Global Energy Update
From www.liveoilprices.co.uk/oil/oil_prices/07/2010/lloyds-peak-oil-report-supply-crunch-200-oil-in-2013.html

Lloyd’s peak oil report, supply crunch, $200 oil in 2013?

A recent Lloyd’s of London reported that the world is heading for a global oil supply crunch (better known as peak oil) and that lack of oil by 2013 could force oil prices of crude above $200 a barrel.

The Lloyd’s of London/Chatham House report, one of the London City’s most respected institutions has warned of “catastrophic consequences” for businesses that fail to prepare for a world of increasing oil scarcity and a lower carbon economy.

The Lloyd’s insurance market and the highly regarded Royal Institute of International Affairs, known as Chatham House, says Britain needs to be ready for “peak oil” and disrupted energy supplies at a time of soaring fuel demand in China and India, constraints on production caused by the BP oil spill and political moves to cut CO2 to halt global warming.

The report the world is heading for a global oil supply crunch and high prices owing to insufficient investment in oil production plus a rebound in global demand following recession. It repeats warning from Professor Paul Stevens, a former economist from Dundee University, at an earlier Chatham House conference that lack of oil by 2013 could force the price of crude above $200 (£130) a barrel.

Economic Chaos because of Lower Oil Production?

It also quotes from a US department of energy report highlighting the economic chaos that would result from declining oil production as global demand continued to rise, recommending a crash programme to overhaul the transport system. “Even before we reach peak oil,” says the Lloyd’s report, “we could witness an oil supply crunch because of increased Asian demand.

* GSG note: this last bit seems like an attempt to blame. It's coming anyway and we've been using more than our share for a long time! What's happening has also been predicted for a long time.

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May 21, 2010 - edit, cut and paste by Phil Baulch

Can the World Live Without Deepwater Oil?

Regardless of the environmental and political fallout from BP's (BP) Deepwater Horizon drill-rig disaster, the larger context remains straightforward: The world, and the U.S., increasingly depends on oil and gas produced by deepwater offshore wells. As existing onshore fields keep declining, the need to develop these offshore fields and so-called unconventional oil deposits will only increase.

A report issued in April by United States Joint Forces Command (USJFCOM) created a splash by confirming that at least some U.S. military planners have accepted the key premise of "Peak Oil" as a basis for strategic planning. This premise holds that as conventional oil fields are depleted, new sources of oil or new technologies won't fully replace the lost capacity. As a result, global oil production will peak and then slowly decline, even as new production and technologies are brought on-line.

A common misunderstanding of Peak Oil is that its proponents are claiming that "we're running out of oil." More accurately, Peak Oil foresees a point of maximum production, and the possibility that demand for oil will greatly exceed the available supply. In that scenario, the price of oil would rise, perhaps significantly.

The USJFCOM planners anticipate not just price increases but shortages, and thus the possibility of conflict as nations jockey to control remaining oil reserves. Such long-term thinking about the decline of current oil resources isn't new. U.S. government agency reports such as Strategic Significance of America's Oil Shale Resource have been circulating for years.

The USJFCOM report contained a chart (a version of which is presented here) published by the International Energy Agency, an intergovernmental organization that acts as energy policy adviser to its mostly industrial-economy member nations.



The chart's most striking feature is the rapid decline in existing capacities of large, mature fields such as Cantarell in Mexico, which after yielding 11 billion barrels of oil has seen production fall from 2 million barrels per day (BPD) to 770,000 BPD.

Enhanced recovery technologies such as nitrogen injection are expected to pick up the slack by retrieving more oil from older fields, and unconventional sources such as Canadian oil-sand deposits will add modestly to global production. Industry sources estimate Canadian oil sands will produce 3 million barrels per day by 2015 -- a welcome quantity but small compared to the current global output of about 85 million BPD.

To put those numbers in perspective, the U.S. consumes about 18.7 million BPD and produces 5.3 million BPD domestically.

Mind-Boggling Logistics

The majority of new production is assumed to come from the development of existing reserves, such as the offshore and deepwater deposits in the Gulf of Mexico, which currently yield 30% of America's oil production. Deepwater wells like the ill-fated Deepwater Horizon made up 15% of total U.S. production in 2002 and are expected to rise to 30% of total production by 2015.

New deepwater production of known reserves is supposed to provide up to 40 million BPD of global production -- a staggering amount, given the monumental capital, engineering and expertise that must be brought to bear to bring oil up from miles below the ocean floor.

