The tectonic plates of energy policy just moved! Did you notice?

[Paul Mobbs]

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The world had a metanoic moment yesterday -- did you notice?

There has just been a major shift in the tectonic plates of global energy 
policy -- the earthquakes will be along when the world realises what it means! 
(curiously, in UK terms, the date was also 9/11!).

This is all related to the International Energy Agency's publication of the 
World Energy Outlook report which, FOR THE FIRST TIME, accepts that oil 
production will not rise in the future -- and this assumes that 'fields to be 
developed in the future' are able to plug the gap between the decline of 
existing fields and existing demand (a very unlikely scenario). For more detail 
see the Oil Drum's initial review -- http://www.theoildrum.com/node/7100

The IEA are even asking for a global climate deal in order to reduce oil 
demand and keep the price under control!!

For summaries and press releases see the IEA's web site -- 
http://www.worldenergyoutlook.org/
http://www.worldenergyoutlook.org/docs/weo2010/WEO2010_ES_English.pdf
http://www.worldenergyoutlook.org/docs/weo2010/factsheets.pdf
http://www.worldenergyoutlook.org/docs/weo2010/key_graphs.pdf
http://www.worldenergyoutlook.org/docs/weo2010/press_release.pdf


NEEDLESS TO SAY, this news didn't make the lead on the main broadcast news 
(except for a small piece on BBC world news), either yesterday or today, 
despite the incredible shift that it represents and the doubt it creates about 
the global economy. I knew it was being published -- it's a regular event -- 
so why the media myopia??

The trade press were interested:

Industrial Fuels and Power --
http://www.ifandp.com/article/008061.html

Commodities Now:
http://www.commodities-now.com/reports/power-and-energy/4067-world-energy-
outlook-2010-released.html

Of the major news outlets few had coverage, except those skewed towards big 
business economics:

Wall Street Journal:
http://online.wsj.com/article/BT-CO-20101109-715838.html

Kipp Report --
http://www.kippreport.com/2010/11/iea-raises-oil-price-outlook-on-supply-
uncertainty/


Of the mainstream UK media only the Indie and the Beeb had reports yesterday:

http://news.bbc.co.uk/1/hi/business/8353840.stm

The Independent --
http://www.independent.co.uk/news/business/news/iea-predicts-oil-breaking-200-
by-2035-as-china-keeps-on-trucking-2129729.html

So, "the game's afoot!!". If the production of new capacity can't keep pace 
with the depletion rate -- as many analysts outside the IEA forecast -- then 
oil is now pretty much "officially" on it's way out.


If you want the 'easy listening' review of the IEA's forecasts, the following 
article is part of a series published by National Geographic yesterday -- 
http://environment.nationalgeographic.com/environment/energy/great-energy-
challenge/

http://news.nationalgeographic.com/news/energy/2010/11/101109-peak-oil-iea-
world-energy-outlook/

Has the World Already Passed "Peak Oil"?

New analysis pegs 2006 as highpoint of conventional crude production

Mason Inman, National Geographic News, 9th November 2010


The year 2006 may be remembered for civil strife in Iraq, the nuclear weapon 
testing threat by North Korea, and the genocide in Darfur, but now it appears 
that another world event was occurring at the same time—without headlines, but 
with far-reaching consequence for all nations.

That’s the year that the world’s conventional oil production likely reached 
its peak, the International Energy Agency (IEA) in Vienna, Austria, said 
Tuesday.

According to the 25-year forecast in the IEA's latest annual World Energy 
Outlook, the most likely scenario is for crude oil production to stay on a 
plateau at about 68 to 69 million barrels per day.

In this scenario, crude oil production "never regains its all-time peak of 70 
million barrels per day reached in 2006," said IEA’s World Energy Outlook 
2010.

In previous years, the IEA had predicted that crude oil production would 
continue to rise for at least another couple of decades.

Now, because of rising oil prices, declines in investment by the oil industry, 
and new commitments by some nations to cutting greenhouse gas emissions, the 
new forecast says oil production is likely to be lower than the IEA had 
expected.


End of Cheap Oil

The projected flat crude oil production doesn’t translate into an immediate 
shortage of fuels for the world’s cars and trucks. IEA actually projects that 
the total production of what it calls “petroleum fuels” is most likely to 
continue steadily rising, reaching about 99 million barrels per day by 2035.

