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Fossil Fuels at Peak: Predictions and Current Status


October-November 2006

Fossil Fuels at Peak: Predictions and Current Status

by John Rawlins

John Rawlins has a B.S. in physics and a Ph.D. in nuclear physics. He retired in 1995 from the Westinghouse Hanford Co. at the Hanford site in Eastern Washington. Currently, he teaches physics and astronomy at Whatcom Community College.

Changes in Energy Infrastructure to Take Decades and Trillions of Dollars

Part 2

Until about 1850, the primary energy source in the U.S. was wood. Coal use began to take off around that time and ushered in the age of industrial revolution. Coal was originally such a dirty fuel that its use encouraged the onset of suburban development near the end of the century — the exodus of a growing middle class out of the industrial cities with their filthy air. Around 1900 we began using petroleum (oil) and natural gas (co-produced with oil). We also began a slow development of our present hydroelectric production at about the same time. With these innovations, coal use was relatively stable from 1920 until 1975. After the end of WWII the suburban development movement in the U.S. really expanded, and today about half the U.S. population lives in suburbia with long commutes.

By around 1970 the combined energy production from coal, oil, natural gas and hydropower had stabilized in the U.S., and at that time nuclear electric plants began coming online and reached a stable level of electrical production within two decades. Of all these energy sources, coal and oil and natural gas and uranium (for nuclear) are all “finite,” while wood and hydropower have the potential for longer-term sustainable use (unless climate change has some surprises in store for us). Here are some notable lessons to learn from this energy history, which is similar to the worldwide pattern:

•The total energy infrastructure (mining/drilling/processing/delivery/use) is vast in scope and cost and required decades of evolutionary development for each type of energy source and use.

•Diversification of energy supply is advantageous because of the risk of supply reductions in any one sector. Lack of energy diversity equates to vulnerability.

The importance of the first point is that a sudden, massive change in the current infrastructure is impossible without massive government policy changes and funding — on the order of trillions of dollars to achieve big change within, say, 10 years. Our cars stay on the roads for more than two decades, buildings of all kinds last for several decades, power plants last for several decades and so on. Good long-range planning is therefore essential to maintaining an energy consuming lifestyle such as that in the U.S. It is crucial to identify energy supply limitations decades before they occur and to develop fuel switching plans to cope with those limits, simply because changing the infrastructure is costly and requires decades.

The second point is important mainly as a risk management strategy, but diversification also allows us to use more total energy than any one source would allow. At present, oil is the biggest chunk of our energy use at around 35 percent, natural gas and coal each supply around 20 percent, with nuclear and hydropower rounding out the mix (more nuclear than hydro). Most of the oil is for transportation, with some also used for space heating (mostly in the northeastern U.S.).

The biggest vulnerability in our entire energy infrastructure at present is in the transport sector, which depends almost entirely on oil. Energy sources for electricity are primarily coal (55 percent), nuclear (20 percent), natural gas (15 percent) and hydro (10 percent) nationwide. Washington state is unique in its high level of dependence on hydropower, with about 75 percent of our electricity production from dams. The rest is from a combination of nuclear (one plant), coal (one plant) and natural gas (several smaller peaking plants). Therefore, we are particularly vulnerable to electricity interruptions from climate anomalies that can reduce stream-flows — a worrisome thought in light of the rapid changes in climate during the past few decades — ironically caused primarily by fossil fuel burning.

Oil and Natural Gas Peaking Won’t Allow Decades for Change

During the past decade a rising chorus of analysts has been predicting that world oil and natural gas will peak soon. Specifically, this means that the rate of extraction of these energy sources will reach a maximum beyond which no amount of money and effort can push it. Over the past few years the debate has shifted from when those peaks would occur to what the consequences will be and what the decline rates will be after peak. An increasingly large group of retired former oil geologists is predicting a world oil peak in the 2005-2010 time frame, with subsequent decline rates on the order of a few percent (3-8 percent) per year.

One analyst who tracks oil extraction very carefully has noted that, over the past year, the extraction rate has been flat to within 1 percent. Since world demand (desire might be a better word) continues to increase, and since oil is a commodity traded in the world marketplace, the price of oil has tripled since 2002, with average annual price increases of around 30 percent per year. Another analyst sees enough big projects coming on line to maintain the world extraction rate where it now is until about 2010 (around 84 million barrels per day now, perhaps climbing to 5 percent higher), but not longer.

The primary method for predicting oil peaking relies on observations and mathematic analyses developed by Dr. M. King Hubbert in the 1950s. He worked for the Shell Oil research department and analyzed oil field extraction experience in the U.S. He observed that the extraction-time profile for a field almost always followed a slightly modified bell-shaped curve. Hubbert also analyzed the lower-48 discovery-time profile (which peaked in the early 1930s), which likewise was a (more or less) bell-shaped curve. He quickly came to the conclusion that the national oil extraction-time profile would mimic the discovery-time profile with a several decade delay.

