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The Energy Sustainability Dilemma:

Powering the Future in a Finite World

Cornell University

Ithaca, New York

May 2, 2012

J. David Hughes

Global Sustainability Research Inc.

Geological Survey of Canada - retired

- The “ENERGY SUSTAINABILITY DILEMMA” defined:

Points to be covered:

- Availability and deliverability of the nonrenewable fuels (OIL,

GAS, COAL, URANIUM) that are the energy-dense

elixers of our modern society

- ELECTRICITY – some issues in keeping the lights on

- Implications of POPULATION GROWTH and ASPIRATIONS

of future energy consumption

- Forecasts - where are we going and how likely is it that

we’ll get there

- History - where have we been

- Going forward in an Energy Constrained World

2

0

1000

2000

3000

4000

5000

6000

7000

-10000 -9000 -8000 -7000 -6000 -5000 -4000 -3000 -2000 -1000 0 1000 2000

Mil

lion

s of

Peo

ple

Year

10000 BC

3 Million

3500 BC

10 Million

150 BC

200 Million

1810

1 Billion

1925

2 Billion

1957

3 Billion

1975

4 Billion

1987

5 Billion

2011 7 Billion

The Phenomenal Reproductive Success of the Human Race

10000 BC – 2011 AD

(data as cited from U.S. Bureau of Census from various authors ) © Hughes GSR Inc, 2011

(data from Arnulf Grubler, 1998;

BP Statistical Review of World Energy, 2010; U.S. Bureau of Census, 2010)

0

2000

4000

6000

8000

10000

12000

1500 1600 1700 1800 1900 2000

Mil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Year

0

1000

2000

3000

4000

5000

6000

7000

1500 1600 1700 1800 1900 2000

Mil

lio

ns

of

Peo

ple

Year

OIL

GAS

COAL

Population

Energy Consumption

Population versus Energy Consumption, 1500-2010

COAL OIL

GAS

© Hughes GSR Inc, 2011

3

0

2000

4000

6000

8000

10000

12000

1965 1975 1985 1995 2005

Mil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Year

Asia Pacific Africa Middle East Former Soviet Union Europe S. & Cent. America North America

0

2000

4000

6000

8000

10000

12000

1965 1975 1985 1995 2005

Mil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Year

Hydro Nuclear Coal Gas Oil

World Primary Energy Consumption: 1965-2010

By Region By Fuel

163%

381%

149% 753%

53%

414% 72%

87%

(data from BP Statistical Review of World Energy, 2011)

218% increase in World

Consumption 1965-2010;

2010 increase = 5.6%

Highest growth in 2010 = Asia Pacific 8.5%; Coal 7.6%

Coal

Gas

Oil


Fo

ssil Fu

els 84%

renewables

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

1850 1870 1890 1910 1930 1950 1970 1990 2010

Year

Nuclear Gas Oil Coal Hydro Wood

To

nn

es O

il E

qu

iva

len

t P

er P

erso

n


BP Statistical Review of World Energy, 2011; U.S. Bureau of Census, 2011) © Hughes GSR Inc, 2011

World Per Capita Annual Primary Energy

Consumption by Fuel 1850-2010

OIL

HYDRO

COAL

WOOD

GAS

89

% N

on

-Ren

ewa

ble

+794%

4

0

10

20

30

40

50

60

70

80

90

100

1850 1890 1930 1970 2010

% o

f 2

01

0 P

op

ula

tion

Year

World Population, Per Capita and Total Energy

Consumption, 1850-2010, as a Percentage of 2010 Levels

Population


BP Statistical Review of World Energy, 2011; U.S. Bureau of Census, 2011) © Hughes GSR Inc, 2011

0

10

20

30

40

50

60

70

80

90

100

1850 1890 1930 1970 2010

% o

f 2

01

0 P

er C

ap

ita C

on

sum

pti

on

Year


0

10

20

30

40

50

60

70

80

90

100

1850 1890 1930 1970 2010

% o

f 2

01

0 T

ota

l C

on

sum

pti

on

Year


Per Capita Consumption Total Consumption

5.5 times 8.9 times 49 times

89

% N

on

-Ren

ewab

le

WOOD HYDRO

COAL

OIL

GAS

COAL

OIL

0

10

20

30

40

50

60

70

80

90

100

1850 1870 1890 1910 1930 1950 1970 1990 2010

Year

Gas

Oil

Coal

Cu

mu

lati

ve

% C

on

sum

ed

sin

ce 1

850

(data from Arnulf Grubler, 1998; BP Statistical Review of World Energy, 2011) © Hughes GSR Inc, 2011

Cumulative Consumption of Fossil Fuels Since 1850

through Yearend 2010

OIL

COAL

90% of Fossil

Fuels have been

consumed

Since 1937

50% of Fossil

Fuels have been

consumed

Since 1985

30

08

Billio

n b

arrels

Oil E

qu

ivalen

t

5

0

100

200

300

400

500

600

700

800

2010 2015 2020 2025 2030 2035

Qu

ad

rill

ion

BT

U

Year

By Economic Development

0

100

200

300

400

500

600

700

800

2010 2015 2020 2025 2030 2035

Qu

ad

rill

ion

BT

U

Year

By Fuel

Fo

ssil Fu

els 79

%

Gas +48%

(data from Energy Information Administration International Energy Outlook, 2011)

Non-OECD Countries +73% (82% of 2009 World Population)

OECD Countries +17% (18% of 2010 World

Population)

Forecast Growth In World Energy Consumption, 2010-2035

(EIA, 2011, Reference Economic Case)


Consumption (1.6%/year)

Oil +27%

Coal +45%

37%

47%


84%

0

20

40

60

80

100

120

140

160

180

1850 1870 1890 1910 1930 1950 1970 1990 2010 2030

Year

Gas

Oil

Coal

Cu

mu

lati

ve

% C

on

sum

ed

sin

ce 1

850


BP Statistical Review of World Energy, 2011; EIA IEO 2011 Reference case projection) © Hughes GSR Inc, 2011

Projected Consumption of Fossil Fuels Through 2035 as a

Percentage of Yearend 2010 Cumulative Consumption

OIL

COAL

CONSUMED

to Date

3008 Billion

Barrels Oil

Equivalent

NEEDED

75% more or an

Additional 2269

Billion Barrels Oil

Equivalent to Cover

Next 25 years

52

77

Billio

n b

arrels

Oil E

qu

ivalen

t

6

ULTIMATE BARRIER

ENERGY IN

EQUALS

ENERGY OUT

Conventional

Unconventional

Price/Technological

Limit to access

Coalbed Methane Shale Oil

Tight Gas

???Gas Hydrates???