The logistical and engineering challenges of deepwater drilling are mind-boggling. The Deepwater Horizon rig -- a behemoth the length of two football fields -- had drilled the deepest known oil well in the Gulf of Mexico last September, through one mile of seawater to the ocean floor, and then six miles down to the oil deposit. (A chart of the entire Macondo well can be found on The Oil Drum, a website devoted to oil/gas industry content and discussion). Known as Tiber, this oilfield is expected to produce in its lifetime some 3 billion barrels of oil. Sounds impressive, but it's less than six months of current U.S. consumption.

The geological pressures are intense at these depths. The deep oil and gas are both superheated and supercompressed, and they can erupt through the wellhead with explosive force.

More Prudent Management Is Needed

Though the congressional panel convened to investigate the disaster has gathered testimony that casts doubt on many of the safety features intended to protect the well from just this sort of leakage, the offshore oil industry had compiled a remarkable safety record over the past decade. Previously, the largest spill was 8,000 barrels in 2005.

The global economy runs on oil, and U.S. military and civilian leaders are well aware of the strategic value of America's domestic petroleum reserves. Prudent, safe management of those resources becomes even more important as oil exploration demands extremes of engineering.



May 8, 2010 - edit, cut and paste by Phil Baulch

12 perspectives on the Gulf Coast oil spill

12 Fresh Angles on the Gulf Coast Oil Spill, Neatly Packaged

Santa Rosa, CA (2. April 2010) With the media coverage on the horrific Gulf Coast oil spill largely centering on the volume of the spill and efforts to stem the outflow, Post Carbon Institute offers 12 additional important angles, each tackled by one of the Institute’s 29 acclaimed Fellows. For further perspectives, information and insight contact the Institute. http://www.postcarbon.org/

1. The Ripple Effect

RICHARD HEINBERG (Senior Fellow – Energy & Climate) – We’ve only just begun to see the true cost of the Gulf Coast oil spill. As we saw with Hurricane Katrina, the ripple effect of disruptions in oil supply can lead to profound and surprising outcomes. When you add the unimaginably large costs associated with the discovery and delivery of deep water oil to the even more prohibitive costs of cleanup and damage control and remove the oil industry subsidies, suddenly ‘alternative’ energy supplies seem far more mainstream, affordable and realistic.

Richard is Senior Fellow-in-Residence of the Institute and is widely regarded as one of the world’s foremost fossil fuel educators. He has authored scores of books, essays and articles on the subjects of oil, energy and the economics of scarcity.

2. Big Oil: The (Unfashionable) Boa Wrapped Tight ‘Round the Global Economy

CHRIS MARTENSON (Economy & Preparedness) – With oil prices surging, any hiccup in new discoveries or supply can only mean increasing strains on fragile global economies. Martenson offers compelling insights into the intertwining of oil prices with U.S. and global economic systems.

Chris Martenson is the creator of The Crash Course, a 20-chapter online video course that educates viewers on our broken economic system, the crisis of population demographics, and Peak Oil. Since its launch in 2008, The Crash Course has been viewed over 1.5 million times online and has sold over 20,000 DVD copies. Prior to spending four years educating himself and developing the course and other materials to help individuals understand and take action, Chris was a Vice President at a Fortune 300 Company and spent over ten years in corporate finance and strategic consulting. He has a PhD in pathology from Duke University and an MBA from Cornell University.

3. A Geoscientist Weighs in on Mission Impossible

DAVID HUGHES (Fossil Fuels) – Drilling into the earth’s crust under two miles of water is an incredible engineering feat. From his perspective as a geoscientist with four decades of experience, Hughes contends that oil companies and engineers are pushing beyond the limits of our understandings of how to safely manipulate geological systems.

David Hughes is a geoscientist who has studied the energy resources of Canada for nearly four decades, including 32 years with the Geological Survey of Canada as a scientist and research manager. He developed the National Coal Inventory to determine the availability and environmental constraints associated with Canada’s coal resources. As Team Leader for Unconventional Gas on the Canadian Gas Potential Committee, he coordinated the recent publication of a comprehensive assessment of Canada’s unconventional natural gas potential. He is currently president of a consultancy dedicated to research on energy and sustainability issues.

4. When Big Oil Attacks: Who Will Defend the Poorest Americans?

ERIKA ALLEN (Community Food Systems & Social Justice) – Most of the Gulf Coast state communities whose economies will be crippled by the spill are far from affluent. These communities are at the middle of looming social justice issues where big oil collides with America’s poorest. Remember Katrina?

