eage slt eu_p_mfinal
TRANSCRIPT
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What energy future after world oil production peak ?
EAGE STUDENT LECTURE TOUR 2009 - 2010
9
A reminder of oil fundamentals: a few key points
Production constraints: oil and gas peaks
Climate constraints: some key data
Oil prices: yesterday, today, and tomorrow
What future for energy: the oil industry in a new world
1
2
3
4
5
What energy future after world oil production peak?
10
Key considerations about energy fundamentals
Energy and life: from sun to food
Energy and our way of life : from Paleolithic to the industrial revolution
And for the last 50 years :
Oil has been the dominant source of primary commercial energy (40% of world total)
Oil has been the economic regulator of all energy prices
Oil has been the physical regulator of the world energy system
OPEC has been the regulator of world oil system
Saudi Arabia has been the regulator of OPEC
11
Key considerations about energy fundamentals
Since 2003 coal has becomethe “physical regulator”
of the World Energy system
Mtoe
Coal
Oil
Gas
Nuclear & Hydro
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000
11 000
12 000
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 20070
10
20
30
40
50
60
70
80
90
Gboe
12
GDP and demand for oil annual growth rate (%, worldwide)
World Energy in the past was simple: oil was the “physical regulator”
Since 2004 this is no more true
-6 %
-4 %
-2 %
0 %
2 %
4 %
6 %
8 %
10 %
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
GDP OIL demand
In 20042/3 of GDP
Increase coming from
China
13
Oil growth is coming exclusively from the OPEC
Annual changes in oil production (Mb/d)
Since 1975 OPEC has become the regulator of the World Oil system.
*Angola left outside the OPEC for consistency purpose
-1,5
-1
-0,5
0
0,5
1
1,5
2
2,5
1990
1992
1994
1996
1998
2000
2002
2004
2006
-1,5
-1
-0,5
0
0,5
1
1,5
2
2,5
1990
1992
1994
1996
1998
2000
2002
2004
2006
-1,5
-1
-0,5
0
0,5
1
1,5
2
2,5
1990
1992
1994
1996
1998
2000
2002
2004
2006
-1,5
-1
-0,5
0
0,5
1
1,5
2
2,5
1990
1992
1994
1996
1998
2000
2002
2004
2006
Former USSROECDOthers outside OPEC
(Brazil, Angola*, Chad, etc.)OPEC
(“Swing producer”)
Mb/d
14
Crude oil production - production almost equal to demand
Mt/y
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
OPECFormer Soviet Union
Others NON OPECDemand
0
5
10
15
20
25
30
Gb/y
15
Upstream: E&P represent 80% of the global oil industry investment
Including China and Russia since 2002
Others : transport, marketing (estimates)
PetrochemicalRefiningExploration/Production
G$
0
50
100
150
200
250
300
350
400
19701972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
16
History of investment in exploration-production
0
50
100
150
200
250
300
350
79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
0
10
20
30
40
50
60
70
Invest. out of North
Invest. in North Am
G$ $/b
Crude oil price
17
The key paradoxes of the oil industry
At 100 $/b crude oil, the upstream worldwide average technical costs represent 15% , while 10% are for the producing companies and around 75% for the producing countries « government take ».
These 100 $/b « crude oil cost » represent an average 30% of the pumps prices in the E.U. The other 70% consist of 60% for the consuming countries « government take », and 10% for downstream costs (refining and marketing).
18
What energy future after world oil production peak?
A reminder of oil fundamentals : a few key points
Production constraints: oil and gas peaks
Climate constraints: some key data
Oil prices: yesterday, today, and tomorrow
What future for energy: the oil industry in a new world
1
2
3
4
5
19
History of oil discoveries (proved and probable) and production
20
History of recent hydrocarbon discoveries (proved and probable) and production
• World demand reaches 50Gboe per year• World discoveries flat since 1996 at 20Gboe per year (excluding the nugget effect).