This growth in liquid fuels would come entirely from unconventional sources, 
including "natural gas liquids," which are created as a by-product of tapping 
natural gas reservoirs.

The consequences for the world’s energy consumers of this increased reliance 
on natural gas liquids and other unconventional fuels are stark.

"The age of cheap oil is over," said Fatih Birol, IEA chief economist.

"If the consuming nations do not make major efforts to slow down the oil demand 
growth, we will see higher oil prices," Birol said, "which we think is not 
good news for the economies of the consuming nations."

IEA was set up by most of the world's industrialized countries after the 1970s 
world oil crises to analyze the world’s energy situation and advise them on 
policy.

The closely watched most-likely scenario, which the IEA calls the "New 
Policies Scenario," assumes that countries stick to the commitments they have 
made in the past couple of years to cut greenhouse gas emissions.

But even under IEA’s so-called "business-as-usual" scenario, without the 
projected efforts to cut fossil fuel pollution, oil production would be 
significantly lower in 20 years' time than the IEA had forecast even just a few 
years ago.

Oil production might rise marginally under the "business-as-usual" scenario, 
the report said, but supplies would be short enough to send oil prices soaring 
to double today’s level.


Fighting Decline

A major reason for the rising prices and flatlining production is that for "the 
currently producing fields of crude oil, the production will decline," Birol 
said.

Today's active oil fields produce about 70 million barrels per day, but by 
2035, he said, "they will produce less than 20 million barrels per day of 
oil."

Just to keep crude oil production flat would require much more production from 
new oil fields—including those discovered but not yet developed, and others 
still to be discovered.

The IEA forecasts that Saudi Arabia—the largest producer—would boost its 
production by 50 percent, and that Iraq would nearly triple its production.

Maintaining this plateau would require massive investment in the oil industry, 
the report estimated, about $8 trillion over the next 25 years.

Also, in the IEA's main scenario, production from "tar sands," also known as 
“oil sands,” found mainly in Canada and Venezuela, would triple in the next 25 
years.

However, these unconventional sources are generally more expensive and harder 
on the environment, the IEA said.

Tar sands "mining operations have a large impact on the landscape," the report 
said, requiring forests to be cleared, and large "tailing ponds" to collect 
the toxic runoff from tar sands processing.

Tar sands have a bigger climate footprint than conventional oil, with larger 
greenhouse gas emissions for the whole life cycle, from "well-to-wheels," the 
new report said.

Barrel for barrel, the IEA said, oil from tar sands would create 5 to 15 
percent more emissions of carbon dioxide (CO2), the principal greenhouse gas 
causing global warming.

Looking at the reasons for the plateau in crude oil production, “it’s clear 
that it’s a mixture of above-ground and below-ground factors,” said Guy 
Caruso, former head of the U.S. Energy Information Agency, and now at the 
Center for Strategic and International Studies, a think tank in Washington, 
D.C.

“It’s partly geological resource limitations,” Caruso said. “There’s decline 
that we’re fighting in the older fields,” in which production has fallen faster 
than had been expected.

But there are also “areas like Venezuela, Iraq, Kazakhstan, and Nigeria, where 
we know the oil is there,” but political turmoil and other issues have kept 
production far below the potential, he said.

When all the factors are taken into account, the trend is toward rising oil 
prices, Caruso said. Oil-consuming nations can cope with this if the price 
rises smoothly, but he added, “what economies have a hard time dealing with is 
a spike like we had in 2008, when oil reached nearly $150 a barrel, and then 
dropped back down again.”

- -- 

"We are not for names, nor men, nor titles of Government,
nor are we for this party nor against the other but we are
for justice and mercy and truth and peace and true freedom,
that these may be exalted in our nation, and that goodness,
righteousness, meekness, temperance, peace and unity with
God, and with one another, that these things may abound."
(Edward Burrough, 1659 - from 'Quaker Faith and Practice')

Paul's book, "Energy Beyond Oil", is out now!
For details see http://www.fraw.org.uk/ebo/

Read my message board, "Ecolonomics", at:
http://www.fraw.org.uk/mei/ecolonomics/

Paul Mobbs, Mobbs' Environmental Investigations
3 Grosvenor Road, Banbury OX16 5HN, England
tel./fax (+44/0)1295 261864
email - mobbsey at gn.apc.org
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