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Peak oil meets climate changeThe numbers game of the century
Jeremy Leggett
US-48
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Hubbert predicts
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Campbell & Laherrere: the first oil industry early-toppers speak
out
Late Toppers:
Topping Point (peak of production) in 2030s“Forty years supply at least” (Lord Browne, 2004)
• Believers: most oil companies and OPEC almost all financial analysts & journalists all governments and agencies, e.g. IEA
• Implications: economies can continue growing in principle there will be time to develop alternatives
Everyone agrees oil is finite There are two views of quite how: 1
Early Toppers:
Topping Point (peak of production) this decade …and the market will wake up to this soon
• Believers: a growing number of dissident experts …….mostly oil company geologists some financial analysts & journalists some futures traders
• Implications: economies will be dislocated there will be no time to develop alternatives
Everyone agrees oil is finite There are two views of quite how: 2
The Peak Oil stakes: summary
“A serious demand-supply discontinuity could lead to worldwide economic chaos.”
DoE Office Naval Petroleum & Oil Shale Reserves, 2005
“We are not good at recognising distant threats even if their probability is 100%. Society ignoring this is like the people of Pompeii ignoring the rumblings below Vesuvius.”
James Schlesinger, former US Energy Secretary, 2005
Leggett’s qualifications on this issue
• Geologist consulting in the oil industry, 1980–1989– Research funding from BP, Shell, among others, at Royal School of Mines,
Imperial College, including for oil source rock studies and seismic stratigraphy.
– Taught on petroleum geology and engineering undergraduate and postgraduate courses.
– Exploration and consultancy with Hydrocarbon Development Institute of Pakistan, Japan Petroleum Exploration Corporation among others.
– Two major international awards for research from the premier UK professional body for geologists, the Geological Society.
• Environmental campaigner (energy), 1989-1996– At the international Climate Convention negotiations and the
Intergovernmental Panel on Climate Change.
• Renewable energy industry executive, 1997-present– Founding director of world’s first renewable energy private equity fund,
Bank Sarasin’s New Energies Invest AG, 2000-present.– CEO of UK’s largest independent solar solutions company 1999-present.– Member of UK Government’s Renewables Advisory Board 2001-2006.
Real Discovery Trend
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Gb
Past discovery Future discovery Past production
World
Expectation of future production
?
Real Discovery Trend
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1930 1950 1970 1990 2010 2030 2050
Gb
Past discovery Future discovery Past production
World
Expectation of future production
Future production
Dwindling discoveryStatistics for “giant” oilfields of 500 million barrels of moreContext: at >80 million barrels per day current global demand, 500 mb is less than a week’s global supply
• In 2000 there were 16 discoveries
• In 2001 there were 9
• In 2002 there were just 2
• In 2003 there was 1
• In 2004 none
• In 2005 there was 1Source: Petroleum Review
The demand /supply challenge summarised
• We need 2-3 million barrels per day more each year (c. 1.8% growth rate)
• We are depleting at 4-5 mbd each year• So in total we need to find 6-8 mbd of
new oil each year
….one Saudi Arabia every year and a bit
….How did we do in 2005? 3.7 mbd
“It can’t be done indefinitely. It’s not sustainable.”
Sadad al-Husseini, former head of Exploration and Production, Saudi Aramco, August 2005
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duct
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Gas
NGLs
Polar Oil
Deep Water
Heavy
Regular
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duct
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NGLs
Polar Oil
Deep Water
Heavy
Regular
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Pro
duct
ion,
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e/a
Non-con Gas
Gas
NGLs
Polar Oil
Deep Water
Heavy
Regular
Second energy crisis 1979
to 1981
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65
19
70
19
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19
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00
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$80
$60
$40
$20
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1
2
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prices of the day
2003 prices
Pea
k oi
l
Second energy crisis 1979
to 1981
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
$80
$60
$40
$20
?
1
2
34 5
6
prices of the day
2003 prices
Pea
k oi
l
A quarterly audit of 2006
Climate change Oil depletionThreat of “explosive” Greenland ice collapse: 10 years to act, says NASA
Kuwait fears only half its reported reserves are real …& may not produce them!
Lloyd’s warns climate change can destroy the insurance industry
Oil sands companies turn to mergers as costs spiral out of control
Ocean acidification is killing corals, US govt agencies warn
BP faces criminal court over corroding pipelines & exploding refineries
US Supreme Court will rule on emissions case brought by states
IEA warns non-OPEC oil will soon peak & current energy course is “doomed to failure”
CO2 concentrations > long-run average: fear of runaway effect
Russia: oil-and-gas nationalism now overt and rampant
Q1
Q2
Q3
Q4
1.07
A quarterly audit of 2006
Climate change Oil depletionThreat of “explosive” Greenland ice collapse: 10 years to act, says NASA
Kuwait fears only half its reported reserves are real …& may not produce them!
