, with their very long cycle lives, and much better energy density (which allows one to carry more capacity in less space). The last remaining hitches are temporary: the greater expense of li-ions which makes a very large battery pack expensive, and the lack of public infrastructure. These will be solved by the relatively minor PHEV compromise, until li-ions get cheaper and parking garage & parking meter outlets arrive (they exist now in places like Canada, and Minnesota for engine pre-heating).

Now that these improvements and more expensive gas are here, it's time for EV's!

Re electric trains: there is a very important distinction between freight and passenger rail. Freight on rail is important, cost effective and practical. It will replace much long-haul trucking, which was always a bad idea, but subsidized by public highways, with their initial public construction, dedicated gas tax funding, property tax-free status and local feeder roads paid for by local government. Even now inter-modal freight transport is doing very well.

OTOH, passenger rail is highly inconvenient for anything but reasonably high density urban commuting and mid-distance city-center to city-center travel, no more energy efficient than EV's, and arguably substantially more expensive per passenger-mile than personal vehicles. I use it for commuting, and I think there are many social and personal advantages that make it overall cost-effective in it's proper place (safety, reduced congestion, comfort, stress reduction, etc). I think it's very valuable in that proper place and that it should be greatly expanded, but it's a silver BB, not a bullet. EV's are much more important.

Randall Parker said at June 30, 2007 6:52 PM:

Nick G,

What I would like to know: Just how fast will A123 Systems and competitors deliver on lithium-based batteries for cars and how cheap they'll get and when.

If the car companies start making millions of pluggable hybrids and pure electric cars before we hit Peak Oil then I will breathe a big sigh of relief.

Nick said at June 30, 2007 8:39 PM:

Well, it's important to keep in mind that A123systems batteries are available, and being used in powertools and demonstration EV's and PHEV's right now. Dewalt 36volt powertools using the A123systems battery are very popular with contractors. A123systems has released an upgrade package that can be used to convert a Prius to a PHEV, and Google recently started converting their corporate fleet using it. So, on the one hand the batteries are ready, and on the other hand they're being used in PHEV's, at least on a demo basis.

What's needed for OEM PHEV's like the Volt is a customized battery PACK. This is a matter of well known, albeit sophisticated, engineering not basic chemistry. A123systems has a contract with GM to deliver a pack by June 2008 (as does a competing company allied with a very big asian li-ion manufacturer which has a slightly more conventional chemistry), and says they expect to have a prototype by December, and come in well before the June deadline for all details of the development contract.

GM has previously laid out a pretty standard 36 month timeline which would be mid 2010, and now are saying that they still have a firm deadline, but that it's secret. They've also said that they are doing design and manufacturing planning in parallel, which is highly unusual, and suggestive of an effort to come in well before the mid 2010 deadline.

I think they know how important the Volt is for them and everyone else. They've been dying to leapfrog Toyota technologically for years now, which is one big reason why they've been pushing fuel cells. Now they see an opportunity to do it with the gas/electric plug-in Volt (though they're still pushing fuel cells), especially with Toyota's recent decision to delay going to li-ions. I think they're hoping to have it out in mid 2009.

Most of my details are from the site gm-volt.com , which AFAIK is independent of GM. It's well worth a look.

Keep in mind that upgrading a Prius, or any hybrid with similar tech, to plug-in is quite simple with the proper batteries, and that battery cost is essentially guaranteed to continue dropping quickly, so I find the rapid expansion of hybrids almost as reassuring as the start of plug-ins.

Randall Parker said at June 30, 2007 8:51 PM:

Nick,

Conversion of existing hybrids into pluggable hybrids isn't so important because there are so few hybrids on the road. What would be more reassuring in terms of being able to rapidly adjust to Peak Oil would be an aftermarket converts conventional cars into pluggable hybrids or pure electric cars.

Once Peak Oil hits we could find world oil production declining at 8% a year. We might spend a few years at a plateau first (and I suspect we are doing that right now). But once the decline hits we need ways to reconfigure huge amounts of existing equipment.

