Peak Oil – The Tipping Point

Our entire way of life depends on Oil

WHERE WE GET OUR ENERGY

0% 20% 40% 60% 80% 100%

Million ofbarrels of

oilequivalent

oil

gas

coal

nuclear

hydro

biomass

solar/wind

The formation of Crude

Most geologists view crude oil and natural gas as the product of compressionand heating of ancient organic materials over geological time.

Planktons

High temperature

High pressure

Flourish during the last Global Warming (Jurassic Age 300 million to 200 million yrs ago). Dead body sank to ocean floor and become thick sediments.

Oil

USA claims worlds first oil wellTitusville Pennsylvania 1859

Ghawar, Saudi: The world’s largest oil field

Ghawar was discovered in 1948 and put on stream in 1951. Estimated tohave 71 billion barrels of proven reserves.

Ghawar

Peak oil is…..

the point at which we can no longer increase the amount of oil we pump. From that moment the entire globe will have an ever decreasing supply of oil.

Why is oil supply peaking, how do we know?

• M King Hubbert

- 2 discoveries • Fields peak when ½ the oil

has been extracted. • There is a time lag between

discovery of an oil field and that field’s peak production of about 25-40 years.

Peak to Peak 40 years US-48

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Peak to Peak 30 years Egypt

00.20.40.60.8

11.21.41.61.8

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Peak to Peak 27 years Russia

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Peak to Peak 25 years United Kingdom

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World Oil Discovery Trend

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Past

Future

Production

Historical Data ExxonMobil

Where is it?Regular Conventional Oil

-245

-191

-193

-110

-83

-47

-44

-27

380

146

30

71

65

22

23

14

-250 -150 -50 50 150 250 350 450

ME Gulf

Eurasia

N. America

L. America

Africa

W. Europe

East

ME.Other

Billion Barrels

Produced

Reserves

Yet-to-Find

2004 was a key year for depletion

• All spare capacity used. OPEC has recently suspended their quota system.

• But also in 2004:– Refinery spare capacity nearly

disappeared– Sulphur removal capacity did disappear – Tankers were costly and in short supply

‘Peak Oil’ in 2007/08?

• Whatever approach we use the answer seems to be ‘Peak’ in 2007/2008

• Before that, if all goes to plan, the world can, possibly, meet likely demand

• After that it is hard to see how demand can be met without demand destruction

• But, there are no guarantees

Various Predictions of World Oil Production Peaking

• Simmons: 2007-2009• Goodstein: 2007-2009• Skrebowski: After 2007• Bakhtiari: Before 2010• Laherrere: 2010-2020• Douglas - Westwood: As early as 2016• EIA (Nominal case): 2016• Shell: After 2020 • Campbell: Around 2010• USGS 95% probability 2032• USGS 5% probability 2012

WORLD OIL DEMAND

• We currently require 84 mbd of oil, and that will rise by around 2-3 mbd by the end of the year. Demand is growing ~2 % per year.