In February ASPO received interesting information from Dr. Robert L. Hirsch to be published in our newsletter. Dr. Hirsch and his colleagues have just completed a study for the U.S. DOE on the mitigation of world oil peaking, Hirsch, R.L., Bezdek, R.H, Wendling, R.M. Peaking of World Oil Production: Impacts, Mitigation and Risk Management. The summary of this paper, as a reporter by Dr. Hirsch, is presented below.
The date for Peak-Oil is discussed without the focus on the date itself: Optimistic oil production forecasts deserve to be viewed with considerable skepticism, but the impact of Peak-Oil is described without doubts: World Oil peaking represents a problem like none other. The political, economic, and social stakes are enormous.
The way US DOE has acted so far it is obvious that we cannot expect action before the Peak-Oil date. According to the study, this will have the following impact: Waiting until world conventional oil production peaks before initiating crash program mitigation leaves the world with a significant liquid fuel deficit for two decades or longer.
ASPO has tried for four years to raise awareness of the serious consequences that Peak-Oil has for Mankind. This report can help you understand the problems.
Kjell Aleklett,
President of ASPO
The Mitigation of the Peaking of World Oil Production
Summary of an Analysis, February 8, 2005
Dr. Robert L. Hirsch
A recently completed study for the U.S. Department of Energy analyzed viable technologies to mitigate oil shortages associated with the imminent peaking of world oil production. Commercial or near-commercial options include improved vehicle fuel efficiency, enhanced conventional oil recovery, and the production of substitute fuels. While research and development on other options could be important, their commercial success is by no means assured, and none offer near-term solutions.
Improved fuel efficiency in the world’s transportation sector will be a critical element in the long-term reduction of liquid fuel consumption. However, the scale of effort required will inherently take time and be very expensive. For example, the U.S. has a fleet of over 200 million automobiles, vans, pickups, and SUVs. Replacement of just half with higher efficiency models will require at least 15 years at the cost of over two trillion dollars in the U.S. alone. Similar conclusions apply worldwide.
Commercial and near-commercial options for mitigating the decline of conventional oil production include:
- Enhanced Oil Recovery (EOR), which can help moderate oil production declines from older conventional oil fields;
- Heavy oil/oil sands, a large resource of lower grade oils, now produced primarily in Canada and Venezuela;
- Coal liquefaction, an established technique for producing clean substitute fuels from the world’s abundant coal reserves; and
- Clean substitute fuels produced from remote natural gas.
For the foreseeable future, electricity-producing technologies, e.g., nuclear and solar energy, cannot substitute for liquid fuels in most transportation applications. Someday, electric cars may be practical, but decades will be required before they achieve significant market penetration and impact world oil consumption. And no one has yet defined viable options for powering heavy trucks or airplanes with electricity.
To explore how these technologies might contribute, three alternative mitigation scenarios were analyzed: One where the action is initiated when peaking occurs, a second where the action is assumed to start ten years before peaking, and a third where the action is assumed to start 20 years before peaking.
Estimates of the possible contributions of each mitigation option were developed, based on crash program implementation. Crash programs represent the fastest possible implementation the best case. In practical terms, the real-world action is certain to be slower.
Analysis of the simultaneous implementation of all of the options showed that an impact of roughly 25 million barrels per day might be possible 15 years after initiation. Because conventional oil production decline will start at the time of the peak, crash program mitigation inherently cannot avert massive shortages unless it is initiated well in advance of peaking. Specifically,
- Waiting until world conventional oil production peaks before initiating crash program mitigation leaves the world with a significant liquid fuel deficit for two decades or longer.
- Initiating a crash program ten years before world oil peaking would help considerably but would still result in a global liquid fuels shortfall, starting roughly a decade after the time that oil would have otherwise peaked.
- Initiating crash program mitigation 20 years before peaking offers the possibility of avoiding a world liquid fuels shortfall for the forecast period.
Without timely mitigation, world supply/demand balance will be achieved through massive demand destruction (shortages), accompanied by huge oil price increases, both of which would create a long period of significant economic hardship worldwide.
Other important observations revealed by the analysis included the following:
- The date of world oil peaking is not known with certainty, complicating the decision-making process. A fundamental problem in predicting oil peaking is uncertain and politically biased oil reserves claims from many oil producing countries.
- As recently as 2001, reliable forecasts of abundant future supplies of North American natural gas proved to be excessively optimistic as evidenced by the recent tripling of natural gas prices. Oil and natural gas geology are similar in many ways, suggesting that optimistic oil production forecasts deserve to be viewed with considerable skepticism.
- In the developed nations, the economic problems associated with world oil peaking and the resultant oil shortages will be far-reaching. In the developing countries, economic problems will be much worse.
- While greater end-use efficiency is essential in the long term, increased efficiency alone will be neither sufficient nor timely enough to solve the oil shortage problem shortly. To preserve reasonable levels of economic prosperity and growth, production of large amounts of substitute liquid fuels will be required. While some substitute fuel production technologies are currently available for deployment, the massive construction effort required will be extremely expensive and very time-consuming, even on a crash program basis.
- Government intervention will be essential, because the economic and social impacts of oil peaking will otherwise be chaotic, and crash program mitigation will need to be properly supported. How and when governments begin to address these challenges seriously is yet to be determined.
Oil peaking discussions should focus primarily on prudent risk management, and secondarily on forecasting the timing of oil peaking, which will always be inexact. Mitigation initiated earlier than required might turn out to be premature if peaking is slow in coming. If peaking is imminent, failure to act aggressively will be extremely damaging worldwide.
World Oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action.