Summer of 2010 seems like a long time away. Huge production quantities of electric cars are even more distant.

On a more optimistic note: How about an electric biodiesel Harley?.

Nick said at July 2, 2007 10:57 AM:

There are about 830K hybrids on the US roads right now, with 2007 sales projected at about 350K. Sales are growing about 55% per year. At that rate it will take about 10 years for hybrid cumulative sales to hit about 100M, which would be enough to handle the majority of miles traveled. That 100M will include a lot of PHEV’s and some electrics, and the hybrids will be upgradeable to PHEV.

I agree: an electric conversion for ICE's would be nice. I don't see why an in-wheel electric motor wouldn't do the trick: apparently GM is very happy with the versions they've developed. I should think it will happen.

I think 8% decline is very unlikely anytime in the next 10 years. Keep in mind that the US, 30 years after peak, is only declining at 2% per year and the US decline is slowing and may stop. The most pessimistic projections that I have seen have assumed that demand growth will continue in Chindia and in exporting nations, and that net exports available would drop quickly. I think that's highly unlikely, as Chindia is indeed sensitive to oil prices in the medium term, and exporting nations won't be able to afford to subsidize their consumers if their exports are falling, even with high prices. Look at Iran: gasoline subsidies are an enormous problem for them, even now, and they're rationing gas. If gas prices rise, they will have restrain consumption growth even further.

On electric bikes, I like the following:

http://www.flytheroad.com/

http://gristmill.grist.org/story/2007/6/13/134640/851

http://www.killacycle.com/

Nick said at July 2, 2007 11:03 AM:

I made a math error: make that 12 years to get to 100M. I don't think that changes the basic, moderately optimistic conclusion that hybrids and PHEV's will provide an effective solution to peak oil in the medium term.

Randall Parker said at July 2, 2007 6:40 PM:

Nick,

On decline rates: It is my understanding from comments at The Oil Drum that the North Sea's been declining at 8% per year.

As for the US decline rate: The slope is sharper a few years after the peak than 30 years after. Also, you have to separate out the lower 48 on land from Alaska and offshore and treat them as separate categories.

Also, the US lower 48 didn't get as high a percentage of its oil out before peak than is the case for later oil fields. We didn't have the enhanced extraction technologies in the 1960s. A field coming online much later (e.g. the North Sea) could get more efficiently drained of oil and therefore have a sharper declining slope. US fields got subjected to enhanced extraction post-peak versus later fields that start getting it pre-peak.

Nick said at July 3, 2007 9:02 AM:

Yes, I've been reading TOD for a while, though I've stopped commenting, due the very great negativity, and lack of expertise of the majority of commenters. That's something to be wary of: your perspective can get warped by their unwarranted pessimism. The posts (substantive lead articles) aren't nearly that pessimistic, but that's easy to forget, reading the comments.

Sure, there are countries/regions that are declining at 8%, but there are others that are growing or stable. If you look at a consolidated chart of all of the peak oil models, they all have smooth inflection points, with decline rates that gradually accelerate. The most pessimistic approach is the "export" model, which roughly speaking takes a second derivative of the decline. I've addressed that previously.

The US is an example of a fairly stable area, with a low and apparently decreasing rate of decline. It's true that this picture changes if you select sub-areas, and that this is useful for analysis purposes, but the most important thing is the overall picture.

Also true that some areas are likely to decline a bit faster post-peak than the US. OTOH, newer categories of liquid fuels must be included in the overall picture. As noted above, it's useful to break down things for analysis, in this case breaking fuels into sub-categories like sweet,light crude (which undoubtedly has peaked already), but for the overall picture you have to include NGL's, bio-fuels, tar-sands, etc.