In Situ Resources

>90% of World’s

Production

Decreasing

Concentration

Increasing

Effort (Energy IN

Vs

Energy OUT)

Tar Sands

Extra-Heavy Oil

In Situ Oil and Gas Resources versus Supply

In Situ Coal Gasification

Coal Liquefaction

Shale Gas

Gas to Liquids

Oil Shale

- The 84% of Primary Energy provided by Hydrocarbons is

A LOT

Beware of Scale:

-Less than 2% of Primary Energy Consumption is now

provided by non-hydropower renewables

-There are no scalable alternatives to hydrocarbons at the

RATES OF ENERGY THROUGHPUT we enjoy at this point in time

-Unconventional hydrocarbon production is

DIFFICULT TO SCALE compared to the cheap hydrocarbons of yesteryear

7

Oil

34%

Gas

24%

Coal

30% Nuclear

5%

Hydro

6%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1995 2000 2005 2010

Per

cen

t of

Tota

l C

on

sum

pti

on

Year

Biomass-electric

Wind

Solar

Geothermal

Wind

Geothermal


Global Primary Energy Consumption by Source in 2010

A Comparison to Total Non-Hydro Renewable* Energy

Renewable Energy by Source

159 MTOE


Total Energy by Source

12002 MTOE

*excluding biomass burned for non-electric uses

Renewables

1.32%

(includes

Biofuels 0.5%)

Biomass

Solar

- Hydrocarbons provided 84% of the world’s primary

energy in 2010

Summary

- Forecasts suggest that 79% of a greatly expanded energy

demand will continue to be provided by hydrocarbons in

2035

- Most of the balance of energy supply will be provided by

large hydro and nuclear – sources with their own

environmental problems

- The Question is: IS THIS SUSTAINABLE?

…… Lets look in more detail at oil, gas and coal


8

0

10

20

30

40

50

60

70

80

90

100

1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Cu

mu

lati

ve

Con

sum

pti

on

as

Per

cen

tag

e

of

Tota

l C

on

sum

ed

Year

Cumulative OIL Consumption by the Human Race as a

Percentage of Total Consumption through Yearend 2010

1% 1925 5% 1950

10% 1960

20% 1970

30% 1976

40% 1982

50% 1988

60% 1993

70% 1998

80% 2002

90% 2006

50% of the OIL Consumed by the

Human Race

Used Since 1988 90% of the OIL Consumed by the

Human Race

Used Since 1960

11

86

Billio

n b

arrels

Con

sum

ed

Start 1859


0

10

20

30

40

50

60

70

80

90

1965 1975 1985 1995 2005

Mil

lion

Barr

els

per

Day

Year

OPEC 12

Former Soviet Union

Non-OPEC

0

10

20

30

40

50

60

70

80

90

1965 1975 1985 1995 2005

Mil

lion

Barr

els

per

Day

Year

OPEC 12

Former Soviet Union

Non-OPEC

World Oil Production* and Consumption 1965-2010

Non-OPEC

182%

F.S.U.

178%

OPEC 12

147%

Non-OPEC

163%


85%

10%

5%

42%

42%

16%

158% increase

Up 2.2% 2010

over 2009

PEAK

2002

Production Consumption


* Production excludes biofuels

184% increase

Up 3.1% 2010

over 2009

9

70

80

90

100

110

120

130

2006 2011 2016 2021 2026 2031

Mil

lio

n B

arr

els

per

Da

y

Year

World Oil Consumption Forecasts, 2006-2035,

Energy Information Administration, 2011

EIA High Oil Price Case EIA Reference Economic Case EIA Low Oil Price Case

+31%

+43%

+32%

(Projections from Energy Information Administration International Energy Outlook, 2011)

Projections

(2008-2035)


70

80

90

100

110

120

130

2006 2011 2016 2021 2026 2031

Mil

lio

n B

arr

els

per

Da

y

Year

World Oil Consumption Forecasts, 2006-2035,

Energy Information Administration, 2011,

International Energy Agency, 2010 EIA High Oil Price Case EIA Reference Economic Case EIA Low Oil Price Case IEA Current Policy Scenario IEA New Policy Scenario IEA 450 Scenario

+31%

+43%

+32%

(Projections from Energy Information Administration International

Energy Outlook, 2011; and International Energy Agency World Energy Outlook, 2010)

Projections

(2008-2035)


+24%

+15%

-6%

The IEA’s WEO 2011 indicates $8.5 Trillion

needed in upstream oil investment through 2035

for its New Policy Scenario

10

0

20

40

60

80

100

120

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mil

lion

Barre

ls p

er

Da

y

Year (5-Month Moving Average

including data to December 2011, from Energy Information Administration, April, 2012) © Hughes GSR Inc, 2012

World Oil Supply – January 2001 to October 2011

Can Investment* Get Us to 112 Million barrels per Day?

Non-OPEC

OPEC-12 Production Plateau

Surplus Capacity

EIA 2035 Reference Forecast

*IEA WEO 2011 indicates $8.5 Trillion

needed in upstream oil investment through 2035

0

200

400

600

800

1000

1200

1400

1980 1985 1990 1995 2000 2005 2010

Bil

lion

Barr

els

Year © Hughes GSR Inc, 2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1980 1985 1990 1995 2000 2005 2010

Per

cen

tag

e of

Rem

ain

ing

Oil

Res

erves

Year

World Conventional Oil and Oil Sands* Reserves 1980-2010


OP

EC

N

on

-OP

EC

64%

77%

24%

14%

12%

9%

Saudi

Arabia

Iraq

Iran

Former Soviet Union

Other Non-OPEC

Former Soviet Union

Non-OPEC

OPEC 12 Kuwait

Other OPEC

U.S.A.

* Includes Oil Sands Reserves “Under Development”

11

0

100

200

300

400

500

600

700

800

900

1980 1985 1990 1995 2000 2005 2010

Bil

lio

n B

arr

els

Year

Implication

Some of the

553 Bbbls or

148% increase

in reported

reserves over

the period may

be spurious

Reserves inflated by 285 Gbbls

over 1984-1988 without major

new discoveries QUOTA WARS


These Countries also Produced 228 Billion Barrels over the Period

Oil Reserve Reporting in Selected OPEC Countries, 1980-2010,

(87% of 2010 OPEC Reserves and 67% of World Reserves)

Saudi Arabia

Venezuela

Kuwait

Iraq

Iran

United Arab Emirates


(96 billion barrels

produced 1980-2010)

(19 billion barrels

produced 1980-2010)

(20 billion barrels

produced 1980-2010)

(26 billion barrels

produced 1980-2010)

(38 billion barrels

produced 1980-2010)

(Recent peak 2005)

(29 billion barrels

produced 1980-2010)

(Peak 1979)

0

10

20

30

40

50

60

70

80

90

OPEC Non-OPEC F.S.U. Total World

Yea

rs o

f P

rod

uct

ion

at

Cu

rren

t R

ate

s

Region

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


* Includes Oil Sands Reserves “Under Development”


World Oil Reserve Lifespan in Years

Including Possibly Spurious post-1984 OPEC Reserves

12

0

10

20

30

40

50

60

1930 1950 1970 1990 2010 2030 2050

Bil

lion

Barr

els

per

Yea

r

Year

The Growing Gap between Production and Discovery

of Regular Conventional Oil (1930-2050)

Past Discovery

Future Discovery

Production

Past discoveries have been backdated with revisions

to reflect “Reserve Growth” (data from Campbell, personal communication, October, 2009)

World Discoveries Peaked in 1965

Production

has Exceeded

Discoveries

since 1984


WHEN?