By 1956 he had enough data for the lower-48 oil extraction to model the curve mathematically and predict that U.S. oil extraction would peak around the year 1970. While some people refer to the Hubbert methodology as a “theory,” I view it as a mathematical model of reality instead. A theory would be more basic and include things like oil characteristics, oil strata flow and structure data, overall field development scenarios and even economics. In the 1970s Hubbert predicted that world oil extraction would peak around the year 2000 — not bad considering the subsequent geopolitical upsets that interfered with Middle-East oil extraction.

Worldwide Natural Gas Supply

Predicting when worldwide natural gas will peak is much more uncertain even than oil peaking, but most analysts seem to agree that the natural gas peak will be around 10 years after the oil peak. For us in the U.S. that’s somewhat irrelevant because we have very limited ability at present to import natural gas. We get about 15 percent of our natural gas from Canada (this is about half their natural gas extraction rate), and we export a smaller amount to Mexico. Natural gas supply already peaked on the North American continent a few years ago, and the U.S. supply peaked decades ago soon after oil peaked. Importing from overseas requires huge new facility and transport investment in liquid natural gas tankers, seaport off-loading facilities (re-gasification) and new distribution pipelines. Few seaport towns will be supportive of hosting such facilities, with their super-high inventories of highly explosive natural gas.

Washington state gets comparable supplies of natural gas (all via pipelines) from the U.S. Rockies and from Alberta, Canada; the former supply is increasing slightly and the latter is decreasing such that our local supply of natural gas seems adequate for about another decade. The natural gas supply for the rest of the U.S. is far more precarious, and the next severe winter in this country could result in actual shortages, not just high prices. About half the homes in this country use natural gas for heating (another important energy vulnerability in northern states), and we could be facing a natural gas crisis a few years before the oil crunch arrives. Weather anomalies, or even fear of them, can cause natural gas cost spikes of a factor of five or more in this unbalanced supply-demand environment.

The only administration in my memory to attempt serious long-term planning and change in energy policy was that of President Carter in the late 1970s. Carter actually had his own engineering background to draw upon. He killed the U.S. nuclear breeder reactor program because of fears that plutonium derived from spent fuel reprocessing could fall into the wrong hands. He talked about the realities of fossil fuel peaking — especially oil — and installed solar electric panels on the White House, and he initiated research and development on renewable energy sources (wind/solar). The backdrop of that energy policy attention was the pair of oil shocks experienced in the 1970s — the first during the early ‘70s Arab-Israeli war, and the second during the Iranian revolution in the late ‘70s. Both those geopolitical emergencies resulted in oil price spikes and shortages with gasoline rationing in the U.S.

Americans briefly coped by carpooling, driving less and slower, and even purchasing more energy efficient vehicles — but we quickly abandoned all those adaptations and resumed consuming cheap oil as though we had learned nothing. And, of course, President Carter became a one-term president, and national energy policy has been a dismal sham ever since. One party says this, one says that, they never agree and time continues to pass. In today’s industrial world, a country without a robust, long-term and continuous (over decades) energy policy seems destined for economic collapse.

President Carter also enunciated the Carter Doctrine, which declared that the U.S. would do anything to maintain access to world oil supplies. In effect it was a declaration of oil as a strategic resource (in the same category as nuclear weapons) — doing without enough of it (oil) would have severe consequences for the country. The Carter Doctrine is obviously still in place in the U.S., with the recent slight modification that we now claim a right to take pre-emptive unilateral military action.

Thus, we now find ourselves facing a very near-term shortage of oil (a strategic resource) for transport (also heating in the Northeast), an existing shortage of natural gas during peak use situations, and no immediately available alternatives other than using less and paying more for those services. This time, however, there is no end in sight of a continuous worsening of that supply/demand disconnect. In the past, energy price inflation has generally led to economic recessions. In the future, the prospect of ever-increasing energy price inflation raises the specter of never-ending recession, ultimately deepening into a long-term worldwide economic depression. Just where the wealth (trillions of dollars) might come from to get out of this hole is far from clear. Peak Oil could turn out to be Peak Everything.

Substitutes to the Rescue?

You can find a huge amount of information now concerning potential technical substitutes for oil in the transport sector at the following Web site: http://www.energybulletin.net/index.php. Therefore, I will describe my impressions for each of several options only briefly.

