October 08, 2009
Range Of Peak Oil Dates All Too Soon To Prepare?

The range of dates over which Peak Oil is expected to happen does not provide enough time for governments to prepare policies to mitigate the impacts.

The debate over exactly when we will reach "peak oil" is irrelevant. No matter what new oil fields we discover, global oil production will start declining in 2030 at the very latest.

That's the conclusion of the most comprehensive report to date on global oil production, published on 7 October by the UK Energy Research Centre.

Steve Sorrell, the report's author, argues that even 2030 is too soon for governments to prepare. Yes, governments can't prepare. I used to think it was worth trying to get them to prepare. Now I expect the only policies we'll get that help prepare for Peak Oil will come as a side effect of trying to reduce CO2 emissions for climate.

If we were lucky (and I do not think we are) then Peak Oil wouldn't happen until 2030. By then costs of electric cars will have fallen enough to make a big shift to electric transportation practical. Plus, genetic engineering of algae might make algae biodiesel a practical (albeit probably more expensive) alternative for longer range ground travel. But my guess from all my reading is that the peak comes much sooner. So the adjustment will be wrenching.

If you are an entrepreneur or inventor prepare by developing post-peak solutions for the marketplace. Got any ideas?

Share |      Randall Parker, 2009 October 08 11:02 PM  Energy Policy


Comments
random said at October 9, 2009 7:54 AM:

How much oil is used to produce electricity that could be used for other things? (heating, cars, manufacturing, etc.) Given that these power plants are single entities controlled by a relatively small number of players, I think it would make most sense to eliminate them first. Perhaps it could be done by government buyouts or subsidies for alternative energy production.

JAY said at October 9, 2009 8:45 AM:

Peak oil is a myth. We will reach peak oil slightly after we reach peak sand.

tvoh said at October 9, 2009 10:03 AM:

Ken Deffeyes first started claiming peak would happen about 2005. It has become a moveable feast. My good man, a tad of the skeptic is called for here.

Bruce said at October 9, 2009 10:14 AM:

What about Peak Oil Shale? 2100?

Peak Methane Hydrates? 2200?

Peak Coal? 2500?

We got energy out the wazoo.

Richard Shultz said at October 9, 2009 10:58 AM:

Look at CMT4Austin.org
This web site explains how we can use vans , along with buses, to improve public transit and cut
energy use per passenger mile. Plug-in hybrid vans with quick recharge batteries would carry 14 riders the last 2 miles from transit center to employer in low density commercial areas. These vans would make several 4 miles trips per hour and then recharge for 10 minutes. They could go all day without using gasoline.

not anon or anonymous said at October 9, 2009 11:15 AM:

I have to agree with tvoh and bruce. If there was convincing evidence that a "peak" in oil production is imminent, surely this would have some influence on the crude futures markets. Yet oil prices are quite far from the all-time highs which where reached in 2007 and 2008.

If peak oil ever becomes a genuine concern, this will most likely ignite yet another boom (bubble?) in the oil exploration, alt. energy and transportation industries.

Lono said at October 9, 2009 3:18 PM:

Peak Oil's a friggin' Joke...

9/11 was clearly an INSIDE job...

Please people - don't continue to be fooled by the man behind the curtain...

RP said at October 9, 2009 10:07 PM:

I love these comments. At least we don't need to wonder why governments haven't prepared.

Randall Parker said at October 9, 2009 10:10 PM:

random,

In the United States very little oil is used for electric power generation. Oil costs much more per million BTUs than natural gas and natural gas costs more (at least double at the moment) than coal. So we get about half our electric power from coal, 20% from nuclear, and then natural gas, hydro, and other sources.

We do not have a problem with generating electricity. Our problem is with liquid fuel. 95% of all energy used in transportation comes from oil.

What we really need are ways to power transportation off of electric power. The easiest part of transportation to switch to electric power is rail. There's no need for batteries with electrified rail.

The key tech we need for electrified transportation is better batteries.

tvoh,

It remains to be seen whether Deffeyes was right about 2005. Briefly in 2008 we hit a new world peak. But if we take yearly average production then 2005 is still the world peak in production so far.

The reason the date of Peak Oil is so hard to call is that some countries keep secret the data we'd need to judge the long term potential of their oil fields. We do not have good visibility into either Saudi Arabia or Russia most notably.