• 10 Gb oil and 10 Gboe gas• 8 Gboe discovered by NOC • 10 Gboe discovered by IOC• 2 Gboe discovered by others
• size of average discovery : constant since 1980
taille moyenne de l'ensemble des découvertes de l'Industrie
0
50
100
150
200
250
300
350
1961-6
5
1966-7
0
1971-7
5
1976-8
0
1981-8
5
1986-9
0
1991-9
5
1996-0
0
2001-0
5
2006-0
7MMboe
Average size of discoveriesMboe
Production
New reserves
Source : IHS et BP Stat. RevueHydrocarbons (Liquids & Gas)Hydrocarbons (Liquids & Gas)
0
50
100
150
200
19
20
19
30
19
40
19
50
19
60
19
70
19
80
19
90
20
00
0
10
15
20
25
Gboe
5
Gtoe
Industrie : Réserves des nouvelles découvertes
20.2 21.623.6
44.0
57.3
26.3
21.724.3
18.1
25.6
49.0
17.421.4
0
10
20
30
40
50
60
70
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Gboe
Source: IHS-Edin (avril 2009)
(Liquids & Gas)
Industrie : Réserves des nouvelles découvertes
20.2 21.623.6
44.0
57.3
26.321.7
24.3
18.1
25.6
49.0
17.421.4
0
10
20
30
40
50
60
70
‘96 ‘97 ‘98 ’99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08
Gboe
20.2 21.623.6
44.0
57.3
26.321.7
24.3
18.1
25.6
49.0
17.421.4
0
10
20
30
50
60
70
Gboe
Source: IHS-Edin (avril 2009)(Liquids & Gas)
BrasilTurkmenistanKashagan
Reserves added by new discoveries Gboe
21
From discoveries to oil resources
Source GSR Total
*32%
**37%
100%
ConventionalResources
Non ConventionalResources
Cumulativeproduction
1000 Gb
Unrecovered Oil4 000 Gb
Extra Heavy Oil& Tar Sands
~ 600 Gb
New discoveries
Re
co
ve
ry R
ati
o I
nc
rea
se
Rec
ove
ryR
atio
* Actual Average Ratio ** Possible Average Ratio (around 2020)
Proved &Probablereserves1000 Gb
Yet to find200-350 Gb
IOR / EOR300 Gb
2 800 – 3600 GbIn place
« The stone age did not end by lack of stones » Sheik Mohamed Yaki Yamani
22
Historical views on ultimate reserves
0
500
1000
1500
2000
2500
3000
3500
Pra
tt (
1942
)D
uce
(19
46)
Po
ug
e (1
946)
Wee
ks (
1948
)L
ever
son
(19
49)
Wee
ks (
1949
)M
acN
aug
hto
n (
1953
)H
ub
ber
t (1
956)
Wee
ks (
1958
)W
eeks
(19
59)
Hen
dri
cks
(196
5)R
yam
n (
1967
)S
hel
l (1
968)
Wee
ks (
1968
)H
ub
ber
t (1
969)
Mo
od
y (1
970)
Wee
ks (
1971
)W
arm
an (
1972
)B
auq
uis
(19
72)
Sch
wei
nfu
rth
(19
73)
Lin
den
(19
73)
Bo
nil
las
(197
4)H
ow
itt
(197
4)M
oo
dy
(197
5)W
EC
(19
77)
Nel
son
(19
77)
De
Bru
yne
(197
8)K
lem
me
(197
8)N
ehri
ng
(19
78)
Neh
rin
g (
1979
)H
alb
ou
ty (
1979
)M
eyer
ho
ff (
1979
)R
oo
rda
(197
9)H
alb
ou
ty (
1979
)W
EC
(19
80)
Str
ickl
and
(19
81)
Co
liti
(19
81)
Neh
rin
g (
1982
)M
aste
rs (
1983
)K
alin
in (
1983
)M
arti
n (
1984
)Iv
anh
oe
(198
4)M
aste
rs (
1987
)C
amp
bel
l (1
991)
Mas
ters
(19
91)
To
wn
es (
1993
)P
etro
con
sult
. (1
993)
Mas
ters
(19
94)
US
GS
(20
00)
1940194019491949
1950195019591959
1960196019691969
1970197019791979
1980198019891989
1990199020002000
Source: IFP/DSEP adapted from Martin (1985) and Campbell (1992) - Updated 2000
* Cumulative production + proven reserves + possible reserves yet to be discovered
Gb500
400
300
200
100
0
Mt
23
From resources to reserves : production
Production profiles liquids: North Sea clastics
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
1 98
7
1 98
8
1 98
9
1 99
0
1 99
1
1 99
2
1 99
3
1 99
4
1 99
5
1 99
6
1 99
7
bp
d
0%
10%
20%
30%
40%
50%
60%
70%
80%
Re
co
ve
ry
Water
Oil
Recov
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60%
Recov
BS
W