- Debatable, because of the variables,

World Oil Production Peak

BUT IT IS HIGHLY

LIKELY TO HAPPEN DEPENDS ON:

- ULTIMATE RECOVERABLE RESERVES - a function of:

- Mother Nature’s Endowment (total discovered and

undiscovered resources)

- Technology and Price (determines economics)

- Reserve Appreciation (Growth) in known pools (through

more drilling, better technology and higher prices)

- RATE OF CONSUMPTION - a function of:

- Price (controls economic growth and

encourages/discourages conservation)

- Infrastructure for production

- Depletion rates of producing pools Copyright J. D. Hughes GSR Inc, 2008

13

-80

-70

-60

-50

-40

-30

-20

-10

0

US

1970

Ven

ezu

ela

1970

Oth

er M

idd

le E

ast

1970

Lib

ya 1

970

Ku

wait

1972

Iran

1974

Rom

an

ia 1

977

Ind

on

esi

a 1

977

Trin

idad

& T

ob

ago 1

978

Iraq

1979

Bru

nei 1979

Tu

nis

ia 1

980

Peru

1982

Oth

er A

fric

a 1

985

Oth

er E

urop

e &

Eu

rasi

a 1

986

Ru

ssia

n F

ed

era

tion

19

87

Egyp

t 1993

Sy

ria

19

95

Gab

on

1996

Mala

ysi

a 1

997

Argen

tin

a 1

998

Un

ited

Kin

gd

om

1999

Uzb

ek

ista

n 1

999

Au

strali

a 2

000

Norw

ay 2

001

Om

an

2001

Yem

en

2002

Oth

er S

. &

C. A

meric

a 2

003

Mexic

o 2

004

Den

mark

2004

Vie

tnam

2004

Ita

ly 2

00

5

Sau

di

Arab

ia 2

005

Alg

eria

2005

Ch

ad

2005

Gu

inea 2

005

Nig

eria

2005

Ecu

ad

or 2

006

UA

E 2

006

An

gola

2008

Oth

er A

-P 2

008

Per

cen

tag

e B

elow

Pea

k P

rod

uct

ion

Country

Year of Peak Production and Percentage 2010 Production is below Peak

(data from B.P. Statistical Review of World Energy, 2011)

U.K.

Norway

Denmark Mexico

= OPEC Countries 25 Countries Peak Since 1993

18 Countries Peak Since 2000

79% of 2010

Production was from

Countries Past Peak © Hughes GSR Inc, 2011

U.S.

0

5

10

15

20

25

30

35

1930 1950 1970 1990 2010 2030 2050

Bil

lio

n b

arr

els

per

y

ear

Year

Natural Gas Liquids Peak 2030

Polar Oil Peak 2030

Deep Water Oil Peak 2016

Heavy/Bitumen Oil Peak 2030

Regular Oil Peak 2005

Combined Liquids

Peak 2008

(excluding biofuels)

(data from C.J.Campbell, personal communication, October, 2009)

Ultimate Recoverable

=2.5 Trillion Barrels

Campbell’s (2009) Base Case History and Forecast of

World Oil Production 1930-2050


Cheap Oil Expensive Oil

14

Global Liquids Production 1990-2035,

IEA 2010 World Energy Outlook – New Policies Scenario

(source: International Energy Agency World Energy Outlook, 2010) © Hughes GSR Inc, 2011

Natural Gas Liquids

Crude Oil - Currently Producing

Crude Oil - Yet to Find

Crude Oil Production Peaks in 2006

and Plateaus through 2035

Mil

lio

n B

arr

els

per

Da

y

0

20

40

60

80

100

120

1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Mil

lon

Ba

rrel

s p

er D

ay

Year

OPEC 2008

EIA 2011 reference

Exxon 2009

IEA 2010 New Policy

Statoil 2006

Total 2008

Shell Blueprints 2008

Shell Scramble 2008

Energyfiles 2008

Uppsala Best Case 2007

Uppsala Worst Case 2007

Campbell 2009

Skrebowski 2008

Energy Watch 2007

BP Historical Production

Modeled Forecasts of Liquids Production through 2030

(Peak production dates indicated by Source and Star)

Campbell 2008

Uppsala (worst case) 2008

Energy Watch 2008

Skrebowski 2012

Energyfiles 2017

Uppsala (best case) 2018

Total 2020

Shell (worst case) 2020

Statoil 2028 OPEC

EIA EXXON

IEA

SHELL

(Best

Case)

(data from U.K. Energy Research Centre,

Annex 1 to Technical Report 7, October, 2009; EIA, 2010; IEA, 2010) © Hughes GSR Inc, 2011

15

0

1

2

3

4

5

6

7

8

2008 2009 2010 2011 2012 2013 2014 2015 2016

Mil

lio

n B

arr

els

per

Da

y

Year

Megaproject additions

Depletion@5%

(data from U.K. Energy Research Centre, Annex 1 to Technical Report 7, October, 2009)

Global Additional Production from New Megaprojects

through 2016 versus Global Oil Depletion Rate

Surplus

Deficit

0

20

40

60

80

100

120

2007 2012 2017 2022 2027 2032

Mil

lio

n B

arr

els

per

Da

y

Year

0

20

40

60

80

100

120

2007 2012 2017 2022 2027 2032

Mil

lio

n B

arr

els

per

Da

y

Year

Non-OECD +32%

OECD -14%

OPEC +34%

Production

EIA World Oil Production and Consumption Forecast 2007-2035

(Reference Economic Case, EIA, 2011)

Non-OECD +70%

(82% of 2010 Population)

OECD +2%

(18% of 2010 Population)

58% 45%


Consumption


Range of many

Peak Oil estimates

16

0

5

10

15

20

1965 1975 1985 1995 2005

Year

0

1

2

3

4

1965 1975 1985 1995 2005

Year

Mexico

0

1

2

3

4

1965 1975 1985 1995 2005

Year

Canada

North American Oil Consumption and Movements: 1965-2010

Net Imports (58% of 2010

consumption)


Peak

1970

Consumption (up 66%)

Mil

lio

n B

arr

els

per

Da

y

Consumption up 573% Consumption up 105%

Net Exports

Net Exports

Production (up 263%)

Production (up 717%)

(Down 23% since 2004)

Peak 2004


Production (down 29%

from Peak)

U.S.A.

