Archive for the ‘Peak Oil’ Category

Oil Supply Crunch: 2011-2015

Wednesday, April 21st, 2010

Concerns are mounting about peak oil, and there continues to be much debate over when the peak will be reached, whether a plateau can be sustained or whether the onset of decline would occur quickly, whether we will hit peak demand before we hit peak supply, etc.

There is convincing evidence that conventional oil production has already peaked, since we have been stuck at around 74 mbpd for over half a decade (despite the incentive of record high prices).

There also seems to be growing consensus that global liquids production (currently around 86 mbpd) is likely to peak within the next decade and almost certainly at less than 95 mbpd.

(Mainstream opinion a few years ago predicted no peak before 2030, with output at 130 mbpd.)

However, there are increasing warnings about an “oil supply crunch” within the next few years, not because of geological constraints, but because of under-investment.

These warnings began just over two years ago, yet the mainstream media have rarely mentioned them, so the public remains largely unaware.

Listed below is a chronology of some of these warnings, with URL links to the original sources.

One of the first warnings came from the chief economist of the International Energy Agency, Fatih Birol in the summer of 2007 and then reiterated in Nov. 2007, cited here:

In May 2008 the Wall Street Journal ran an article entitled, Energy Watchdog Warns of Oil Supply Crunch:

This was followed by a study from Chatham House, a highly regarded think-tank in the UK. In August 2008, it published a paper entitled The Coming Oil Supply Crunch in which author Paul Stevens predicted a shortage within the next 5-10 years. His 40-page study (which includes a May 09 reaffirmation of his 08 prediction) is available here:

On Nov. 15, 2008 the International Energy Agency released its annual World Energy Outlook, which was something of a bombshell. The IEA, which had been quite dismissive of peak oil, suddenly warned, “What is needed is nothing short of an energy revolution… the era of cheap oil is over… time is running out….”

It further warned, “Some 30 mb/d of new capacity is needed by 2015. There remains a real risk that under-investment will cause an oil-supply crunch in that timeframe” (WEO, Executive Summary, p. 7).
The Executive Summary of the 2008 WEO is available here:


– research thanks to Tony H.

US military warns oil output may dip causing massive shortages by 2015

Monday, April 12th, 2010

• Shortfall could reach 10m barrels a day, report says
• Cost of crude oil is predicted to top $100 a barrel

The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.

The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day,” says the report, which has a foreword by a senior commander, General James N Mattis.

It adds: “While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”


– research thanks to Tony H.

Govt must get serious about peak oil

Tuesday, March 2nd, 2010

– It’s the same everywhere.  This is from a New Zealand newspaper.

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John de Bueger looks at the implications of “peak oil” and suggests New Zealand should be getting serious about it.

A predictable howl erupted when it was announced that some parts of the conservation estate might be opened-up to small-scale mineral extraction.

This contrasted markedly with the barely audible mutterings from the same quarter when Gerry Brownlee announced late last year that offshore oil exploitation from our continental shelf held the key to future prosperity, with likely annual exports of tens of billions of dollars.

Given that the Zealandia plate on which these islands float is about one-third the size of Australia, it follows that the potential of offshore oil and minerals dwarfs any onshore prospects, even if it was Otago placer gold that kick-started this country’s economic development.

My initial suspicion was that thoughts of mining in national parks was a just a decoy tactic to redirect eyes onshore while the foreshore and seabed issue was being thrashed out, but perhaps this is being a little too Machiavellian.

It is more likely that our Minister of Energy has little or no idea of the real worth of untapped oil reserves (anywhere), given the coming realities of peak oil.

When he was asked some questions on this matter at an energy conference late last year, he gave the impression that even if he had heard of the concept, he certainly hadn’t mastered its implications.

In this respect Gerry is exhibiting the archetypal behavioural response of the caveman – a condition I hasten to add that he shares with 95% of the human race, and 100% of politicians.

That is a total inability to rationally weigh the seriousness of future risks against pressing short-term expediency.

– More…

– Research thanks to Tony H.

The world according to ExxonMobil

Monday, February 15th, 2010

– The big insurance companies like Lloyd’s of London have a vested interest in getting their analyses right as they have big money riding on their predictive skills.

– One might argue that a company like Exxon might have a greater interest in ‘spinning’ their analyses.  But, they have to get it right with the version they’re using behind closed doors.   Here’s what they are publicly saying.   Makes for interesting reading.