Erika Allen is Chicago Projects Manager for Growing Power, a nationally acclaimed non-profit organization and land trust led by founder Will Allen that provides equal access to healthy, high-quality, safe, and affordable food, especially in disadvantaged communities. She helps food producers of limited resources strengthen their farm businesses and work in partnerships to create healthy and diverse food options in inner city and rural communities. Erika is co-chair of the Chicago Food Policy Advisory Council, and was appointed by Governor Pat Quinn in 2008 to the Illinois Local and Organic Food and Farm Task Force.

5. The CIA Knows All…

TOM WHIPPLE (Peak Oil & Energy) – As a former CIA analyst, Whipple knows better than almost anyone that cheap, easy oil supplies are long gone. The recent BP catastrophe is the latest proof that we’re getting increasingly desperate, with ruinous consequences, to hold onto that which will inevitably slip away—fossil fuels.

Tom Whipple is one of the most highly respected analysts of peak oil issues in the United States. A retired 30-year CIA analyst who has been following the peak oil story since 1999, Tom is the editor of the daily Peak Oil News and the weekly Peak Oil Review, both published by the Association for the Study of Peak Oil-USA. Tom has degrees from Rice University and the London School of Economics.

6. Future Shock

DAVID FRIDLEY (Renewable Energy & Biofuels) – This accident drives home the difficulty, expense and danger of unconventional (deep water) oil and how the technology of accessing the oil we depend on is only going to get more expensive and more dangerous. How much more of this type of catastrophic failure can we expect to see in the future?

Since 1995, David Fridley has been a staff scientist at the Energy Analysis Program at the Lawrence Berkeley National Laboratory in California. He is also deputy group leader of Lawrence Berkeley's China Energy Group, which collaborates with China on end-user energy efficiency, government energy management programs, and energy policy research. He spent 12 years working in the petroleum industry both as a consultant on downstream oil markets in the Asia-Pacific region and as business development manager for Caltex China.

7. The Mississippi is Fracked & So is Our Food Supply

WES JACKSON (Sustainable Agriculture) – The environmental degradation caused by oil to the Gulf Coast region is only part of the story. While the Gulf Coast spill is gushing oil into the ocean, millions of gallons of toxic chemicals and oil-derived fertilizers are pouring from rivers into the Gulf every single day, creating desertification of farmland and massive algae blooms (the infamous Dead Zone). The Mississippi is beset by oil in its mouth while pesticides constrict its throat. Jackson can put the bigger picture into perspective—if we don’t take care of our topsoil and fail to find alternatives to fossil fuels we’ll be faced with food shortages in the U.S.A. before long.

Wes Jackson is one of the foremost figures in the international sustainable agriculture movement. Founder and president of The Land Institute in Salina, Kansas, he has pioneered reserach in Natural Systems Agriculture — including perennial grains, perennial polycultures, and intercropping — for over 30 years. He was a professor of biology at Kansas Wesleyan and later established the Environmental Studies program at California State University, Sacramento, where he became a tenured full professor. He is the author of several books including Becoming Native to This Place (1994), Altars of Unhewn Stone (1987), and New Roots for Agriculture (1980). Life magazine predicted Wes Jackson will be among the 100 "most important Americans of the 20th century." He is a recipient of the Pew Conservation Scholars award and a MacArthur Fellowship, and has been listed as one of Smithsonian's "35 Who Made a Difference".

8. A Time for Leaders, not Politicians

GLORIA FLORA (Public Lands) In 2000, Gloria made national headlines when she resigned as Forest Supervisor for the largest national forest in the lower 48 states to call attention to antigovernment zealots engaged in the harassment and intimidation of Forest Service employees. Gloria has spent her career battling those who would destroy ecosystems through development of natural resources. President Obama, now gifted with the ultimate opportunity to turn disaster into real progress, must now take a page from Gloria’s playbook and promote powerful legislation that will significantly lessen the U.S. dependence on fossil fuels.

Gloria Flora is founder and Director of Sustainable Obtainable Solutions, an organization dedicated to the sustainability of public lands and of the plants, animals and communities that depend on them. In her 22-year career with the U.S. Forest Service, Gloria became nationally known for her leadership in ecosystem management and for her courageous principled stands: as supervisor of the Lewis and Clark National Forest in north-central Montana, she made a landmark decision to prohibit natural gas leasing along the 356,000-acre Rocky Mountain Front. She serves on the Montana Climate Change Advisory Committee and works throughout the U.S. with the Center for Climate Strategies in assisting states develop climate change action plans.