Canada

23.6%

Saudi Arabia

11.2%

Nigeria

10.3% Venezuela

9.9%

Mexico

8.6%

Russia

6.3%

Algeria

5.2%

Iraq

4.3%

Angola

4.0%

Colombia

3.1%

Virgin

Islands

2.5% United Kingdom

2.4% Kuwait

2.0%

Brazil

1.5% Ecuador

1.4%

Norway

0.9%

Congo

0.7% Trinidad and

Tobago

0.7%

Libya

0.7%

Equatorial Guinea

0.6%

US Oil Imports from Top 20 Countries in 2010

Top 20 provided 9.8 MMbbls/day in 2010

(data from EIA, 2011) Red = OPEC; Green = Non-OPEC

OPEC = 49%

17

0

5

10

15

20

25

30

35

40

45

50

U.S.A. Canada Mexico North America

Yea

rs o

f P

rod

uct

ion

at

Cu

rren

t R

ate

s

North America Oil Reserve Lifetime

in Years Including Oil Sands* 1990-2010

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

(data from BP Statistical Review of World Energy, 2011) * Includes Oil Sands Reserves “Under Development”


0

2

4

6

8

10

12

14

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035

Mil

lio

n B

arr

els

per

Da

y

Year

Shale Oil Gas-to-Liquids Coal-to-Liquids Ultra-Heavy Oil Oil Sands/Bitumen Biofuels

11.7% of forecast 2035 World Liquids Consumption

(data from Energy Information Administration, International Energy Outlook 2011)

Overall Growth +275%

World Unconventional Liquids Production Forecast

2007-2035 (EIA Reference Economic Case, 2011)

Biofuels +292%


18

Source

Energy Profit Ratio for Liquid Hydrocarbons


?

En

ergy R

etu

rn o

n

En

ergy I

nves

ted

High

Low

Energy

Source

(EROEI > 1)

Energy

Sink

(EROEI < 1)

Increasing Energy Input

(biodiesel, ethanol from University of Minnesota

Proceedings of National Academy of Sciences

July, 2006, and Pimentel and Patzek, 2005,

Nat Resources Research (Vol. 14:1, 65-76))

University

of Minnesota

Pimentel

and Patzek

In P

lace

Res

ou

rces

Oil Shale Oil Sands Heavy Oil,

Enhanced

Recovery

Light Oil,

Primary

Recovery

Energy Profit Ratio versus In Place Oil Resources

(Energy Return on Energy Invested)

Energy Profit (EROEI > 1)

Energy Sink (EROEI < 1)

The Issue is Not Resources – its Deliverability – How Fast

Can These Resources be Converted into Supply in the

Face of Growing Demand?, and at What Cost? We are

not running out of OIL – there will be oil in 100 million

years - it just won’t be recoverable at an Energy Profit


19

“Even if demand remained steady, the world would have to

find the equivalent of four Saudi Arabias to maintain

production, and six Saudi Arabias if it is to keep up with

the expected increase in demand between now and 2030. It's a

big challenge in terms of the geology, in terms of the

investment and in terms of the geopolitics ”

Dr. Fatih Birol, Chief Economist of the IEA, the

OECD’s Energy Watchdog as quoted in the

Independent August 3, 2009

(from http://www.independent.co.uk/news/

science/warning-oil-supplies-are-running-out-fast-766585.html © Hughes GSR Inc, 2011

0

10

20

30

40

50

60

70

80

90

100

1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Cu

mu

lati

ve

Con

sum

pti

on

as

Per

cen

tag

e

of

Tota

l C

on

sum

ed

Year

Cumulative GAS Consumption by the Human Race as a


1% 1933 5% 1957

10% 1966

20% 1975

30% 1982

40% 1988

50% 1992

60% 1997

70% 2001

80% 2004

90% 2007

50% of the GAS Consumed by the

Human Race

Used Since 1992 90% of the GAS Consumed by the

Human Race

Used Since 1966

611

Billio

n b

arrels O

il

Eq

uiv

alen

t Con

sum

ed

Start 1885


http://www.independent.co.uk/news/

http://www.independent.co.uk/news/

20

0

20

40

60

80

100

120

1970 1980 1990 2000 2010

Tri

llio

n C

ub

ic F

eet

per

Yea

r

Year


0

20

40

60

80

100

120

1970 1980 1990 2000 2010

Tri

llio

n C

ub

ic F

eet

per

Yea

r

Year


World Gas Production and Consumption 1965-2010

715%

3780%

2038%

230%

31%

3038%

2213%

323%

177% 791%

25%


221% increase

up 7.4% 2010

over 2009

392%

219% increase

up 7.3% 2010

over 2009



80

100

120

140

160

180

200

2006 2011 2016 2021 2026 2031

Tri

llio

n C

ub

ic F

eet

per

Yea

r

Year

World Gas Consumption Forecasts, 2006-2035,



+38%

+63%

+52%


Projections

(2008-2035)


21

0

1000

2000

3000

4000

5000

6000

7000

1980 1985 1990 1995 2000 2005 2010

Tri

llio

n C

ub

ic F

eet

Year

Middle East

Former

Soviet Union

Asia Pacific

Africa Europe

North America 0

10

20

30

40

50

60

70

80

90

100

1980 1985 1990 1995 2000 2005 2010

Per

cen

tag

e o

f R

ema

inin

g R

eser

ves

Year

Middle East

Former

Soviet Union

Asia Pacific

Africa

Europe

North America

30%

35%

41%

31%

12% 5%

World Gas Reserves: 1980-2010

(data from BP Statistical Review of World Energy, 2011) © Hughes GSR Inc, 2011

0

20

40

60

80

100

120

140

North America Europe Rest of World Total World

Yea

rs o

f P

rod

uct

ion

at

Cu

rren

t R

ate

s

World Natural Gas Reserve to Production

Ratio in Years 1990-2010

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


22

0

5

10

15

20

25

30

1930 1950 1970 1990 2010 2030 2050

Bil

lio

n b

arr

els

Oil

Eq

uiv

ale

nt

per

yea

r

Year

Unconventional Gas

Conventional Gas

(data from C.J.Campbell, personal communication, October, 2009)

Campbell’s (2009) Base Case History and Forecast of

World Natural Gas Production 1930-2050


Gas Peak 2045

(data copyright IHS Energy, Diagram prepared and copyright by EOG Resources Inc., 2006)

Natural Gas Production in the United States

by Well Vintage at Yearend 2006

(60% of Production from wells drilled in past FOUR YEARS)

60% From

Most

Recent

FOUR

YEARS

23

100

110

120

130

140

150

160

170

180

190

250,000

300,000

350,000

400,000

450,000

500,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Av

era

ge G

as W

ell Pro

du

ctivity

(Mcf/d

ay

) N

um

ber

of

Pro

du

cin

g G

as

Wel

ls

Year

Number of wells

Average Productivity

(data from EIA, 2011)

Number of Operating Gas Wells in the U.S.

versus Average Productivity


Shale Gas – North American Prospects

(from National Energy Board, 2009)