Source GSR Total P.Carpentier et al
24
From resources to reserves : production
Production profiles liquids: Middle East carbonates
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
180 000
74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03
bp
d
0%
10%
20%
30%
40%
50%
60%
70%
80%
Re
co
ve
ry
Water
Oil
Recov
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50%
Recov
BS
W
Source GSR Total P.Carpentier et al
25
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0% 10% 20% 30% 40% 50% 60% 70%Recup- % OIIP
Ra
te -
% O
IIP
/Ye
ar
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0% 10% 20% 30% 40% 50% 60% 70%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0% 10% 20% 30% 40% 50% 60% 70%
Dep
leti
on
rat
e
Depletion rate versus recovery factors for various type of oil fields
North Sea 1North Sea 2
Far East 1
North Sea 3
Middle East 1
Middle East 3Middle East 2 Far East 2
Central America
Source GSR Total P.Carpentier et al
26
Foreseeable drop in productions
1984 1988 1995200059% of ultimate resources
Daily productionMb
Cumulated productionsGb
Daily productionMb
Cumulated productionsGb
70% of ultimate resources
60% of ultimate resources
HistoryConsultantAlternative Prognosis
UK RussiaFrom:P.Carpentier et al Total
27
The 2009 « TOTAL view » of future world petroleum production
40
50
60
70
80
90
100
110
2005 2010 2015 2020 2025 2030
Mb/d
Crude oil
Other
Biofuels
Condensate and LPG
28
The irreversible decline of oil production in the USA
Peak oil is not a theory: it’s an historical fact…
(*) Discoveries are registered as per their initially declared sizes and their timing is « forwarded » by 33 years
Source : King Hubbert 1956 - Updated by Jean Laherrere
29
Various world oil production profile forecasts
30
The exploration production capacity challenge
World oil production
Increasing demand and natural decline of producing fields require42 to 52 Mb/d of production between 2005 and 2015 coming from new fields
Mb/d
Mb/d = Million barrels per day
0
20
1995 2000 2005 2010 2015
Required capacity
increase
Estimated demand growth (~1% to 1.5%/year)
Producing fields decline (~5% to 6%/year)
40
60
80
100
120
31
Summary of opinions about "peak oil"
Since June 2006 it can be considered that views about Peak Oil in France have become reasonnably similar :
TOTAL : Thierry Desmarest – around 2020 / around 100 Mb/d ASPO France : J. Laherrère – around 2015 / less than 100 Mb/d P.R. Bauquis – around 2020 / around 100 Mb/d IFP : Y. Mathieu – ondulated plateau 2015/2030 – less than 100 Mb/d
This point of view is widely different from those among the "optimists" who believe that Peak Oil is not "reserves related" but a political problem : insufficient investments and restrictive policies about investments by OPEC countries, Russia and Mexico :
Exxon Mobil – June 2006 – "no sign of peak oil" Aramco – June 2006 -"no reserve problem" ENI (Maugeri – Early 2006 - "no foreseeable oil peak" BP : John Browne – May 2006 - "There is no reserves problem" Mike Lynch (ex MIT) – "similar and above 120 Mb/d" CERA (Cambridge Energy Research Associates) – 2007 study "Denying peak-oil" USGS, DOE, EIA, IEA…
IEA started changing their views in 2006 and accentuated this change in 2007 : they now seem to realize that peak oil is not only a political or "above ground" problem but also a geological one.