Lloyd’s warns climate change can destroy the insurance industry
Oil sands companies turn to mergers as costs spiral out of control
Ocean acidification is killing corals, US govt agencies warn
BP faces criminal court over corroding pipelines & exploding refineries
US Supreme Court will rule on emissions case brought by states
IEA warns non-OPEC oil will soon peak & current energy course is “doomed to failure”
CO2 concentrations > long-run average: fear of runaway effect
Russia: oil-and-gas nationalism now overt and rampant
Q1
Q2
Q3
Q4
1.07
A quarterly audit of 2006
Climate change Oil depletionThreat of “explosive” Greenland ice collapse: 10 years to act, says NASA
Kuwait fears only half its reported reserves are real …& may not produce them!
Lloyd’s warns climate change can destroy the insurance industry
Oil sands companies turn to mergers as costs spiral out of control
Ocean acidification is killing corals, US govt agencies warn
BP faces criminal court over corroding pipelines & exploding refineries
US Supreme Court will rule on emissions case brought by states
IEA warns non-OPEC oil will soon peak & current energy course is “doomed to failure”
CO2 concentrations > long-run average: fear of runaway effect
Russia: oil-and-gas nationalism now overt and rampant
Q1
Q2
Q3
Q4
1.07
A quarterly audit of 2006
Climate change Oil depletion
Threat of “explosive” Greenland ice collapse: 10 years to act, says NASA
Kuwait fears only half its reported reserves are real …& may not produce them!
Lloyd’s warns climate change can destroy the insurance industry
Oil sands companies turn to mergers as costs spiral out of control
Ocean acidification is killing corals, US govt agencies warn
BP faces criminal court over corroding pipelines & exploding refineries
US Supreme Court will rule on emissions case brought by states
IEA warns non-OPEC oil will soon peak & current energy path is “doomed to failure”
CO2 concentrations > long-run average: fear of runaway effect
Russia: oil-and-gas nationalism now overt and rampant
Q1
Q2
Q3
Q4
1.07
A quarterly audit of 2006
Climate change Oil depletion
Threat of “explosive” Greenland ice collapse: 10 years to act, says NASA
Kuwait fears only half its reported reserves are real …& may not produce them!
Lloyd’s warns climate change can destroy the insurance industry
Oil sands companies turn to mergers as costs spiral out of control
Ocean acidification is killing corals, US govt agencies warn
BP faces criminal court over corroding pipelines & exploding refineries
US Supreme Court will rule on emissions case brought by states
IEA warns non-OPEC oil will soon peak & current energy path is “doomed to failure”
CO2 concentrations rising > long-run average: fear of runaway effect
Russia: oil-and-gas nationalism now overt and rampant
Q1
Q2
Q3
Q4
1.07
Reasons to fear global warming
1. The degree
2. The rate
3. Biodiversity loss
4. Sea level rise
5. Threat to insurance industry
6. Threat to capital markets
7. Threat to food supplies
8. Threat to water supplies
9. Threat to human health
10. Increased risk of conflict
11. Threat to societal stability
12. Danger of amplifying feedbacks
13. Danger of runaway effect
CO
2 C
on
ce
ntr
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(p
pm
v)
Years before present Atm
osp
heri
c C
O2 c
once
ntr
ati
on p
art
s per
mill
ion
oC
diff
ere
nce
w.r
.t.
end
of
the 1
9th C
entu
ry
Global average near surface temperature oC
1861 - 2003
CO2 and fossil fuel use 1861 –2100
Dep
art
ure
s oC
fro
m t
he 1
96
1 –
19
90
avg
e.
Surface temperatures 1000 – 2100 AD
Average temperatures from a range of IPCC energy scenarios short of deep
cuts in fossil fuel use
Threshold of severe danger: 2oC above pre-industrial average temperature (EU
target not to exceed)
Year AD
0
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4000
700
billi
on t
onne
s ca
rbon
of
carb
on
2oC
TH
RES
HO
LD
TOTAL COAL“RESOURCE”
3100
500700
TOTAL GAS“RESOURCE”
TOTAL OIL“RESOURCE”
400
3,500
0
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1000
1500
2000
2500
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billi
on t
onne
s ca
rbon
of
carb
on
2oC
TH
RES
HO
LD
TOTAL COAL“RESOURCE”
3100
500700
TOTAL GAS“RESOURCE”
TOTAL OIL“RESOURCE”
400
3,500
Conclusions
• Can we go zero carbon on renewable and efficient energy? Yes, more quickly than most think
• Will we? Will we even go low carbon? The jury is out
• Can we plug the energy crisis if the early peak on oil production is correct? No, and neither can anything else
….the silver lining to the cloud is going to be about renaissance, and “going renewable” versus “going coal”