24

U.S. Potential Gas Committee 2011 Resource Estimates

(from “Potential Supply of Natural Gas

in the United States”, 2011, U.S. Potential Gas Committee) © Hughes GSR Inc, 2009

0

5

10

15

20

25

30

2009 2014 2019 2024 2029 2034

Tri

llio

n C

ub

ic F

eet

per

Yea

r

Year

Shale Gas +365%

Lower 48 Conventional

(including Tight Gas) -25%

Lower 48 Offshore +2%

U.S. Natural Gas Supply Forecast by Source 2009-2035

(Reference Case, EIA, 2012)

(data from Energy Information Administration Annual Energy Outlook, 2012)

Lower 48 Production

Grows 37% 2009-2035

20% Total Supply Growth

from 2009-2035

Coalbed Methane -8%

Lower 48 Unconventional

Lower 48 Onshore Associated -24%


US becomes net exporter 2021

25

0

2

4

6

8

10

12

14

16

2008 2013 2018 2023 2028 2033

Tri

llio

n C

ub

ic F

eet

per

Yea

r

Year

Shale gas forecast 2009




EIA projections of U.S. Shale Gas Production, 2009-2012

(data from Energy Information Administration

Annual Energy Outlook, 2009, 2010, 2011 and 2012 reference case projections)

49% of production


16%

26%

45%

26

0

2

4

6

8

10

12

14

16

18

20

2003 2004 2005 2006 2007 2008 2009 2010 2011

Ga

s P

rod

uct

ion

(b

illi

on

cu

bic

fee

t p

er d

ay

)

Year

Niobrara

Mississipian

Permian

Bakken

Eagleford

Granite Wash

Woodford

Marcellus

Fayetteville

Haynesville

Barnett

(data from Art Berman, HPDI, 2012)

Shale Gas Production by Play (2003 - June, 2011)


Barnett

Haynesville

30% of U.S. Production

0

5

10

15

20

25

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

An

nu

al D

ry G

as P

rod

uctio

n (trillio

n cu

bic feet) A

nn

ua

l N

um

ber

of

Su

cces

sfu

l G

as

Wel

ls D

rill

ed

Year

Number of wells

Dry Gas Production

Drilling triples from 1990’s levels


Natural Gas Production versus Annual

Drilling Rates, 1990-2011

Production up 4.6% from 1973, 15.8% from 2001

(data from EIA, 2012; includes production and drilling up until October, 2011)

27

0

500

1000

1500

2000

2500

3000

3500

4000

0

50

100

150

200

250

300

350

400

450

500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Nu

mb

er of P

rod

ucin

g W

ells Th

ou

san

d B

arr

els

per

Day

Year

Production Number of wells

Bakken Shale Oil Production and

Number of Producing Wells, 2000-2011

(data from State of North Dakota https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf) © Hughes GSR Inc, 2012

28

0

1

2

3

4

5

6

7

8

0

5,000

10,000

15,000

20,000

25,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Cru

de O

il Pro

du

ction

(Millio

n b

arrels p

er da

y)

An

nu

al

Nu

mb

er o

f S

ucc

essf

ul

Oil

Wel

ls D

rill

ed

Year

Number of wells

Crude Oil Production

Production down 42% from 1971 peak;

up 13% from 2008 low

(data from EIA, 2012; includes production and drilling up until October, 2011) © Hughes GSR Inc, 2012

Crude Oil Production versus Annual

Drilling Rates, 1990-2011

Drilling Doubles from 1990’s levels

Shale Gas Fracturing Job, Barnett Shale, Texas

29

57

Example: Dallas/Fort Worth Airport Property,

Barnett Shale Play

• 53 pads on 18,076 acres,30 square miles • Each red dot is a pad • Each red line is a well • Almost complete coverage • Patchwork, mostly ideal units • One developer

(Thanks to Anthony R. Ingraffea, 2012)

The Optimism on Shale Gas

- There is so much natural gas that there is enough available,

according to one researcher, "to displace half of the coal burning

power plants [in the United States] by 2020” (Pickens Plan, 2012)

- “We have the domestic natural gas necessary to fuel our trucks and

fleet vehicles…” (Pickens Plan, 2012)

- Studies from prestigious energy research firms and universities have

affirmed that the dream of clean, abundant, home grown energy is now

reality, with the help of shale gas. (ANGA, 2012).

- “I believe U.S. natural gas producers can increase supplies by 5% per

year for at least the next decade and that assumes there is no more

access to public lands and waters than there is today.” (Testimony to

Congress, Aubrey McClendon, July 30, 2008). [63% compounded]

30

0

5

10

15

20

25

30

2009 2013 2017 2021 2025 2029 2033

Qu

ad

rill

ion

Btu

Year

U.S. Natural Gas Consumption by Sector

2009-2035 (Reference Case, EIA, 2012)

Electricity +30%


Market

Share

Commercial +14%

Industrial +14%

30%

33%

14%

21%

32%

13%

18%

16% Growth 2009-2035

34%


Residential -3%

CNG

Pipeline Fuel +11%

“Shale plays are marginally commercial at best.”

Arthur Berman on Shale Gas

(ASPO meeting in Washington DC, October, 2010)

(from Art Berman’s ASPO-USA presentation in October 2010)

“The plays have consistently contracted to a core area that

represents 10-20% of the resource that was initially claimed.

The manufacturing model has failed.”

“Reserves have been greatly over-stated and 80% of booked

reserves are undeveloped.”

“These are not low-cost plays: the marginal cost of

production for most companies is $7.50/Mcf based on SEC

10-K filings over the past 5 years.”

31

Shale Plays inevitably contract to core

areas with higher productivity and the “rest”

(from Art Berman’s ASPO-USA presentation in October 2010)

50% Recovered 75% Recovered

90% Recovered

Theoretical Production Profiles

for Major Shale Gas Plays (MMcf/day)

(data from Moorman, Southwest Energy, November, 2009)

32

0

5

10

15

20

25

30

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

An

nu

al D

ry G

as P

rod

uctio

n (trillio

n cu

bic fee

t) An

nu

al

Nu

mb

er o

f S

ucc

essf

ul

Ga

s W

ells

Dri

lled

Year

Actual Wells Drilled

EIA Forecast of Wells Drilled

Wells required for EIA production forecast

Actual Production

EIA Forecast of Production

Production given EIA drilling forecast

Wells required to meet EIA production forecast

Likely Production with EIA drilling forecast

The EIA’s forecast of low drilling rates and high production

are likely wishful thinking

© Hughes GSR Inc, 2011 (data from EIA, 2011)

0

5

10

15

20

25

30

0

2

4

6

8

10

12

14

16

18

20

1995 1999 2003 2007 2011 2015 2019 2023 2027 2031 2035

An

nu

al G

as P

rod

uctio

n (T

rillion

cub

ic feet)

Ga

s P

rice

($

US

/mcf

)