The International Energy Agency projects a peak in 2020. They used to project a peak in 2030. But the data they collected more recently on decline rates in existing fields makes them think the peak is coming much sooner. Charley Maxwell projects 2015. The IEA and Charley Maxwell know far far more about oil fields than you do. You would do well to take them seriously.

M. Simon said at October 10, 2009 5:59 AM:

The Saudis want subsidies because they expect the world will be using less oil in the future. What they need to do is develop the market for sand. Countries in Asia are limiting or eliminating sand exports.

BTW in the US due to new drilling technologies the amount of natural gas available is expected to last 100 years. It may be more. We don't know because exploration has slowed due to low prices.

And if Herbert Gold is right? We have at least 1,000 years of oil left. Maybe 10,000.

Reid said at October 10, 2009 9:45 AM:

The first Peak Oil scare took place in 1903 and has been repeated about every 10 years since. Whether the current Peak Oil hysteria is correct or not is irrelevant since it has nothing to do with running out of energy. If oil production drops the price of oil will rise forcing a switch to cheaper natural gas or other energy sources.

Peak Oil is a big yawn.

PacRim Jim said at October 10, 2009 10:26 AM:

All this speculation ignores the real possibility that enabling technologies such as nanotechnology will alter the paradigm. Never disregard the occasional occurrence of happy accidents. Count on one a decade, with the pace accelerating after that.

Randall Parker said at October 10, 2009 4:53 PM:

PacRim Jim,

When?

You can always imagine the prospect of a deus ex machina solution. But what if that doesn't happen? Lots of decades have gone by without that solution developing. Sure, there's lots of nanotech research going on. But if the solution was easy it'd already exist.

What happy accident happened in the last decade that is on a sufficient scale as to compare with a shift away from oil? What about in the previous decade? I can point to the continuing acceleration of computer and network capacity. But what really new development made a big impact in the last 20 years outside of computing? I'm struck by how little everything else changed.

John Moore said at October 10, 2009 9:38 PM:

2 words: goal gassification.

Bye bye, peak liquid petroleum.

Not to mention oil shale and oil sands, as a previous commenter pointed out.

As for dexu ex machina - I see more of that sort of thinking in the energy storage world - especially batteries for mobile use.

It seems like folks believe that extremely rapid improvement in one area of technology (such as digital electronics) is fungible, and can be moved to the energy world.

Meanwhile, I watch other trends... how fast have disk drive access speeds increased (4x in 30 years)? The current internet latency coast-to-coast is only ten times better than the original ARPA-net design goal of the early '70s (or there-abouts). Life spans have increased only a few percent in that time.


Some technologies are mature; some are not. Batteries will improve, some, due to evolutionary improvements (for example, aided by nanotech) but they have a hard limit. Hoping for too much is like pushing a rope - all wiggles, no progress.

Energy density of gasoline is about 12000 WH/kg, while battery folks get excited at 600.

Randall Parker said at October 10, 2009 11:24 PM:

John Moore,

I'm beginning to think that natural gas will play a significant role in transportation when world oil production starts falling. Scaling up production of natural gas-powered vehicles should be pretty easy to do. The components aren't hard to manufacture. It'll be much easier in areas where natural gas is already widely used for other purposes.

Hybrids, pluggable hybrids, and natural gas for cars will all play bigger roles.

RP said at October 11, 2009 1:00 AM:

Why we use natural gas to produce electricity is beyond me. Talk about turning gold into lead. We need to build nukes. Starting about 10 years ago.

John Moore said at October 11, 2009 11:05 AM:

RP - I agree that NG may help, if the anti-CO2 forces don't stop it, or it doesn't all end up in electricity generation due to the no-nukes de-facto policy of the US. The biggest problem with CNG is infrastructure - where to fill up. If you drive an extra ten miles to get your CNG, that's a problem.

Note that if coal-gassification can provide CNG equivalent also, using a fuel that we have enormous amounts of - or you can go on and make liquid hydrocarbon. From what I have read, coal gassification is competitive at roughly current oil prices. I think we should be encouraging that approach strongly, but the one thing environmentalists hate more than nuclear is coal.

BTW, one approach that may work for batteries is fast-swapping them at former gas-stations. That would require standardization (which would imply a technological choice lock) and a bunch of infrastructure, but it would allow the use of electricity where long charges aren't appropriate. Here in Arizona, btw, you need 5 kWh/h just to keep your AC going.