9. From Every Disaster, a Perfect Opportunity

BILL MCKIBBEN (Climate, Ecology & Economy) – As the most active environmental leader alive, Bill McKibben is a vocal proponent for meaningful climate legislation. From a policy perspective, McKibben offers well reasoned, inspiring calls to action, the timeliness of which are greatly amplified by BP’s blunder.
Bill McKibben, scholar-in-residence at Middlebury College, is an American environmentalist and environmental writer. He is the author of twelve books, including The End of Nature (1989), the first book for a general audience about global warming, and, most recently, Deep Economy: the Wealth of Communities and the Durable Future (2007). His latest book, Eaarth: Making a Life on a Tough New Planet explores what it means to live on a planet we’ve changed fundamentally. Bill's 350.org Day of Action on October 24, 2009, was the largest environmental action in history

10. The Repercussions Will Last for Generations

STEPHANIE MILLS (Biodiversity & Bioregionalism) – From her perspective as a renowned author and lecturer on ecological restoration and community economics, Stephanie offers an analysis of the devastating, multigenerational impact of the spill on the pristine ecosystems, wildlife, and human communities.

Stephanie Mills is a renowned author and lecturer on bioregionalism, ecological restoration, community economics, and voluntary simplicity. Stephanie has lectured at numerous institutions, including the E.F. Schumacher Society, the Chicago Academy of Sciences, and the Harvard Graduate School of Design. In 1996 she was named by Utne Reader as one of the world's leading visionaries.

11. Corporate Responsibility, Where Art Thou?

BILL SHEEHAN (Products & Waste) – Atlanta-based Sheehan recently helped craft the nation’s first Product Stewardship Law, a critical piece of legislation that puts manufacturers on the hook for the cost recycling and trash disposal of their products. With BP looking to escape the cost of cleanup by passing it on to consumers, the idea of corporate responsibility through product stewardship has never been more relevant.

Bill Sheehan co-founded the Product Policy Institute in 2003 and serves as its Executive Director. Bill advocates for public policy that protects public health and safety and slows climate change by encouraging waste prevention, clean production and reduced use of toxics in products. He helped develop a historical analysis that showed how municipal recycling and waste management services enable product manufacturers to design and sell goods without considering disposal costs and impacts. Since 2005, Bill has worked with local governments, communities and NGOs to bring "extended producer responsibility" (EPR) policies to the U.S. to spur green product design.

12. Envisioning a World Without Oil

ANTHONY PERL (Transportation) – It can’t be denied that an overreliance on fossil fuels is the root cause for the Gulf Oil spill. So what does transportation look like in a world where fossil fuels are no longer the go-to source for motive power? Anthony Perl is a globally recognized expert on urban transportation systems, whose vision of post-oil transport is highly sought after by governments around the world.

Anthony Perl is Director of the Urban Studies Program at Simon Fraser University in Vancouver, British Columbia; he has previously worked at the City University of New York, the University of Calgary, and Université Lumière in Lyon, France. He has authored or co-authored four books, most recently Transport Revolutions: Moving People and Freight Without Oil (2008). Anthony's research crosses disciplinary and national boundaries to explore the policy decisions that affect transportation, cities and the environment. He has advised governments in Australia, Belgium, Canada, France, and the United States on transportation and environmental research and policy development, and currently chairs the Intercity Passenger Rail committee of the U.S. Transportation Research Board, a division of the National Research Council.

ABOUT POST CARBON INSTITUTE

Post Carbon Institute provides individuals, communities, businesses, and governments with the resources needed to understand and respond to the interrelated economic, energy, and environmental crises that define the 21st century. PCI envisions a world of resilient communities and re-localized economies that thrive within ecological bounds.

In addition to Senior Fellow Richard Heinberg, PCI Fellows include Bill McKibben, Majora Carter, Wes Jackson, David Orr and 24 others. Full list of PCI Fellows.

POST CARBON INSTITUTE

Tel: +1.707.823.8700 • Fax: +1.866.797.5820

http://www.postcarbon.org • media@postcarbon.org


April 19, 2010 - edit, cut and paste by Phil Baulch

U.S. military warns of oil production shortage by 2015

The U.S. military thinks we're one step closer to peak oil, the point at which oil demand will forever outstrip oil supply, and therefore we're one step closer to fighting over the last rusting cans of gasoline like so many scraps of meat. On the plus side, we're also one step closer to finally equipping our cars with superchargers and massive gas tanks rigged with explosives a la Mad Max and his archetypal peak-oil sled, "the last of the V-8 Interceptors."

The U.S. Joint Forces command has issued a Joint Operating Environment report that states that surplus oil production capacity could disappear within two years and that there could be serious shortages by 2015. From the report:

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, 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.

The Joint Operating Environment report didn't go quite as far as saying it was time to start dressing in leather, eating canned dog food and carrying sawed-off shotguns, but it didn't exactly paint a rosy picture of what post-2015 America could look like. "One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest," the report points out. Ruthless conquest? They might as well say "massive oiled-up dudes wearing hockey masks and riding around the desert on tractors."