Year

Russian Gas Price Indonesia LNG Gas Price in Japan U.S. Henry Hub Gas Price EIA Forecast U.S. Gas Price ($2010) Actual U.S. Gas Production EIA Forecast U.S. Gas Production

(data from International Monetary Fund 2012; EIA AEO 2012)

EIA projections of Gas Price and Production Compared

to History, 1995-2035


33

Methane Contamination within 1000 metres of Active

Wells in Pennsylvania, Osburn et al. 2011, Duke University

0

0.5

1

1.5

2

2.5

3

3.5

Perc

en

tag

e o

f L

ifeti

me P

rod

ucti

on

Source

Distribution

Transmission and Storage

Processing

Extraction

NETL (Skone, 2011) Methane Emissions by Gas Source

adjusted to match average emissions of the 2009 EPA inventory


34

0

1

2

3

4

5

6

7

8

9

Per

cen

tag

e o

f T

ota

l P

rod

uct

ion

Estimated Ultimate Recovery (billion cubic feet)

% of total production vented

according to NETL

% of total production vented

adjusted to match EPA 2009

inventory

Lo

w e

stim

ate

Hig

h e

stim

ate

0

0.5

1

1.5

2

2.5

3

3.5

4

25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105

Po

un

ds

of

CO

2 e

qu

iva

len

t p

er k

Wh

Global Warming Potential (GWP) of Methane (times CO2)

Existing U.S. Coal Fleet

Existing U.S. Gas Fleet fuelled by shale gas

Best-in-class Coal Technology

Best-in-class Gas Technology fuelled by shale gas

IPCC 2007 Shindell et al. 2009

100 year GWP

Shindell et al. 2009

20 year GWP

IPCC 2007

20 year GWP

Global Warming Potential of Shale Gas versus Coal

Given various 20- and 100-year estimates of Methane Potency

Compared to CO2 on an Electricity Basis (Mean methane emissions)


35

Source

Energy Profit Ratio for Natural Gas and Alternatives

En

erg

y R

etu

rn o

n

En

ergy I

nves

ted

High

Low

Energy

Source

(EROEI > 1)

Energy

Sink

(EROEI < 1)

Increasing Energy Input

?

0

10

20

30

40

50

60

70

80

90

100

1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Cu

mu

lati

ve

Con

sum

pti

on

as

Per

cen

tag

e

of

Tota

l C

on

sum

ed

Year

Cumulative COAL Consumption by the Human Race as a


10% 1911

20% 1933

30% 1951

40% 1964

50% 1975

60% 1984

70% 1992

80% 1999

90% 2006

50% of the COAL Consumed by the

Human Race

Used Since 1975 90% of the COAL Consumed by the

Human Race

Used Since 1911

12

11

Billio

n b

arrels O

il

Eq

uiv

alen

t Con

sum

ed

(data from Arnulf Grubler, 1998; BP Statistical Review of World Energy, 2011)

Start <1850


36

0

500

1000

1500

2000

2500

3000

3500

4000

1981 1986 1991 1996 2001 2006

Mil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Year


0

500

1000

1500

2000

2500

3000

3500

4000

1981 1986 1991 1996 2001 2006

Mil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Year

-48%

World Coal Production and Consumption: 1981-2010


408%

-30%

-57%

123%

21%



Consumption 1981-2010

Coal production up 44% since 2002

31%

-35%

74%

363%


80

100

120

140

160

180

200

220

240

260

280

2006 2011 2016 2021 2026 2031

Qu

ad

rill

ion

Btu

per

Yea

r

Year

World Coal Consumption Forecasts 2006-2035,



+26%

+82%

+50%


Projections

(2008-2035)


37

(from Energy Watch Group, March, 2007)

One Forecast of Future

World Coal Production (EWG, 2007)

Peak 2025


Peak 2030

Uppsala Forecast of Global Peak Coal, 2008

(from Hook, Zittel, Schindler, Aleklett, 2008) © Hughes GSR Inc, 2009

38

0

1

2

3

4

5

6

7

8

9

1850 1870 1890 1910 1930 1950 1970 1990 2010 2030 2050 2070 2090 2110 2130 2150

Bil

lio

n T

on

nes

per

Yea

r

Year

China FSU Rest of World South Africa Germany Australia India USA

China

USA

FSU

India

Australia

Peak Coal Production Forecast using Hubbert Linearization

1850 – 2150 (Newcastle University, 2009)

(data courtesy of S.H.Mohr and G.M.Evans “Forecasting Coal Production Until 2100”, 2009) © Hughes GSR Inc, 2009

World Peaks in 2034

if 1144 billion tonnes

recoverable World Peaks in 2010

if 700 billion tonnes

recoverable

0

2

4

6

8

10

12

1950 1970 1990 2010 2030 2050 2070 2090 2110 2130 2150

Bil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

per

Yea

r

Year

All hydrocarbons

Oil and Gas

Coal

All Hydrocarbons Production (1950-2150)

History and Forecast (Caltech, 2010)

History Forecast

Peak 2020

Peak 2019

(data from rutledge.caltech.edu, June, 2009; peak coal from caltech November, 2010)

Peak 2022


39

0

10

20

30

40

50

60

70

80

90

100

1950 1970 1990 2010 2030 2050 2070 2090 2110 2130 2150

Per

cen

t o

f U

ltim

ate

Rec

ov

era

ble

Rem

ain

ing

Year

All hydrocarbons

Oil and Gas

Coal

Percentage of Hydrocarbons Remaining (1950 – 2150)

History and Forecast (Caltech, 2010)

History Forecast

58% Remaining 2009

20% Remaining 2050

(data from rutledge.caltech.edu, June, 2009)

50% Remaining 2017

2% Remaining 2100


Each Windmill requires 260 tonnes of steel

made from 170 tonnes of coking coal and 300 tonnes

of iron ore, all mined and transported by hydrocarbons

40

Cumulative CO2 Emissions Caltech (2010) compared to UN IPCC Scenarios

• Caltech’s production constrained projection has lower emissions than any of the 40 IPCC scenarios

• Jean Laherrere was the first to call attention to this situation

(from rutledge.caltech.edu, November, 2010) © Hughes GSR Inc, 2011

Caltech

forecast

Projection for next IPCC

report without climate policy

0

1000

2000

3000

4000

5000

Caltech IPCC

Bil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Source

Coal

Oil and Gas

Consumed

Consumed and Remaining Recoverable Hydrocarbons

Caltech (2009) vs IPCC

(data from rutledge.caltech.edu, June, 2009)

Caltech includes 174 Billion Barrels of Oil Sands

IPCC includes only maximum consumption to 2100, ultimate recoverable would be higher

6.9

times

8.3

times

7.4

times


41

250

300

350

400

450

500

1850 1870 1890 1910 1930 1950 1970 1990 2010 2030 2050 2070 2090 2110 2130 2150

Atm

osp

her

ic C

O2 C

on

cen

tra

tio

n (

pp

mv

)