Reid said at October 12, 2009 9:33 AM:

Back in the 1970's during a prior Peak Oil scare, the Saudi petroleum chief Shiek Yamani famously said "The stone age did not end because we ran out of stones and the petroleum age will not end because we run out of petroleum". His comments are just as correct today as they were 30 years ago.

Nick G said at October 12, 2009 4:36 PM:

Randall,

Batteries are more than good enough - the problem is just ramping up production of extended range EVs like the Volt and plug-in hybrids. Their only problem is price, and that's also good enough, at about $350/KWH and falling - see http://gm-volt.com/2009/10/02/compact-power-ceo-on-the-cost-of-lithium-ion-batteries/

Annual production of both crude & condensate and total liquids hit peaks in 2008. You can see it in the charts put out on TOD. The C&C peak was small, but visible. The total liquids peak was quite pronounced. I suspect that Maxwell is right - still, markets do still matter.

Aleklett, int'l president of ASPO, projects only an 11% decrease in total liquids by 2030 ( See page 40 of the presentation: http://www.aspo-australia.org.au/References/Aleklett/20090611%20Sydney4.pdf ). That's not that bad.

Randall Parker said at October 12, 2009 5:40 PM:

John Moore,

Yes, the hydro-fracturing techniques for natural gas extraction from shale have turned up the amount of natural gas available. But it'll take a sustained high ratio of oil to natural gas prices in order to provide incentives to switch to much less convenient natural gas vehicles. It'll happen. It'll lessen the pain of dealing with declining oil production. But it'll take expensive oil and much less expensive natural gas to make it happen.

Nick,

Aleklett: Yes, when I first read about his projections on TOD I was surprised. 11% decline globally is more than 11% decrease per capita in the US though. Chinese demand is going to surge in the 2010s as the number of cars on China's roads double, double again, and double again. We are probably going to have to cut back oil consumption 30-40-50% even if oil production globally only declines 11%.

I like this quote from the Compact Power CEO:

but I fully expect over the next 5 to 10 years for the cost to get better by anywhere from a factor of 2 to 4 in terms of dollars per kwh as compared to where we are now.

A factor of 4 decline in 10 years from $350 per kwh would put us at $88 per kwh, Then in order to get 200 mile range at, say, 300 wh/mile (more than a compact) we'd need 60 kwh times $88 = $5280. Probably higher than that to avoid full discharge. But maybe full discharge will not be as big of a wear on the battery by then. But say $7000. For $7000 per car Peak Oil doesn't matter and some of that $7000 is earned back by avoiding an internal combustion engine. So how much saved by no ICE?

John Moore said at October 12, 2009 10:27 PM:

That's an expensive "gas tak!"

Of course, the engine is then reallly simple

Randall Parker said at October 13, 2009 10:14 PM:

Krazilec,

The shale natural gas news certainly is good. Just how good is still not clear. We need to find out more about the production decline rates of wells drilled into shale formations. The problem is that this is still pretty new and it is my impression that the Haynesville shale has the most production data history and Fayetteville, Marcellus, et al aren't as well understood.

It comes down to price. How many dollars to get 1 million BTU of natural gas out of the ground? What's the long term break-even point for most of the shale gas?

We currently use a large portion of the natural gas for electric power generation and little for transportation. If we want to make an easier transition as a result of Peak Oil then we need to shift to electric and natural gas powered vehicles and then use nukes, wind, solar to generate the electricity for the electric cars while using the natural gas directly in the vehicles.

Randall Parker said at October 13, 2009 10:16 PM:

On shale natural gas also see this New York Times article: New Way to Tap Gas May Expand Global Supplies.

Nick G said at October 14, 2009 11:36 AM:

So how much saved by no ICE?

Of course, electricity is much cheaper than fuel: 12k miles would cost perhaps $400, instead of the $1,500 average today. That would also pay for the battery.

For a long time, the sweet spot will be something like the Volt, with a 16KWH battery and 10% of the fuel consumption.

Wayne Conrad said at October 14, 2009 3:34 PM:

Assumes facts not in evidence: That government is the solution.

If you let prices float to the free market, without any "sin" taxes on certain kinds of energy or subsidies to the development and use of others, then as the price of an energy source rises, the market will seek the best alternatives. There's no crisis requiring government intervention. With government meddling in prices structures, the free flow of information (in the form of prices) will be hampered and people will either do the wrong thing (if those in government picked to back the wrong energy source), or people will do the right thing less efficiently, since much of their money they would have used anyway to do the right thing is now going through government's hands (and not all of it coming back).