All in all, I expect oil production/consumption to be fairly stable for 4-6 years, and then to start declining gradually, say 1-3% for at least another 4-6 years. That's still a bumpy ride, but with a little luck (i.e., barring invasions, etc) we'll get through it, albeit in much greater debt to the ME (which, of course, is a topic in itself. Suffice it to say that I think ME oil suppliers understand PO quite well, and will be happy to accumulate T-bills in preparation for the final depletion.

Randall Parker said at July 3, 2007 10:43 PM:

Nick,

The UK North Sea fields production declined 7.8% in the last year:

The decline in oil and gas production in the UK North Sea continued in April, despite record investment in 2006, in what economists at Royal Bank of Scotland said was another sign that the province is maturing rapidly.

The latest oil and gas index from Royal Bank shows that combined average daily oil and gas production for the UK Continental Shelf stood at 2,823,141 barrels of oil equivalent per day (boe/d) in April. This was about 2.3% lower than in March, ending a run of six consecutive monthly increases. The underlying rate of production continued on a firmly downward trend, falling 7.8% compared with April last year.

So once we reach the steepest section of the downhill post-peak slope the changes in oil availability from year to year will be quite large and consistently for the worse.

Nick said at July 4, 2007 9:57 AM:

Sure, what you just wrote is consistent with what I said, but the question is timing.

Wells, and fields, and regions have been depleting ever since oil was discovered in Pennsylvania (Pennzoil....). The Saudis will tell you that their individual wells normally deplete at 8%, even while reassuring you about their overall output. This has always been handled by drilling more wells in a field, and finding new fields.

Hubbert's insight was that in any given region, like the US's lower 48, eventually you run out of new fields. And of course, that applies to the world as a whole. Oil & Gas veterans will tell you that we're very far from running out of new fields in the world, and of course that's true - there's a great deal in Africa, in deep water, in the Arctic, in tar sands, etc.

The problem is that the easy stuff is running out, and the more difficult stuff has lower flow rates. Replacement of existing production quickly enough is going to be unlikely, and so we have peak oil.

But, will the world look like the North Sea? No. There will be regions, like the US, that decline more slowly. There will be new fields and production, even if it's not enough to prevent peak, like Alaska for the US. There will be new forms of liquids: NGL's, bio-fuels, tar-sands, etc.

Also, while the market is imperfect, it will respond, and the world markets will respond differently than one region. We saw a partial market response in the 70's, when US peak allowed OPEC to take control of pricing. Then, prices rose dramatically and consumption levelled off for quite a while. This threw off predictions of peak in the 90's, which were based on a smooth, exponentional rise to peak. Of course, the world and the markets forgot that signal in the 80's and 90's, but now consumption is levelling off again, and lopping off the peak and pushing production later again.

In the 80's prices dropped again, and investment fell off. Prices are likely to stay high now, and investment is rising, which will slow the decline.

If we're lucky, and don't shoot ourselves in the foot with an invasion of Iran, or have the Iraq war turn into a ME civil war, we're likely to get through this ok. Not great - at best we'll have a lot of debt to oil producers, and there certainly is also the risk that producers will stop being so excited by lending to us, but with a little luck we'll be OK.

Of course, we should be moving to reduce our risks, and our debt, by increasing efficiency, conservation, and alternative energy ASAP.

Randall Parker said at July 4, 2007 10:44 AM:

Nick,

On the slope of the post-peak oil production decline see Stuart Staniford's Hubbert Theory says Peak is Slow Squeeze and Extrapolating World Production.

A few points:

A) Initially world production decline won't be as sharp as decline in any one field since newer smaller fields will still be coming online and some existing fields won't have peaked yet.

B) But world demand will be growing and the OECD countries will get less of the total shrinking pie.

C) However, unconventional liquid fuel sources (e.g. coal-to-liquid and oil shale) will also reduce the slope of the overall decline once conventional oil peaks.

D) The early years will see a less sharp decline and give markets time to start adjusting to the new conditions.

E) The biggest wild card is how fast we can convert to use of electricity to power transportation. I tend toward optimism on that score.

