Nov09 1

1
PEAKING OF WORLD OIL PRODUCTIONThe Problem
Its Mitigation

• Robert L. Hirsch, Ph.D.
• Senior Energy Program Advisor, SAIC
• 6th National Conference on Science, Policy and
  the Environment
• January 27, 2006.

2
THIS PRESENTATION

• THE PEAK OIL PROBLEM
• MITIGATION OPTIONS
• THREE SCENARIOS
• TIMING RISK

3
Why will conventional oil production peak?
Regions Peak (Many oil fields)
Oil Fields Peak
The world will peak (All regions)
4
World Additions to Oil Reserves Have Been Lagging
Consumption for Decades.

40
Annual Additions Minus Consumption (Billions of
Barrels)

20


0


-20

1940
2000
Year
We now consume 3 barrels for each new barrel
added.
5
What Might Happen at Peaking?
Oil demand grows in a healthy world economy

• PRICES ESCALATE
• SHORTAGES DEVELOP

• Supply cannot meet demand

Production reaches a maximum then declines -
PEAKS -
6
When?No one knows for certain

• Forecast Source
• 2006-2007 Bakhitari (Iran)
• 2007-2009 Simmons (U.S.)
• After 2007 Skrebowski (U.K.)
• 2010 Campbell (Ireland)
• Before 2009 Deffeyes (U.S.)
• Before 2010 Goodstein (U.S.)
• After 2010 World Energy Council
• 2012 Weng (China)
• 2016 Doug-Westwood
  (U.K.)
• After 2020 CERA (U.S.)

5 years
5-15 years
gt 20 years
7
Forecasting Oil Gas Supply Is Difficult! DOE
EIA Forecasts of N. American Natural Gas Supply
to U.S.
Looks good
4 years
Trouble!
8
Why worry now?

• World oil demand is huge growing.
• World consumption outstripping discoveries.
• Oil production in decline in 33 of the 48 of the
  worlds largest oil producing countries.
• Many experts are deeply concerned.
• Mitigation requires time.
• The risks are enormous.

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Fundamentals
Peaking is maximum production, not running out.
Its a liquid fuels problem, not energy.
10
Mitigation Study

• Scenario I - No action until
  peaking occurs
• Scenario II - Mitigation started 10
  years before peaking
• Scenario III - Mitigation started 20
  years before peaking

ASSUMED CRASH PROGRAM IMPLEMENTATION
THE MOST OPTIMISTIC, LIMITING CASE
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Mitigation Options Considered

• Vehicle fuel Efficiency
• Heavy oil / oil sands
• Coal Liquefaction
• Gas-To-Liquids (GTL)
• Enhanced Oil Recovery (EOR)
• Why these? Therere ready for
• Implementation

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Options Not Included in Our Analysis

• Option Reasoning
• Nuclear
• Wind ... Electric
• Solar
• HydrogenNeither ready nor economic
• Biomass. Not economic
• Shale Oil. Not commercial

LIQUID FUELS needed
13
Sum of Contributions
30
E
O
R
Impact in Millions of barrels of oil per day (MM
bpd)
20
C
o
a
l Li
q
ui
d
s
H
eav
y
Oil
10
G
T
L
E
ff.

Ve
h
icle
s
0
0








5













10
















15
Y
ea
r
s
A
ft
e
r
Cr
as
h
P
r
o
g
r
a
m I
n
iti
a
tio
n
Delay, then rapid growth. Roughly 25 MM bpd 15
years after crash program start.
14
Q Why cant we do more conservation faster? A
Fleets of vehicles are huge median life is
long.
Autos
Light Heavy Airplanes
Trucks Trucks Fleet size -
Millions 130 80 7
Small Median life - Years
17 16 28
22
U.S. Transportation - 2003
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A Pattern for World Oil Demand Date for peaking
left open
Extrapolated Demand -Growing World Economy
Shortage (60 MM bpd _at_ year 20)
U.S. Lower 48 production pattern
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SCENARIO I MITIGATION _at_ PEAKING
120
Mitigation
100
Shortage
80
PRODUCTION (MM bpd)
60
40
20
0
-20
0
10
20
-10
YEARS BEFORE / AFTER OIL PEAK
17
SCENARIO II MITIGATION 10 YEARS BEFORE
120
Mitigation
100
Shortage
80
PRODUCTION (MM bpd)
60
Start
Oil Decline Delayed
40
20
0
-20
0
10
20
-10
YEARS BEFORE / AFTER OIL PEAK
18
SCENARIO II MITIGATION 20 YEARS BEFORE
120
Mitigation
100
80
PRODUCTION (MM bpd)
60
Oil Peaking Further Delayed
40
Start
20
0
-20
0
10
20
-10
YEARS BEFORE / AFTER OIL PEAK
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Summary Crash Program Implementation

• I. Wait for peaking
• II. Start 10 years early
• III. Start 20 years early

BIG TROUBLE!
SERIOUS TROUBLE!
NO PROBLEM?
20
Forecasts of World Conventional Oil Production
Peaking

• Forecast Source
• 2006-2007 Bakhitari (Iran)
• 2007-2009 Simmons (U.S.)
• After 2007 Skrebowski (U.K.)
• 2010 Campbell (Ireland)
• Before 2009 Deffeyes (U.S.)
• Before 2010 Goodstein (U.S.)
• After 2010 World Energy Council
• 2012 Weng (China)
• 2016 Doug.-Westwood

Now
Scenario III
Now 20 years
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A Chinese View on Peak Oil
Gb/year
50
Demand Growth
WORLD OIL
40
GAP
30
Past Production
Forecast Production
20
10
0
Peak 2012
China has been taking aggressive action to secure
oil supply.
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Past / Future?

• Oil interruptions in 1973 1979 caused
  recessions inflation.
• Both events were brief.
• World oil peaking impacts could last for decades.
• We have never faced a problem like world oil
  peaking.

• The worlds first forced energy transition.

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Conclusions

• Oil peaking timing is uncertain.
• It may be soon.
• Soon is less that 20 years hence.
• Its a world liquid fuels problem.
• Peaking Worlds first forced energy transition.
• The risks of over optimism are enormous!
• Mitigation technologies ready Implementation the
  challenge.
• With timely mitigation, economic damage
  minimized.