John Moore said at October 14, 2009 8:53 PM:
Of course, electricity is much cheaper than fuel: 12k miles would cost perhaps $400, instead of the $1,500 average today. That would also pay for the battery.

This does not logically follow. I've priced it here and there is nowhere close to that savings - and electricity rates are going to rise rapidly - perhaps more rapidly than oil. Somebody has to pay for all the new generation and distribution capability.

Nick G said at October 15, 2009 9:11 AM:

I've priced it here and there is nowhere close to that savings

Well, if you want to reproduce that here, I can comment on it. In fact, I believe I was conservative - I assumed $.10/KWH, whereas many people will charge at night under lower-priced time-of-day pricing; and I assumed a lower than average annual mileage.

The calculations are simple: the average US vehicle gets about 22 MPG, and drives about 13,000 miles. @$2.75/gallon, that's $1,625/year. The Chevy Volt gets representative miles/KWH of 4, which @$.10/KWH gives costs of $325/year. The difference is $1,300/year.

electricity rates are going to rise rapidly

Not really. Nuclear, coal, hydro costs are stable, despite a modest amount of new construction. As far as "all the new generation and distribution capability", I'm not aware of anything really massive. It would be nice if we built out 100GW of wind per year, but appears pretty unlikely. Smart meters won't cost that much, and will be rolled out pretty slowly, in the grand scheme of things.

I suppose cap and trade might raise coal generation costs - anybody have an idea how much?

Engineer-Poet said at October 17, 2009 8:28 PM:

What is it with the posters on this discussion?  Did someone leave the asylum doors unlocked?

  • Deffeyes was right, especially about total energy.  The natural-gas liquids the IEA counts in its totals have much less energy per barrel than crude oil.
  • For that matter, M. King Hubbard would have been right if the OPEC's price shocks during the 70's hadn't delayed demand growth and kept reserves in the ground longer.
  • Sadad al-Husseini, ex-head of exploration and production for Saudi Aramco, sees no increase in world oil production.  He spoke on-camera a few weeks ago and the interview was shown at the ASPO conference last weekend.  If you bet against him, you're a fool.
  • Oil shale is always "viable" at about $20/bbl above current prices.  This indicates that the accounting is bad, not looking at the energy required to actually crack the kerogen to liquids.  Once that is included, oil shale does not return enough energy on the energy invested to make it viable at any price.
  • Methane hydrates are there, but how do you gather such a diffuse resource?  And how do you do it without leaking huge amounts of methane to the atmosphere?
  • Oil prices hit $10/bbl in the "Asian Flu" recession of 1998.  Oil prices are now about $70 despite a far deeper worldwide recession, and world oil production did not exceed the 2005 peak for 3 years despite a steep increase in oil prices.  If you don't think that indicates a geological peak, you are deluded.
  • Natural gas isn't nearly as abundant as some people are claiming.  Sure, many shales are full of gas.  Many of these are also under such high pressure that they cannot be made permeable.  Others are so soft that cracks cannot be kept open; I overheard someone at ASPO refer to parts of one of the touted shales as "like peanut butter".
  • PacRim Jim seems to think that a happy accident will occur in energy supplies just when needed.  He doesn't seem to understand the meaning of "accident", nor the fact that things take 20 years to get to market.  The accidents we'll be using have already occurred, like reticulated vitreous carbon matrices for lead-acid batteries.
  • Coal liquefaction costs about $100k to get 1 bbl/day, and is perhaps 50% efficient.  Even if we could stand the CO2 emissions, we don't have the coal or the water to process it (the USA burns about 40 quads of oil per year, which would take nearly 70 quads of coal to replace; this would take more than a tripling of coal production).  Going electric is the only option for coal.
  • John Moore:  Check out Shai Agassi's scheme, Project Better Place.

<sarcasm> Obviously the free market is the solution, because it's done such a fine job of getting us off oil, as well as slashing air and water pollution and making diseases like polio extremely rare and even making smallpox extinct.  Oh, wait, those were government accomplishments.  Never mind.... </sarcasm>

Seriously, what we need to get off polluting energy in general and oil in particular is government action in the form of stiff taxes on it.  No mandates, no subsidies, just taxes (and maybe some infrastructure support for alternatives, to offset the support for oil implicit in the Interstate system).  If carbon and oil cost money, it will pay to use nukes, wind, and NGVs and people will flock to them.

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