32
Oil and gas will still be produced beyond the end of the 21st century
However the oil production peak (between 2015 and 2025, most probably) and gas production peak will trigger radical changes
Paradoxically, it will be the oil and gas industries golden age (high prices, little political interference in those prices).
After the oil peak, oil and gas prices will see a change of logic: they will become related to those of their substitutes (reversal from the past).
As soon as world oil production starts declining, OPEC will lose its price-policing role but could keep other roles.
Summary of opinions about "peak oil"
33
What energy future after world oil production peak?
A reminder of oil fundamentals : a few key points
Production constraints: oil and gas peaks
Climate constraints: some key data
Oil prices: yesterday, today, and tomorrow
What future for energy: the oil industry in a new world
1
2
3
4
5
34
Climate change: the earth’s evolving temperature
1 000 1 200 1 400 1 600 1 800 2 000
- 1.0
-0.5
0.0
0.5
NORTHERN HEMISPHERE
Données provenant de thermomètres (en rouge), de cerclesde croissance des arbres, de coraux, de carottes
glaciaires et d’enregistrements historiques (en bleu)
Variation in global temperatures over 1000 years (in °C)The zero reference is the period 1961-1990
35
Atmospheric contributions to greenhouse effect
NaturalNatural(155 Watts/m(155 Watts/m22))
AnthropicAnthropic(2.8 Watts/m(2.8 Watts/m22))
Water vapor55%
Clouds15%
Other green-house gases
30% CH4
17%
Halocarb,12%
Stratosph. Ozone13%
N2O5%CO2
53%
36
Strong anthropic emissions increase of carbon dioxyde
37
Projections are heavily scenario-dependant
World emissions remain constant
10 billion humans raise their average emissions to those of the year 2000
T°
38
For those who do not believe in Science…
39
Climate change: what can an oil company do about it ?
Promote a better understanding of climate change mechanisms and use it’s industrial competences to develop potential solutions
Better control greenhouse gas emissions from it’s own facilities
Help its clients to manage their greenhouse gas emissions
Promote alternatives: renewable energies non CO2 or low CO2 emitting and nuclear energy
Imagine and validate efficient and reliable solutions to capture and store CO2
(Lacq Pilot scheme and others)
… while continuing to meet the world’s energy demand(deep offshore, unconventional oil, mature fields, LNG…)
40
Capture and Storage of CO2
Dedicated CCS (Carbon Capture & Storage) program
and partnership since 2001 Capture technology development:
IPCC – 20-40% of world CO2 emissions by 2050
CO2 injection and storage Storage integrity Well integrity Long term
fate of CO2
P&R,monitoring
Total Lacq project
41
What energy future after world oil production peak?
A reminder of oil fundamentals : a few key points
Production constraints: oil and gas peaks
Climate constraints: some key data
Oil prices: yesterday, today, and tomorrow
What future for energy: the oil industry in a new world
1
2
3
4
5
42
Crude oil price and crisis
43
Brent price evolution forecasts
Actual
94 constant $/b
0
10
20
30
40
50
60
70
80
90
1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
1984
19831982
1980-1981
44
What is driving oil prices ?
It depends upon which newspaper you read…
Financial press: stocks, stocks market anticipations…
Economic press: investment, economic growth,….
Green/red press: speculation, speculation, greed….