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ExxonMobil – known as the world’s largest, most efficient, and most profitable oil company – has its own distinctive way of looking at the world. In its starkly realistic annual “Outlook for Energy”, it concludes that until 2030: CO2 emissions will continue to grow, fossil fuels will continue to dominate energy supply, and solar power, electric cars and carbon capture & storage will not become cost-competitive. But the company is not without idealism: it believes in the power of efficiency, dreams of turning algae into oil and favours a carbon tax over a cap-and-trade policy.

Todd Onderdonk, Senior Energy Adviser at ExxonMobil

Every year, energy giant ExxonMobil presents its own “Outlook for Energy”, its view of the world’s energy future until 2030. Although ExxonMobil’s outlook is based on essentially the same historical data as similar “outlook” reports from the International Energy Agency in Paris and the Energy Information Administration (EIA) in Washington, it offers in many ways a different – and fascinating – perspective on the world. It may well be – although this is something no one can say for sure – a more realistic, anticipatory vision than the one offered by the “official” energy institutions.

Todd W. Onderdonk, Senior Energy Adviser in ExxonMobil’s Corporate Strategic Planning Department, and one of the main authors of the “Outlook for Energy”, explains the uniqueness of ExxonMobil’s report as follows: ‘The energy outlooks of some key government institutions typically reflect a set of certain policy assumptions, which help provide a wide bracket of possible outcomes rather than a forecast of what is likely to happen by 2030. For example, they often provide a baseline outlook that assumes no changes in energy policy. By comparison, in developing an outlook to guide our long-term investment decisions, we have to take a view on how policies, energy markets and technology are likely to evolve through 2030 to address economic, energy and environmental challenges worldwide.


– Research thanks to Mike D.

China: The new Big Oil

Friday, August 21st, 2009

The country is snapping up oil fields from Africa to South America to the Middle East. Soon it may be able to rival the Western giants.

NEW YORK ( — China is on an oil buying binge.

Over the past few months, the Chinese government — or its big government-controlled oil firms — have closed or floated a slew of deals in countries all over the world. These deals have expanded the nation’s oil reach and may one day position the nation to match the skills of western oil firms.

The deals include a $10 billion loan the Chinese government extended to Russia’s Rosneft in exchange for a guaranteed cut of that company’s production. The Chinese have also gotten in tight with Brazil’s Petrobras, arranging a similar deal with the firm that is developing a huge new offshore field – one of the biggest new discoveries in decades.

But it doesn’t end with loans. Last week the Wall Street Journal reported that China National Petroleum Corporation is interested in buying all or a part of Argentina’s YPF for $14.5 billion, although a deal is far from certain.

In Africa, CNOOC and Sinopec are buying a $1.3 billion stake in offshore Angolan development rights from American oil firm Marathon. Angola has recently overtaken Nigeria as Africa’s biggest oil producer, and is one of Exxon Mobil’s (XOM, Fortune 500) favorite countries to invest in.

And rumors are swirling that the China National Petroleum Corporation will take the majority stake in Iraq’s Rumaila oilfield from BP (BP). Rumaila produces over 1 million barrels a day, and is Iraq’s biggest oil field.

It’s clear what the Chinese are doing.

“They are stilting on a huge pile of cash and they’re using this as a buying opportunity,” said Greg Priddy, a global energy analyst at the Eurasia group, a political risk consultancy.


BP stand for “back to petroleum” — oil giant shuts clean energy HQ, slashes renewables budget up to $900 million this year, dives into tar sands

Sunday, August 16th, 2009

You just can’t teach an old petro-dog re-new-able tricks.

The UK’s Guardian reports:

BP has shut down its alternative energy headquarters in London, accepted the resignation of its clean energy boss and imposed budget cuts in moves likely to be seen by environmental critics as further signs of the oil group moving “back to petroleum”.

Sad, but not terribly original or surprising (see “Shell shocker: Once ‘green’ oil company guts renewables effort“).

But Tony Hayward, the group’s chief executive, said BP remained as committed as ever to exploring new energy sources and the non-oil division would benefit from the extra focus of being brought back in house….

“It saves money and brings it closer to home … you could almost see it as a reinforcement [of our commitment to the business],” he said.

Paging Dr. Cal Lightman!

Seriously, they gut the program and claim it is “reinforcement” of their commitment.  Perhaps BP stands for “Beyond Prevarication” or “Beyond Pinocchio.”

In the business world, “money talks, bullsh!t walks” — so let’s follow the money (as it departs the BP clean energy biz):

BP Alternative Energy was given its own headquarters in County Hall opposite the Houses of Parliament two years ago and its managing director, Vivienne Cox, oversaw a small division of 80 staff concentrating on wind and solar power.