Biofuels have been the subject of discussions in the media as well as in universities (such as Washington State University) and politics recently. Biodiesel fuel is an economical small-niche option when the feedstock is used oil from food fryers. Individuals can easily learn to do this processing in their backyard. Used, filtered straight vegetable oil also works when used in tandem with biodiesel. When the feedstock is a food crop rather than used oil, the economics are less favorable but the potential is much larger. The all-important Energy Return on Energy Invested (ERoEI) is the ratio of the energy you get back to the energy required to produce the fuel. For food-crop biodiesel, the typical ERoEI is in the range 1.3-2 for various feedstocks. The obvious big-picture tradeoff, however, is food for fuel. Very few analysts believe biodiesel can ever exceed a few percent of today’s U.S. diesel fuel use.

Ethanol’s outlook is even more negative than that for biodiesel. Again, some kind of plant is the feedstock for a more complicated conversion to alcohol (ethanol, methanol, ... ). The ERoEI is closer to one (possibly even less than one!) for all feedstocks, and some potential feedstocks remain in the highly speculative research and development mode. Today Brazil uses ethanol (from sugar) for about 40 percent of their transportation fuel, but Brazil uses about eight times less fuel per person than in the U.S. Meanwhile, naturally, sugar prices have increased substantially because of this food to fuel switch. You can’t have your fuel and eat it too! Today, the U.S. is struggling to replace 3 percent (by volume, only 2 percent by energy content) of its gasoline needs with ethanol, and very few analysts see that percentage going above 5 percent. The main U.S. food-crop used in ethanol production is corn, and U.S. ethanol production is heavily subsidized.

A few years ago President Bush, in a state of the union address, touted hydrogen as the transport option of the future. A study from the U.S. National Academies of Science & Engineering issued in 2004 identified enormous technical and economic barriers for the hydrogen fuel cell transport option. The report did support continued research and development but reminded us that, even should a technical option present itself some day, the implementation time would be decades (remember the infrastructure development time). It seems likely to me that this option will prove to resemble the field of controlled nuclear fusion for electrical production — always 30 years in the future, regardless of how old I am.

Today’s focus seems to be on converting coal to liquid transport fuel (actually, diesel fuel) with a process developed in Germany in WWII and currently in use in South Africa (when they had nuclear weapons they had to develop this option because of sanctions against them). If this can be done without increasing carbon dioxide emissions it might be the only hope of relatively large-scale liquid transport fuel production aside from oil — but remember again that implementation takes decades and scads of money. The primary big-picture concern with increased use of coal is its overly-large contribution to greenhouse gases that exacerbate global warming. With climate specialists sounding increasingly panicked about the rate of climate change, coal appears to me to be an unlikely substitute fuel for oil. It would certainly be an expensive one with a much lower ERoEI than oil.

To my knowledge, the only remaining possibility is conversion to all-electric vehicles combined with electrified rail for mass transit — but here again changing the infrastructure takes decades and big money. Additionally, if we insist on continuing to drive even sub-compact-sized electric cars that travel faster than 60 mph and have a range of 300 miles, we would need roughly a 100 percent increase in electricity generation for charging the batteries of these vehicles. If we could settle for tiny vehicles weighing around 300-500 pounds that travel up to 35 mph and have a range of 30 miles the additional electrical needs would be far less and our streets would look more and more like those in China. My electric scooter, as well as my electric kit for a bicycle, both came from China.

In conclusion, both oil and natural gas supplies will soon be declining worldwide, and in the U.S. we already are experiencing a declining natural gas supply. Declining oil means reducing our transport fuel needs. Declining natural gas means decreasing space heating in winter and electrical production in summer. The only non-nuclear options for the space heating and electrical production problems that do not exacerbate global warming are solar heating and electricity as well as wind-powered electricity. There appears to be no near-term combination of techo-fixes for the transport problem — which means we’ll drive ever less, spend ever more and use ever more mass transit — at a rate of change of about 5 percent per year averaged over the world. That translates to half of today’s oil use 14 years after peak, and one-quarter of today’s oil use after 28 years. Because of considerations related to world oil available for export, the reality will likely be even more severe in the U.S. — we could be facing the one-quarter mark 20 years after peak.

Next Month:

The oil-food and oil-population connections.



Web Sites for Tracking Oil and Natural Gas Prices and Production Levels

World Oil Prices

•http://www.oilnergy.com/1onymex.htm

U.S. Natural Gas Prices

•http://www.oilnergy.com/1gnymex.htm

U.S. Gasoline Prices

•http://www.oilnergy.com/1gasoli.htm

World Oil Extraction Rate Profile

•http://faculty.whatcom.ctc.edu/jrawlins/phys109/aspopic.htm

All the Above and Much More at My Web site — Includes a Book List

•http://faculty.whatcom.ctc.edu/jrawlins/phys109/artlist.htm

General Energy News Web Site

•http://www.energybulletin.net/index.php

Excellent Peak Oil Primer

•http://www.energybulletin.net/primer.php


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