All these explanations are partially relevant:world unused surplus capacity is the key factor
45
The price impact of OPEC surplus production capacity
Surplus OPEC capacity (right scale)
IPE Brent prices (left scale)
Pric
e ($
/b)
M b
/d
46
Oil prices 2005 – 2050 (Arabian light in US $ 2000/bbl)
0
50
100
150
200
250
2005 2011 2017 2023 2029 2035 2041 2047 2053
Oil Prices
A dream view presented in Cambridge by P.R. Bauquis on 15/03/06A dream view presented in Cambridge by P.R. Bauquis on 15/03/06
$/b
47
Production costs are increasing… … necessitating a relatively high oil price
Billions of barrels
80
60
40
1000 2000 3000
20OPEC
Middle East
OtherConventional
Deepwater
Ultra deepwater
EnhancedRecovery
Extra Heavy
oil
Oil shales
100
Arctic
Billions of barrels
80
60
40
1000 2000 3000
20OPEC
Middle East
OtherConventional
Deepwater
Ultra deepwater
EnhancedRecovery
Extra Heavy
oil
Oil shales
100
Arctic
$/bbl
48
Key considerations about future oil and energy prices
High oil prices are a favourable factor: To ensure stability and economic growth of oil producers To ensure energy conservation of oil importers To ensure development of energy substitutes (Renewable and Nuclear) To ensure development of “High Tech.” costly oil.
High oil prices means around 100 $/bbl in constant US$ referenced year 2000 (order of magnitude)
However before prices could stabilize in this price range a new oil shock with temporary very high prices (200 to 400 $ / bbl) is a likely scenario
49
What energy future after world oil production peak?
A reminder of oil fundamentals : a few key points
Production constraints: oil and gas peaks
Climate constraints: some key data
Oil prices: yesterday, today, and tomorrow
What future for energy: the oil industry in a new world
1
2
3
4
5
50
The 4 main drivers for oil industry structural changes
Geopolitics
Peak oil and Peak gas
Carbon emission costs (climate issue)
The financial/economic crisis
51
World Oil PlayersWorld Oil Players
Oil reserves in Gb
Mb/d
0 10 20 30 40 50 60 70 80 90 100 110 1200
0.5
1
1.5
2
2.5
3
3.5
4
260
Oil productionOil production
ExxonMobil
ChevronTexaco
ENIRepsol-YPF
ShellBP
TOTAL
International companies
Source : Oil and Gas Journal, AIE
4
4.5
5
5.5
6
6.5
7
7.5
Mb/dMb/d
NIOC (Iran)
INOC (Irak)
PEMEX
ARAMCO
PDV (Venezuela)
KPC (Kuwaït)
Libya NOC ADNOC (UAE)
PetroChina
Sonatrach
National companies
……technical, environmental and societal acceptabilitytechnical, environmental and societal acceptability
52
The oil industry structure in the past and today
Crude suppliers
Refining capacities
19731999
*State ownership > 50%
19732000
1973
2005
Majors Nationalcompanies*
OthersCompanies
Majors Nationalcompanies*
OthersCompanies
0%
20%
40%
60%
80%
0%
20%
40%
60%
80%
53
World Oil production profile and transports share
54
Liquid hydrocarbons: an energy compactness that no other sources can match, neither today nor in the future
0
1
2
3
4
5
6
7
8
9
10
0 1 2 3 4 5 6 7 8 9 10
liquid Hydrocarbons
Compressed Natural gas
Hydrogen
Hydrides
Batteries
Compressed natural gas : steel or composite tanks
Hydrogen : liquid or compressed from 5000 to 10000 PSI in composite tanks
kWh / l
kWh / kg
55
Which energy for road transports 1960 – 2000 - 2100
56
Back to fully proved locomotion systems ….