Nick said at July 4, 2007 11:24 AM:

I think we're in agreement. I've been following Stuart's analyses for quite some time - they're very high quality.

Another thought: PO pessimists tend to forget that adaptation is slow to start with, and accelerates, because of the time required to become confident that the new situation is permanent; the lags inherent in capital expenditure; and the nature of exponential change. They see the small initial response, and get discouraged.

On point B, I agree, but I don't think that's a big deal. Efficiency & substitution can allow this to happen without too much of a problem. This is already happening: Japanese oil imports have fallen 11% from last year.

Nick said at July 4, 2007 11:35 AM:

Hmmm. I guess that last paragraph tried to cover too much ground, as after we analyze decline rates, we're still left with the important question: how quickly can we adapt? I'm optimistic, but it is a large topic. Still, I'm really struck by the news from Japan. The Japanese take energy very seriously....

Randall Parker said at July 4, 2007 11:46 AM:

Nick,

One advantage we have in the early years is that we drive such big cars. We can shift to smaller cars and to hybrids at the same time and double our gas mileage.

In other words, we have the technology and the flexibility to greatly reuse our energy usage. I read TOD posters who claim that Europe is better positioned to adapt to Peak Oil than profligate Americans. But they miss the obvious point: People who are wasteful (i.e. Americans) can cut back much more easily than people who are already misers (i.e. Europeans).

Randall Parker said at July 4, 2007 2:18 PM:

Nick,

Reading Stuart Staniford's Why We Drive brought up the following questions:

1) Will highway or rail construction costs go up faster in the future?

2) Does it make sense to run rails down some highway lanes (Engineer-Poet argues for this elsewhere) to lower rolling resistance for trucks and even cars - at least while they are on highways? Basically have two sets of wheels in each vehicle, with rubber tires for surface roads and steel wheels for highways.

Nick said at July 4, 2007 3:42 PM:

I would take the viewpoint that both Europeans and Americans are reasonably well positioned. Europeans use about 16% as much fuel per person (higher MPG, fewer cars, fewer miles/car), which means they can comfortably pay for imports, even if the price rises. They're into diesels, which are a technological blind alley, but they're less dependent on cars, and they'll have time to switch to PHEV's.

OTOH, the US can switch to much higher vehicles reasonably painlessly given a little time. We have been, and will be, sending a lot more $ to oil exporters than we can afford, but we're on a good growth path towards hybrids, PHEV's and EV's.

Also, we have still have relatively very good domestic energy resources. If we were to reduce our oil consumption by 60% (which won't be that hard) we would be self-sufficient.

Nick said at July 4, 2007 7:40 PM:

"Will highway or rail construction costs go up faster in the future?"

I would guess highway, with the fast rise in asphalt costs. Of course, we could dramatically reduce the cost and frequency of highway construction & maintenance if we could get the freight off of long-haul trucks and onto rail.

"Does it make sense to run rails down some highway lanes"

I don't think it's very practical. It seems to me to make much more sense to go to inter-modal freight. It accomplishes the same thing, it elimintates the labor of the truck driver, it's easy, and being done right now. This concept, IIRC called Bladerunner, would have a very high capex, and require a very large critical mass of infrastructure to work.

You can do the same thing for passenger traffic, by the way, and it works well. Just drive your car to the train station, and hop on the train while they load your car on the train. Have an easy trip, and have your car when you get there. Another alternative for long-distance travel is rail or plane between city hubs, and car-sharing once you get there. Take a look at Zipcar.com . I use it, and like it very much.

I would note that single occupancy EV's are as efficient as electric rail, more efficient than diesel rail. An ev with four people, of course, would be 4x as efficient as electric rail, and even more efficient than diesel rail.

Jack Toronto said at November 22, 2010 10:07 AM:

Things are just going to get worse if we keep thinking like we did in the industrial revolution. We need to get over out combustible-driven engine system and pool our resources into something more economically viable, such as solar hydrogen power!

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