We're not sure where the U.S. Joint Forces command got their numbers from, but their conclusion does seem to jibe with a peak oil assessment by a Kuwaiti study and an estimate by Richard Branson's energy taskforce, all of which means we're off to practice our welding skills.

[Source: Guardian | Image: Clinton Steeds - C.C. License 2.0]





April 12, 2010 - edit, cut and paste by Phil Baulch

Energy analysts predicting $100 barrel oil soon.

Crude oil price is currently $87 barrel, more than double the price a year ago. Analysts are not talking about $147 oil — not yet, anyway. That will come later, on peak oil theory and an expected rebound in the global economy.

For the time being, they're only talking about $100 to $110 oil — by late May/early June — that will send US petrol prices well above $3.00.

Goldman Sachs believes that crude shortages will re-emerge as supply fails to keep up with demand recovery; that higher demand could drive oil to the $92 to $97 range within the next three to six months.

Can $100 Reality Be Far Behind?

Two big banks are joining that $100-prediction crowd, telling clients to brace for it. 

Barclays, for one, expects crude to "flirt with $100 this year," anticipating an average price of about $140 by 2015.

Analysts at Bank of America see oil nailing $105 this year, and believe that $150 isn't far behind — a possible reality by 2014 — thanks in part to increased demand from China and India; China recently overtook the U.S. car market, and India has billions of people waiting to buy cars.

And then we have the IEA and EIA projecting stronger demand for oil in the near term.

Others anticipate that a global economic recovery and tightening refinery supplies will push up prices, too, ahead of U.S. summer driving season. Saudi Aramco, for one, already upped its selling prices for all crude grades for U.S. customers in April.

Australian consumers have been insulated from price increases by the strength of the Australian dollar, whilst in the U.K. petrol prices have high an all time high, higher even than the prices before the global financial crisis hit.

So long as there's recovery speculation, any damp energy demand will recover — resulting in higher prices and higher demand. And let's not overlook the potential for conflict around the globe that could flare up at any time, disrupting oil supply. 

Peak oil Theory

From Wikipedia, the free encyclopedia

Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. The concept is based on the observed production rates of individual oil wells, and the combined production rate of a field of related oil wells. The aggregate production rate from an oil field over time usually grows exponentially until the rate peaks and then declines—sometimes rapidly—until the field is depleted. This concept is derived from the Hubbert curve, and has been shown to be applicable to the sum of a nation’s domestic production rate, and is similarly applied to the global rate of petroleum production. Peak oil is often confused with oil depletion; peak oil is the point of maximum production while depletion refers to a period of falling reserves and supply.

M. King Hubbert created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1970.^[1] His logistic model, now called Hubbert peak theory, and its variants have described with reasonable accuracy the peak and decline of production from oil wells, fields, regions, and countries,^[2] and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures. Various modified versions of his original logistic model are used, using more complex functions to allow for real world factors. While each version is applied to a specific domain, the central features of the Hubbert curve (that production stops rising and then declines) remain unchanged, albeit with different profiles.

Some observers, such as petroleum industry experts Kenneth S. Deffeyes and Matthew Simmons, believe the high dependence of most modern industrial transport, agricultural, and industrial systems on the relative low cost and high availability of oil will cause the post-peak production decline and possible severe increases in the price of oil to have negative implications for the global economy. Predictions vary greatly as to what exactly these negative effects would be. If political and economic changes only occur in reaction to high prices and shortages rather than in reaction to the threat of a peak, then the degree of economic damage to importing countries will largely depend on how rapidly oil imports decline post-peak. According to the Export Land Model, oil exports drop much more quickly than production drops due to domestic consumption increases in exporting countries. Supply shortfalls would cause extreme price inflation, unless demand is mitigated with planned conservation measures and use of alternatives.^[3]

Optimistic estimations of peak production forecast the global decline will begin by 2020 or later, and assume major investments in alternatives will occur before a crisis, without requiring major changes in the lifestyle of heavily oil-consuming nations. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used.^[4] Pessimistic predictions of future oil production operate on the thesis that either the peak has already occurred,^[5][6][7][8] oil production is on the cusp of the peak, or that it will occur shortly.^[9] As proactive mitigation may no longer be an option, a global depression is predicted, perhaps even initiating a chain reaction of the various feedback mechanisms in the global market which might stimulate a collapse of global industrial civilization, potentially leading to large population declines within a short period. Throughout the first two quarters of 2008, there were signs that a global recession was being made worse by a series of record oil prices.^[10]