Year

Upper 90% confidence limit

Lower 90% confidence limit

Best Estimate

Atmospheric CO2 Concentration (1850-2150)

Caltech, 2010

(data from rutledge.caltech.edu, January, 2011)

Hansen’s Danger Threshold

Hansen’s New Threshold

History Forecast


Peak CO2 2062 @ 449 ppmv

-2

-1

0

1

2

3

4

0

10

20

30

40

50

60

70

80

90

100

1850 1870 1890 1910 1930 1950 1970 1990 2010

Tem

pera

ture V

aria

tion

Co

mp

ared

to

Pre

-Ind

ustria

l Lev

els (Deg

rees C

elsius)

Cu

mu

lati

ve

Co

nsu

mp

tio

n o

f

Fo

ssil

Fu

els

(%)

Year

Cumulative consumption of Fossil Fuels (%)

Average Temperature

Upper 95% Confidence in Temperature

Lower 95% Confidence in Temperature


(Temperature data from Hadley Meteorological Centre;

fossil fuel consumption from BP , 2011, and Arnulf Grubler, 1998)

Cumulative Consumption of Fossil Fuels versus Annual

Global Temperature, 1850-2011

Pre-Industrial Temperature

Climate Danger Threshold

42

0

5000

10000

15000

20000

25000

1990 1995 2000 2005 2010

Ter

aw

att

Ho

urs

Year

World

Asia Pacific Africa Middle East Former Soviet Union Europe S. & C. America North America

0

1000

2000

3000

4000

5000

6000

1990 1995 2000 2005 2010

Ter

aw

att

Ho

urs

Year

North America

Mexico

Canada

US

Generation of Electricity: 1990-2010


238%

-13%

33%

118%

38%

36%

32%

80% increase in Consumption

up 5.9% 2010 over 2009

38% increase in Consumption

up 3.7% 2010 over 2009


0

5000

10000

15000

20000

25000

30000

35000

2008 2012 2016 2020 2024 2028 2032

Ter

aw

att

hou

rs

Year

Forecast World Net Electricity Generation by Region

2008-2035 (reference case, EIA, 2011)

OECD Other Non-OECD India China


OECD +36%

Other

Non-OECD +93%

China +198%

World 84% total

increase

2008-2035

53%

40%


43

0

5000

10000

15000

20000

25000

30000

35000

40000

2008 2012 2016 2020 2024 2028 2032

Ter

aw

att

Ho

urs

Year

Forecast World Electricity Generation by

Fuel 2008-2035 (Reference Case, EIA, 2011)

Non-hydro renewables

Hydro

Nuclear

Coal

Gas

Oil


Market

Share

Natural Gas 101%

Coal +67%

16%

14%

40%

22%

16%

14%

39%

24%

84% Growth 2008-2035

7%


0

500

1000

1500

2000

2500

3000

2008 2012 2016 2020 2024 2028 2032

Ter

aw

att

Ho

urs

Year

Solar Geothermal Wind All other renewables


Market

Share

Biomass and all other renewables 199%

Wind 596%

2.8%

7.4%

383% Growth 2008-2035


World Non-Hydro Renewable Electricity Generation

2008-2035 (EIA Reference Case, 2011)

(4.2%)

(2.2%)

44

0

1000

2000

3000

4000

5000

6000

2009 2013 2017 2021 2025 2029 2033

Ter

aw

att

Hou

rs

Year

Forecast U.S. Electricity Generation by Fuel

2009-2035 (Reference Case, EIA, 2012)


Market

Share

Natural Gas +49%

Coal +11%

7%

20%

44%

23%

9%

18%

39%

27%

27.9% Growth 2009-2035

6%


0

50

100

150

200

250

300

350

400

450

500

2009 2013 2017 2021 2025 2029 2033

Ter

aw

att

Ho

urs

Year

Solar Geothermal Wind Biomass and other renewables


Market

Share

Biomass and all other renewables +261%

Wind +156%

3.7%

9.4%

226% Growth 2009-2035


U.S. Non-Hydro Renewable Electricity Generation

2009-2035 (EIA Reference Case, 2012)

(3.8%)

(3.9%)

45

0

5000

10000

15000

20000

25000 M

egaw

att

s

Year

Total U.S. Wind Generation Nameplate Capacity

1975-2008

(data from Energy Information Administration, 2010) © Hughes GSR Inc, 2010

0

2

4

6

8

10

12

14

16

18

Ter

aw

att

-Hou

rs p

er M

on

th

Month

Actual Generation

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Per

cen

tage

of

Cap

aci

ty U

sed

Actual Generation

Averaged 31% (Capacity Factor)

Actual Wind Generation in the U.S. Compared

to Nameplate Capacity, 2007-2008

(data from Energy Information Administration, 2010) © Hughes GSR Inc, 2010

Capacity Unavailable

Due to Intemittency

Capacity Unavailable

Due to Intemittency

Theoretical Maximum

69%

46

Generation Capacity at Current Construction Levels and Levels

Required to Maintain and/or Increase Nuclear Capacity by 2025

WHAT ABOUT “NUCLEAR”?

(adapted from Energy Watch Group, Paper EWG Series No. 1/2006, (2006); data from IAEA, (2006))

57 New 1GW

Reactors

283 New 1GW

Reactors

346 New 1GW

Reactors

482 New 1GW Reactors

The Last Piece of the Energy

Sustainability Puzzle:

POPULATION GROWTH

and

ASPIRATIONS OF GROWTH IN

ENERGY CONSUMPTION

IN THE DEVELOPING WORLD

47

0

1

2

3

4

5

6

7

8

9

10 22% of World Population

(1.5 Billion People)

78% of World Population


OECD four times

Non-OECD

18% of population

Country/Region

(B.P. Statistical Review of World Energy, 2011; U.S. Census Bureau, 2011) © Hughes GSR Inc, 2011

20

10

To

nn

es O

il E

qu

iva

len

t P

er C

ap

ita

Non-OECD

82% of population

x1

x4.2

x17 x49

x2.1

There is a Great Inequity in Energy Consumption Worldwide Per Capita Energy Consumption by Country and Region, 2010

0

5

10

15

20

25

30

35

40

34% of World

Population


66% of World

Population


OECD five times

Non-OECD

18% of population

There is a Great Inequity in Energy Consumption Worldwide Per Capita OIL Consumption by Country and Region, 2010

Country/Region (B.P. Statistical Review of World Energy, 2011; U.S. Census Bureau, 2011) © Hughes GSR Inc, 2011

