subject: Peak Oil - Tdm Over Ip - China Tdm Over Ethernet [print this page] Demand for oil Demand for oil
Petroleum: top consuming nations, 1960-2006
Further information: Oil consumption rates, Industrialization, and Developing countries
The world increased its daily oil consumption from 63 million barrels (Mbbl) in 1980 to 85 million barrels in 2006
The demand side of peak oil is concerned with the consumption over time, and the growth of this demand. World crude oil demand grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. World demand for oil is projected to increase 37% over 2006 levels by 2030 (118million barrels per day (18.810^6m3/d) from 86million barrels (13.710^6m3)), due in large part to increases in demand from the transportation sector.
Energy demand is distributed amongst four broad sectors: transportation, residential, commercial, and industrial. In terms of oil use, transportation is the largest sector and the one that has seen the largest growth in demand in recent decades. This growth has largely come from new demand for personal-use vehicles powered by internal combustion engines. This sector also has the highest consumption rates, accounting for approximately 68.9% of the oil used in the United States in 2006, and 55% of oil use worldwide as documented in the Hirsch report. Transportation is therefore of particular interest to those seeking to mitigate the effects of peak oil.
Although demand growth is highest in the developing world, the United States is the world's largest consumer of petroleum. Between 1995 and 2005, U.S. consumption grew from 17.7 million barrels a day to 20.7 million barrels a day, a 3 million barrel a day increase. China, by comparison, increased consumption from 3.4 million barrels a day to 7 million barrels a day, an increase of 3.6 million barrels a day, in the same time frame.
United States oil production peaked in 1970. By 2005 imports were twice the production.
As countries develop, industry, rapid urbanization, and higher living standards drive up energy use, most often of oil. Thriving economies such as China and India are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996-2006. In 2008, auto sales in China were expected to grow by as much as 15-20%, resulting in part from economic growth rates of over 10% for 5years in a row. Although swift continued growth in China is often predicted, others predict that China's export dominated economy will not continue such growth trends due to wage and price inflation and reduced demand from the United States. India's oil imports are expected to more than triple from 2005 levels by 2020, rising to 5million barrels per day (79010^3m3/d).
The International Energy Agency estimated in January 2009 that oil demand fell in 2008 by 0.3%, and that it would fall by 0.6% in 2009. Oil consumption had not fallen for two years in a row since 1982-1983.
The Energy Information Administration (EIA) estimated that the United States' demand for petroleum-based transportation fuels fell 7.1% in 2008, which is "the steepest one-year decline since at least 1950." The agency stated that gasoline usage in the United States may have peaked in 2007, in part due to increasing interest in and mandates for use of biofuels and energy efficiency.
The IEA now expects global oil demand to increase by about 1.6 million barrels a day in 2010. Asian economies, in particular China, will lead the increase. China oil demand may rise more than 5% compared with a 3.7% gain in 2009, the CNPC said.
Population
World population
Another significant factor on petroleum demand has been human population growth. Oil production per capita peaked in the 1970s. The United States Census Bureau predicts that the world population in 2030 will be almost double that of 1980. Author Matt Savinar predicts that oil production in 2030 will have declined back to 1980 levels as worldwide demand for oil significantly out-paces production. Physicist Albert Bartlett claims that the rate of oil production per capita is falling, and that the decline has gone undiscussed because a politically incorrect form of population control may be implied by mitigation. Oil production per capita has declined from 5.26barrels per year (0.836m3/a) in 1980 to 4.44barrels per year (0.706m3/a) in 1993, but then increased to 4.79barrels per year (0.762m3/a) in 2005. In 2006, the world oil production took a downturn from 84.631 to 84.597 million barrels per day (13.455310^6 to 13.449810^6m3/d) although population has continued to increase. This has caused the oil production per capita to drop again to 4.73barrels per year (0.752m3/a).
One factor that has so far helped ameliorate the effect of population growth on demand is the decline of population growth rate since the 1970s, although this is offset to a degree by increasing average longevity in developed nations. In 1970, the population grew at 2.1%. By 2007, the growth rate had declined to 1.167%. However, oil production is still outpacing population growth to meet demand. World population grew by 6.2% from 6.07 billion in 2000 to 6.45 billion in 2005, whereas according to BP, global oil production during that same period increased from 74.9 to 81.1 million barrels (11.9110^6 to 12.8910^6m3), or by 8.2%. or according to EIA, from 77.762 to 84.631 million barrels (12.363210^6 to 13.455310^6m3), or by 8.8%.