But the 49-year-old Cox -– BP’s most senior female executive, who previously ran renewables as part of a larger gas and power division now dismantled by Hayward -– is standing down tomorrow.

This comes alongside huge cuts in the alternative energy budget – from $1.4bn (£850m) last year to between $500m and $1bn this year….


Russia to build floating Arctic nuclear stations

Saturday, May 9th, 2009

– I’ve written about this looming problem of competition for resources in the Arctic before: , , , , , and .

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Environmentalists fear pollution risk as firms try to exploit ocean’s untapped oil and gas reserves

Russia is planning a fleet of floating and submersible nuclear power stations to exploit Arctic oil and gas reserves, causing widespread alarm among environmentalists.

A prototype floating nuclear power station being constructed at the SevMash shipyard in Severodvinsk is due to be completed next year. Agreement to build a further four was reached between the Russian state nuclear corporation, Rosatom, and the northern Siberian republic of Yakutiya in February.

The 70-megawatt plants, each of which would consist of two reactors on board giant steel platforms, would provide power to Gazprom, the oil firm which is also Russia’s biggest company. It would allow Gazprom to power drills needed to exploit some of the remotest oil and gas fields in the world in the Barents and Kara seas. The self-propelled vessels would store their own waste and fuel and would need to be serviced only once every 12 to 14 years.

In addition, designers are known to have developed submarine nuclear-powered drilling rigs that could allow eight wells to be drilled at a time.

Bellona, a leading Scandinavian environmental watchdog group, yesterday condemned the idea of using nuclear power to open the Arctic to oil, gas and mineral production.

“It is highly risky. The risk of a nuclear accident on a floating power plant is increased. The plants’ potential impact on the fragile Arctic environment through emissions of radioactivity and heat remains a major concern. If there is an accident, it would be impossible to handle,” said Igor Kudrik, a spokesman.

Environmentalists also fear that if additional radioactive waste is produced, it will be dumped into the sea. Russia has a long record of polluting the Arctic with radioactive waste. Countries including Britain have had to offer Russia billions of dollars to decommission more than 160 nuclear submarines, but at least 12 nuclear reactors are known to have been dumped, along with more than 5,000 containers of solid and liquid nuclear waste, on the northern coast and on the island of Novaya Zemlya.


– Hat tip to Cryptogon for this story

Nuclear Power Cannot Solve Climate Change

Wednesday, April 8th, 2009

A new report finds that nuclear power plants cannot be built quickly enough and in a safe and secure manner to be a major global solution for climate change

Nuclear power plants cannot be built quickly enough and in a safe and secure manner to be a major global solution for climate change, according to a report released yesterday from the Carnegie Endowment for International Peace.

The report says the nuclear industry, under current policies and financing, won’t be able to build enough new reactors to make a difference in climate in the next 20 years.

“Without major changes in government policies and aggressive financial support, nuclear power is actually likely to account for a declining percentage of global electricity generation,” the report says.

The International Energy Agency’s World Energy Outlook 2008 projects that without policy changes, nuclear power’s share of worldwide electricity generation will drop from 15 percent in 2006 to 10 percent in 2030.

But policymakers should be aware of the timeline, costs and risks nuclear power brings as compared to the possible benefits, before expending a tremendous amount of resources on it, the report says.

Bottlenecks in the nuclear supply chain, weak infrastructure in developing countries and tighter credit risk management strategies in the wake of the economic crises will severely limit all countries’ capabilities to significantly expand their nuclear fleet, while the current fleet of reactors is likely to be retired by 2030, the report said.

The earliest the first new U.S. reactor could be finished is 2015, but the report notes that it takes about 10 years to put a new plant in service, from licensing to connection to the grid. In two dozen countries that are interested in obtaining civil nuclear energy but have not previously built a reactor, it will take even longer, the report says.


Global crisis ‘to strike by 2030’

Wednesday, April 8th, 2009

Growing world population will cause a “perfect storm” of food, energy and water shortages by 2030, the UK government chief scientist has warned.

By 2030 the demand for resources will create a crisis with dire consequences, Prof John Beddington said.

Demand for food and energy will jump 50% by 2030 and for fresh water by 30%, as the population tops 8.3 billion, he told a conference in London.

Climate change will exacerbate matters in unpredictable ways, he added.


“It’s a perfect storm,” Prof Beddington told the Sustainable Development UK 09 conference.

“There’s not going to be a complete collapse, but things will start getting really worrying if we don’t tackle these problems.”

Prof Beddington said the looming crisis would match the current one in the banking sector.

“My main concern is what will happen internationally, there will be food and water shortages,” he said.