Which energy for road transports
57
120
160
1970 1980 1990 2000 2010 2020 2030
Electricity
Transportation
IndustryHeating
2002-2030growth: +3,2% pa
energygrowth: +1,7% paGHG emissiongrowth: +1,7% paFossilfuels = 80% ofprimaryenergygrowth
0
40
80
2010
Electricity
TransportationIndustryHeating
120
160
1970 1980 1990 2000 2010 2020 2030
Electricity
Transportation
IndustryHeating
2002-2030growth: +3,2% pa
energygrowth: +1,7% paGHG emissiongrowth: +1,7% paFossilfuels = 80% ofprimaryenergygrowth
0
40
80
2010
Electricity
TransportationIndustryHeating
132
2005 2015 2030
39%
22%
45%
22%
46%
21%
112
89
17%3%
16%
3%Mboe/day
17%
12% Renewables
Hydroelectricity
Nuclear
Oil
Natural gas
Coal
(+5.6%)
(+2.0%)
(+0.7%)
(- 0.7%)
(+2.5%)
(+2.1%)
132
2005 2015 2030
39%
22%
45%
22%
46%
21%
112
89
17%3%
16%
3%Mboe/day
17%
12%132
2005 2015 2030
39%
22%
45%
22%
46%
21%
112
89
17%3%
16%
3%Mboe/day
17%
12% Renewables
Hydroelectricity
Nuclear
Oil
Natural gas
Coal
(+5.6%)
(+2.0%)
(+0.7%)
(- 0.7%)
(+2.5%)
(+2.1%)
Renewables
Hydroelectricity
Nuclear
Oil
Natural gas
Coal
(+5.6%)
(+2.0%)
(+0.7%)
(- 0.7%)
(+2.5%)
(+2.1%)
IEA primary energy IEA primary energy consumption by segmentconsumption by segment
Annual growth Annual growth raterate
2005-20302005-2030
Gas demand mainly driven by power generation
58
Proved conventional gas reserves equivalent to 65 years of today’s demand
Gas availability controlled by transportation : pipelines and LNG terminals
Gas prices controlled by long term contracts
Sources : O&G Journal, USGS, IEA, HIS, Cedigaz
Proved reserves of Gas
Latin Latin AmericaAmerica
FSUFSU
Asia Asia PacificPacific
AfricaAfrica
EuropeEuropeNorth AmericaNorth America
Middle Middle EastEast
Gas ResourcesTCF
~2,000
Estimatedresources
6,340
2,000 2,000
Provedreserves
Reservegrowth
Yet-to-findreserves
Conventional gas Non Conventional
Gas reserves and resources
59
Oil
Coal
Gas
Nuclear energy
Bioenergy
Solar/Wind/GeothermalWater power
From L. Bolkow, 2009
40
0
25
20
15
10
5
35
30
Gboe
Still 80% of the energy mix still derived from fossil fuels in 2030
World energy outlook (IAE)
60
Coal resources
From F.W. WELLMER
Coal resources
Capture and sequestration of CO2 is not an option, it is a necessity
61
Renewable energies will grow but not enough
+ 1.7 %+ 1.7 %
+ + 8.38.3 % %
+ + 7.67.6 % %
+ 2.5 %+ 2.5 %
Biofuels (incl BtL)
Solar, wind, etc
Hydroelectric power
Biomass (incl. forest use in developing countries)
1924
28
364
5
7
10
3
9
2
3
1
1990 2005 2015 2030
2424
3131
5858Mboe/dEstimates
4141+ 2.6% /y
ear.
+ 2.6% /year.
Annual growth
2005 - 2030
Annual growth
2005 - 2030
Source: IEA World Energy Outlook , Alternative Policy Scenario
62
Conclusion: future of oil industry
It should be bright for all players: IOC’s, NOC’s, independants,but also contractors, major Service Cies, specialized Service Cies…not forgetting R & D Institutes and Training Specialists!
Twenty years down the road this industry will have been deeply « redesigned » both because of the ressources/production constraints and the climate change issues
Like always the most adaptable and the best will not only survive: they will do fascinating jobs and make money…
Thank you for your attention