Agricultural effects and population limits
Further information: Food vs fuel, 20072008 world food price crisis, Agriculture and petroleum, and Food security
Because supplies of oil and gas are essential to modern agriculture techniques, a fall in global oil supplies could cause spiking food prices and unprecedented famine in the coming decades.[note 1] Geologist Dale Allen Pfeiffer contends that current population levels are unsustainable, and that to achieve a sustainable economy and avert disaster the United States population would have to be reduced by at least one-third, and world population by two-thirds. The largest consumer of fossil fuels in modern agriculture is ammonia production (for fertilizer) via the Haber process, which is essential to high-yielding intensive agriculture. The specific fossil fuel input to fertilizer production is primarily natural gas, to provide hydrogen via steam reforming. Given sufficient supplies of renewable electricity, hydrogen can be generated without fossil fuels using methods such as electrolysis. For example, the Vemork hydroelectric plant in Norway used its surplus electricity output to generate renewable ammonia from 1911 to 1971. Iceland currently generates ammonia using the electrical output from its hydroelectric and geothermal power plants, because Iceland has those resources in abundance while having no domestic hydrocarbon resources, and a high cost for importing natural gas. However, in the near term, almost every large-scale source of renewable energy still requires petroleum inputs, such as to fuel construction equipment and to transport workers and materials. Iceland, for example, has abundant renewable energy resources, but still depends critically on liquid fuels from petroleum,[citation needed] all of which it must import. If the supply of petroleum should fall faster than people can learn how to build renewable energy infrastructure using only renewable inputs, it may not be possible to maintain the intensive agriculture necessary to support the high global population.
Petroleum supply
Discoveries
All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas.
William J. Cummings, Exxon-Mobil company spokesman, December 2005
It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive.
Lord Ron Oxburgh, a former chairman of Shell, October 2008
To pump oil, it first needs to be discovered. The peak of world oilfield discoveries occurred in 1965 at around 55 billion barrels(Gb)/year. According to the ASPO, the rate of discovery has been falling steadily since. Less than 10 Gb/yr of oil were discovered each year between 2002-2007.
Reserves
Main articles: Oil reserves and List of largest oil fields
2004 U.S. government predictions for oil production other than in OPEC and the former Soviet Union
Conventional crude oil reserves include all crude oil that is technically possible to produce from reservoirs through a well bore, using primary, secondary, improved, enhanced, or tertiary methods. This does not include liquids extracted from mined solids or gasses (oil sands, oil shales, gas-to-liquid processes, or coal-to-liquid processes). Reserves in effect peaked in 1980, when production first surpassed new discoveries, though creative methods of recalculating reserves have made this difficult to establish exactly.
Oil reserves are classified as proven, probable and possible. Proven reserves are generally intended to have at least 90% or 95% certainty of containing the amount specified. Probable reserves have an intended probability of 50%, and the possible reserves an intended probability of 5% or 10%. Current technology is capable of extracting about 40% of the oil from most wells. Some speculate that future technology will make further extraction possible, but to some, this future technology is already considered in Proven and Probable reserve numbers.
In many major producing countries, the majority of reserves claims have not been subject to outside audit or examination. Most of the easy-to-extract oil has been found. Recent price increases have led to oil exploration in areas where extraction is much more expensive, such as in extremely deep wells, extreme downhole temperatures, and environmentally sensitive areas or where high technology will be required to extract the oil. A lower rate of discoveries per explorations has led to a shortage of drilling rigs, increases in steel prices, and overall increases in costs due to complexity.
Concerns over stated reserves
[World] reserves are confused and in fact inflated. Many of the so-called reserves are in fact resources. They're not delineated, they're not accessible, theye not available for production.
Sadad I. Al Husseini, former VP of Aramco, presentation to the Oil and Money conference, October 2007.
Al-Husseini's estimated that 300billion (64109m3) of the world's 1,200billion barrels (19010^9m3) of proved reserves should be recategorized as speculative resources.
Graph of OPEC reported reserves showing refutable jumps in stated reserves without associated discoveries, as well as the lack of depletion despite yearly production.
One difficulty in forecasting the date of peak oil is the opacity surrounding the oil reserves classified as 'proven'. Many worrying signs concerning the depletion of 'proven reserves' have emerged in recent years. This was best exemplified by the 2004 scandal surrounding the 'evaporation' of 20% of Shell's reserves.
For the most part, 'proven reserves' are stated by the oil companies, the producer states and the consumer states. All three have reasons to overstate their proven reserves: oil companies may look to increase their potential worth; producer countries gain a stronger international stature; and governments of consumer countries may seek a means to foster sentiments of security and stability within their economies and among consumers.
The Energy Watch Group (EWG) 2007 report shows total world Proved (P95) plus Probable (P50) reserves to be between 854 and 1,255 Gb (30 to 40 years of supply if demand growth were to stop immediately). Major discrepancies arise from accuracy issues with OPEC's self-reported numbers. Besides the possibility that these nations have overstated their reserves for political reasons (during periods of no substantial discoveries), over 70 nations also follow a practice of not reducing their reserves to account for yearly production. 1,255 Gb is therefore a best-case scenario. Analysts have suggested that OPEC member nations have economic incentives to exaggerate their reserves, as the OPEC quota system allows greater output for countries with greater reserves.
Kuwait, for example, was reported by a January 2006 issue of Petroleum Intelligence Weekly to have only 48 Gb in reserve, of which only 24 were "fully proven." This report was based on "leaks of confidential documents" from Kuwait, and has not been formally denied by the Kuwaiti authorities. This leaked document dates back from 2001 so the figure includes oil that have been produced since 2001, roughly 5-6 billion barrels, but excludes revisions or discoveries made since then. Additionally, the reported 1.5 Gb of oil burned off by Iraqi soldiers in the First Persian Gulf War are conspicuously missing from Kuwait's figures.