20

10

Ba

rrel

s o

f O

IL P

er C

ap

ita

Non-OECD

82% of population

x1

x5

x9 x22 x96

48

0

500

1000

1500

2000

2500

1981 1986 1991 1996 2001 2006

Mil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Year


0

500

1000

1500

2000

2500

1981 1986 1991 1996 2001 2006

Mil

lio

n T

on

nes

Oil

Eq

uiv

ale

nt

Year


Oil 101%

Coal 479%


418% increase

up 9.5% 2010

over 2009

Production

CHINA: The World’s Number 1 Consumer of Energy

Primary Energy Production and Consumption by Fuel: 1981-2010

491% increase

up 11.2% 2010

over 2009

Oil 428%

Coal 467%

Consumption

Imports 7%


71

%

-5

-4

-3

-2

-1

0

1

1980 1984 1988 1992 1996 2000 2004 2008

Mil

lio

n B

arr

els

per

Da

y

Year

Surplus

Deficit

55% of

Demand

CHINA’s Oil Production Surplus and Deficit 1980-2010


2010 Imports

5 million barrels per day

5.7% OF WORLD CONSUMPTION

49

0

0.5

1

1.5

2

2.5

3

3.5

1980 1985 1990 1995 2000 2005 2010

Mil

lio

n B

arr

els

per

Da

y

Year

Imports

Production

2010 Imports

2.5 million barrels per day

2.9% OF WORLD CONSUMPTION

INDIA’s Oil Production and Imports 1980-2010

75%


0

2

4

6

8

10

12

1985 1995 2005 2015 2025 2035

Ton

nes

Oil

Eq

uiv

ale

nt

Per

Cap

ita

Year

Canada

U.S.A.

OECD

China World Average

India Non-OECD

Per Capita Annual Energy Consumption

History and Forecasts (1985-2035)

(history from BP Statistical Review of World Energy,

2011; forecast from EIA International Energy Outlook reference case, 2011; population from U.S. Bureau of Census)

History Forecast


50

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1985 1995 2005 2015 2025 2035

Mil

lion

Ton

nes

Oil

Eq

uiv

ale

nt

Year

Canada

U.S.A.

China

India

Total Annual Energy Consumption


(history from BP Statistical Review

of World Energy, 2011; forecast from EIA International Energy Outlook reference case, 2011)

History Forecast


0

5

10

15

20

25

1985 1995 2005 2015 2025 2035

Ton

nes

of

CO

2 E

mis

sion

s P

er C

ap

ita

Year

Canada

U.S.A.

OECD

China World Average

India Non-OECD

Per Capita Annual CO2 Emissions


(history from BP Statistical Review of World Energy,

2011; forecast from EIA International Energy Outlook reference case, 2011; population from U.S. Bureau of Census)

History Forecast


51

0

2000

4000

6000

8000

10000

12000

14000

16000

1985 1995 2005 2015 2025 2035

Mil

lion

Ton

nes

of

CO

2 E

mis

sion

s

Year

Canada

U.S.A.

China

India

Total Annual CO2 Emissions


(history from BP Statistical Review

of World Energy, 2011; forecast from EIA International Energy Outlook reference case, 2011)

History Forecast


0

10

20

30

40

50

60

70

80

90

1950 1970 1990 2010 2030 2050

Net

Po

pu

lati

on

In

cre

ase

per

Yea

r (m

illi

on

s)

Year

Net Increase per Year

0

0.5

1

1.5

2

2.5

1950 1970 1990 2010 2030 2050

Gro

wth

Ra

te (

%/Y

ear)

Year

Percentage Increase

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1950 1970 1990 2010 2030 2050

Po

pu

lati

on

(m

illi

on

s)

Year

Population

World Population Increase 1950-2050

© Hughes GSR Inc, 2011 (U.S. Bureau of Census, 2009; US Cars http://www.bts.gov/; World Cars www.plunkettresearch.com

Motor

Vehicles

1 billion

U.S.A.

256 million

China

2009

70 million

+20%

in 2010

Motor Vehicles >5%/year

Motor Vehicles

62 million new

Cars and Light

Trucks built

in 2009

52

Trends in Energy Investment for Food Production

(The Hydrocarbons We Eat)

En

erg

y I

np

ut

per

Un

it o

f F

oo

d E

nerg

y O

utp

ut 20

10

5

2

1

.5

.2

.1

Lo

ss

Pro

fit

.05

.02

Ind

ust

iali

zed

D

evel

op

ing

(Adapted from Science, April 19, 1974) © Hughes GSR Inc, 2011

0

20

40

60

80

100

120

140

160

0

50

100

150

200

250

Oil P

rice ($U

S/b

arrel)

Food

Pri

ce I

nd

ex

Year

Food Price Index

Oil Price (Brent)

Food Commodity Price Index vs Oil Price

© Hughes GSR Inc, 2012 (International Monetary Fund, 2012)

53

0

10

20

30

40

50

60

70

80

90

100

1850 1880 1910 1940 1970 2000 2030

Nuclear

Gas

Oil

Coal Hydro

Wood

0

10

20

30

40

50

60

70

80

90

100

1850 1880 1910 1940 1970 2000 2030

0

10

20

30

40

50

60

70

80

90

100

1850 1880 1910 1940 1970 2000 2030

Nuclear

Gas

Oil

Coal

Hydro Wood

Per

cen

tag

e of

20

35

Per

Cap

ita C

on

sum

pti

on

World Population, Per Capita and Primary Energy

Consumption, 1850-2035, as a Percentage of 2035 Levels

(data from Arnulf Grubler, 1998; BP Statistical Review of World

Energy, 2010; U.S. Bureau of Census, 2010); EIA IEO, Reference Case, 2010)

9.6 times

WOOD

OIL

COAL

GAS

Year

Ren

ew

ab

le

11%

N

on

-Ren

ew

ab

le

89

%

HYDRO

Per

cen

tag

e of

20

35

Pop

ula

tion

Year

6.8 times

Per

cen

tag

e of

20

35

Tota

l C

on

sum

pti

on

Year

Population Per Capita Consumption Total Consumption

65 times

OIL

COAL

47%


“Anyone who believes EXPONENTIAL

GROWTH can go on forever in a finite

world is either a madman or an

economist”

(Economist Kenneth Boulding, early ’70’s)

“The term

‘SUSTAINABLE GROWTH’

is an Oxymoron”

(Albert A. Bartlett, 2000)

54

• The Climate Change dialogue for the most part excludes any consideration of resource limitations on growth, and hence leads us down some counter productive pathways, although initiatives on conservation, efficiency and renewables fortuitiously also address the energy question.

• In an era of constrained energy the correlation of economic growth with energy supply and price will set the stage for economic and geopolitical volatility and intense competition for energy resources.

Summary and Implications

• Hydrocarbons represent an extremely convenient, dense form of non-renewable energy for which there are NO SCALABLE ALTERNATIVES. They will be needed for the development of infrastructure for the next paradigm of more sustainable human development.

• Achieving a sustainable energy system is likely to be the defining issue of our time as the economic growth paradigm abuts physical limits to growth.

• A sustainable energy future is not out of reach but will be hugely challenging – the U.S. and Canada have no real energy strategy – this must be a high priority for the future.

Thank you

[email protected]

250 830-3662

403 276-3056