“We’re relatively fortunate in the UK; there may not be shortages here, but we can expect prices of food and energy to rise.”

The United Nations Environment Programme predicts widespread water shortages across Africa, Europe and Asia by 2025.

The amount of fresh water available per head of the population is expected to decline sharply in that time.


What we need vs. what we’ll get

Friday, April 3rd, 2009

– The current G-20 meeting has stirred a lot of commentary and hope.   The world has a lot of problems and there’s always the possibility and the hope, when a significant number of world leaders come together to talk about those problems, that they’ll make decisions that will improve things.The Browns and the Obamas

– Below, is an analysis by George Friedman of STRATFOR of the G-20 meeting and what’s likly to come out of it along with a look at a follow-on NATO meeting and an Obama-EU summit.  There’s even discussion of President Obama’s upcoming visit to Turkey, which will be his last stop on his current international trip.

– Other commentators might go through these same subjects; G-20, NATO, EU and Turkey and come to somewhat different conclusions about their meanings and prospects but I seriously doubt that anyone could seriously avoid my final conclusion – that what the world needs is not what the world is going to get out of all these meetings and pontifications.

– In the near-term, we need unified global strategies to pull the world out of the current economic melt-down.

– And, following immediately on the heels of such economic repairs, we need a deep recognition that mankind’s current dominate economic system, Capitalism, even when working well,  cannot continue as it is currently configured.   Its fundamental requirements of continuing growth and consumption to fuel itself, are axiomatically inconsistent with the fact that we live on a planet with finite resources.

– And, once we’ve rethought our basic economic systems and globally began to reorient them into something that focuses on sustainability rather than growth, then we need to move onto how we, globally, are going to defuse all the ecological and climatic destruction we’ve set in motion which is threatening to reset our climate and to initiate another major ecological die-off like the one that took out the dinosaurs 65 million years ago.

– That’s all.  It’s not much to ask, right?   Surely,the best and the brightest of our national leaders can see that these are the paths forward?

– Well, I wish I thought so, but I don’t.  Friedman’s analysis makes clear that in spite of the fact that we need radical new thinking, these meetings will end up driven by narrow national interests as nation jockeys against nation to see who’s going to do the work and pay the bills.

There’s your future, folks.– It’s as if we’re all sitting in a lifeboat at sea and we’re having meeting after meeting about how to best arrange the seating in the boat to determine who has to row and who gets to just sit and benefit. And all the time, the boat is slowing but inexorably sinking but no one can be bothered to talk about that because… because?     Damned if I know.

– Here’s George Freidman’s analysis.   See what you think:

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Three major meetings will take place in Europe over the next nine days: a meeting of the G-20, a NATO summit and a meeting of the European Union with U.S. President Barack Obama. The week will define the relationship between the United States and Europe and reveal some intra-European relationships. If not a defining moment, the week will certainly be a critical moment in dealing with economic, political and military questions. To be more precise, the meeting will be about U.S.-German relations. Not only is Germany the engine of continental Europe, its policies diverge the most sharply from those of the United States. In some ways, U.S.-German relations have been the core of the U.S.-European relationship, so this marathon of summits will focus on the United States and Germany.

Although the meetings deal with a range of issues — the economy and Afghanistan chief among them — the core question on the table will be the relationship between Europe and the United States following the departure of George W. Bush and the arrival of Barack Obama. This is not a trivial question. The European Union and the United States together account for more than half of global gross domestic product. How the two interact and cooperate is thus a matter of global significance. Of particular importance will be the U.S. relationship with Germany, since the German economy drives the Continental dynamic. This will be the first significant opportunity to measure the state of that relationship along the entire range of issues requiring cooperation.

Relations under Bush between the United States and the two major European countries, Germany and France, were unpleasant to say the least. There was tremendous enthusiasm throughout most of Europe surrounding Obama’s election. Obama ran a campaign partly based on the assertion that one of Bush’s greatest mistakes was his failure to align the United States more closely with its European allies, and he said he would change the dynamic of that relationship.

There is no question that Obama and the major European powers want to have a closer relationship. But there is a serious question about expectations. From the European point of view, the problem with Bush was that he did not consult them enough and demanded too much from them. They are looking forward to a relationship with Obama that contains more consultation and fewer demands. But while Obama wants more consultation with the Europeans, this does not mean he will demand less. In fact, one of his campaign themes was that with greater consultation with Europe, the Europeans would be prepared to provide more assistance to the United States. Europe and Obama loved each other, but for very different reasons. The Europeans thought that the United States under Obama would ask less, while Obama thought the Europeans would give more.


– research thanks to Michael M.