On the other hand investigative journalist Greg Palast argued in 2006 that oil companies have an interest in making oil look more rare than it is, to justify higher prices. Other analysts in 2003 argued that oil producing countries understated the extent of their reserves to drive up the price.
In November 2009, a senior official at the IEA alleged that the United States had encouraged the international agency to manipulate depletion rates and future reserve data to maintain lower oil prices. In 2005, the IEA predicted that 2030 production rates would reach 120Mb/d, but this number was gradually reduced to 105 million. The IEA official alleged industry insiders agree that even 90 to 95Mb/d might be impossible to achieve. Although many outsiders had questioned the IEA numbers in the past, this was the first time an insider had raised the same concerns. A 2008 analysis of IEA predictions questioned several underlying assumptions and claimed that a 2030 production level of 75Mb/d (including 55Mb of crude oil and 20Mb non-conventional oil and NGLs) was more realistic than the IEA numbers.
Unconventional sources
Main articles: Unconventional oil, Heavy crude oil, Oil sands, and Oil shale
Syncrude's Mildred Lake mine site and plant near Fort McMurray, Alberta
Unconventional sources, such as heavy crude oil, oil sands, and oil shale are not counted as part of oil reserves. However, oil companies can book them as proven reserves after opening a strip mine or thermal facility for extraction. Oil industry sources such as Rigzone have stated that these unconventional sources are not as efficient to produce, however, requiring extra energy to refine, resulting in higher production costs and up to three times more greenhouse gas emissions per barrel (or barrel equivalent). While the energy used, resources needed, and environmental effects of extracting unconventional sources has traditionally been prohibitively high, the three major unconventional oil sources being considered for large scale production are the extra heavy oil in the Orinoco Belt of Venezuela, the Athabasca Oil Sands in the Western Canadian Sedimentary Basin, and the oil shales of the Green River Formation in Colorado, Utah, and Wyoming in the United States. Energy companies such as Shell and Chevron have already started extracting bitumen, a reserve of oil sands, and processing it into synthetic oil.
Chuck Masters of the USGS estimates that, "Taken together, these resource occurrences, in the Western Hemisphere, are approximately equal to the Identified Reserves of conventional crude oil accredited to the Middle East." Authorities familiar with the resources believe that the world's ultimate reserves of unconventional oil are several times as large as those of conventional oil and will be highly profitable for companies as a result of higher prices in the 21st century. In october 2009, the USGS updated the Orinoco tar sands (Venezuela) recoverable "mean value" to 513billion barrels (8.161010m3), with a 90% chance of being within the range of 380-652 billion barrels, making this area "one of the world's largest recoverable oil accumulations".
Unconventional resources are much larger than conventional ones.
Despite the large quantities of oil available in non-conventional sources, Matthew Simmons argues that limitations on production prevent them from becoming an effective substitute for conventional crude oil. Simmons states that "these are high energy intensity projects that can never reach high volumes" to offset significant losses from other sources. Another study claims that even under highly optimistic assumptions, "Canada's oil sands will not prevent peak oil," although production could reach 5 million bbl/day by 2030 in a "crash program" development effort. Moreover, oil extracted from these sources typically contains contaminants such as sulfur, heavy metals, and carbon that are energy-intensive to extract and leave highly toxic tailings. The same applies to much of the Middle East's undeveloped conventional oil reserves, much of which is heavy, viscous, and contaminated with sulfur and metals to the point of being unusable. However, recent high oil prices make these sources more financially appealing. A study by Wood Mackenzie suggests that within 15 years all the world extra oil supply will likely come from unconventional sources.
Synthetic sources
A 2003 article in Discover magazine claimed that thermal depolymerization could be used to manufacture oil indefinitely, out of garbage, sewage, and agricultural waste. The article claimed that the cost of the process was $15 per barrel. A follow-up article in 2006 stated that the cost was actually $80 per barrel, because the feedstock that had previously been considered as hazardous waste now had market value.
A 2007 news bulletin published by Los Alamos Laboratory stated that waste heat from nuclear power plants could be used to convert sequestered CO2 and hydrogen gas into methanol, and then into gasoline. The press release stated that in order for such a process to be economically feasible, gasoline prices would need to be above $4.60 "at the pump" in U.S. markets. Capital and operational costs were uncertain mostly because the costs associated with sequestering CO2 are unknown.
Production
Main articles: Petroleum#Means of production and Extraction of petroleum
OPEC Crude Oil Production 2002-2006. Source: Middle East Economic Survey
The point in time when peak global oil production occurs defines peak oil. This is because production capacity is the main limitation of supply. Therefore, when production decreases, it becomes the main bottleneck to the petroleum supply/demand equation.
World wide oil discoveries have been less than annual production since 1980. According to several sources, worldwide production is past or near its maximum. World population has grown faster than oil production. Because of this, oil production per capita peaked in
