Transcript Geologists and Geographers Making a Difference!

Tinker, 2008
RMS-AAPG and COGA
Denver, CO
July, 2008
Global Energy
Myths, Realities and Paradoxes
Scott W. Tinker
Bureau of Economic Geology
Jackson School of Geosciences
The University of Texas at Austin
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The Global Energy Road
• Fossil fuels are the bridge to an
alternate energy future.
• Alternate energies will take time,
technology, and money to scale up.
• The cost to reduce carbon is high;
everyone must play and pay or we risk
the global economy.
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Webster’s Online: Myth
Main Entry: myth Pronunciation: \ˈmith\ Function: noun
Etymology: Greek mythos Date: 1830
1 a: a usually traditional story of ostensibly historical
events that serves to unfold part of the world view of a
people or explain a practice, belief, or natural
phenomenon b: parable, allegory
2 a: a popular belief or tradition that has grown up
around something or someone; especially : one
embodying the ideals and institutions of a society or
segment of society <seduced by the American myth of
individualism — Orde Coombs>
2 b: an unfounded or false notion
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Webster’s Online: Paradox
Main Entry: par·a·dox Pronunciation: \ˈper-ə-ˌdäks, ˈpa-rə-\
Function: noun Etymology: Latin paradoxum, from Greek
paradoxon, from neuter of paradoxos contrary to
expectation, from para- + dokein to think, seem — more at
decent Date: 1540
1: a tenet contrary to received opinion
2 a: a statement that is seemingly contradictory or
opposed to common sense and yet is perhaps true
2 b: a self-contradictory statement that at first seems true
2 c: an argument that apparently derives self-contradictory
conclusions by valid deduction from acceptable premises
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Ten Energy Myths
6. “Big Oil” controls the price of oil and
gasoline and makes “obscene” profits.
7. Cutting oil imports will stabilize
gasoline prices.
8. Global production of oil and natural
gas are “peaking” and we are running
out of fossil energy soon.
9. All coal is dirty.
10. The cost of energy increasing.
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Ten Energy Myths
1. The US can be energy independent in the
next 25 years.
2. “Renewable energy” can reduce
dependence on fossil fuels significantly in
the next 25 years.
3. The economy will adapt easily to a rapid,
federally imposed energy transition.
4. Energy efficiency and savings (alone) will
solve the problem.
5. There is plenty of low cost (conventional)
oil ready to be found.
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Energy Paradoxes
Crisis/Policy Paradox
Sound energy policy is necessary to
prevent an energy crisis, yet crisis is
seemingly necessary to cause policy to
be considered.
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Energy Paradoxes
Economy/Carbon Paradox
Emissions from the combustion of fossil
fuels enhance global warming which
harms the economy, yet a healthy
economy relies on fossil energy today.
or
The road to an alternate (clean) energy
future must be paved with fossil energy.
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Energy Paradoxes
Government/Markets Paradox
Government policies are needed to
enhance free market behavior.
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Energy Paradoxes
Nationalization/Globalization Paradox
The US should be energy independent in
order to remain a global leader in an
interdependent world.
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Myth 8
Global production of oil and
natural gas are “peaking”
and we are running out of
fossil energy soon.
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Global Energy
Energy Use (Quadrillion Btu)
Asia & Oceania
United States
Europe
Coal
Oil
Eurasia
Gas
Nuclear
Central & South America
All Other
Middle East
Canada & Mexico
Africa
0
20
40
60
80
100
120
140
160
Quadrillion Btu
Data: EIA, October 2007
We depend upon fossil fuels today.
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US Energy Mix
US Transportation Energy Demand
(2006 Btu)
Electricity
Uranium
Transportation
592
147
611
688
Light-Duty Vehicles
1333
Commercial Light Trucks 1
Conventional Oil
Buses
2647
Coal
Freight Trucks
Air 3
Water
16407
4892
Rail
Lubricants
Pipeline Fuel Natural Gas
264
Natural Gas
Military Use
618
Heat
Data from EIA 2007
We depend
upon fossil
fuels today.
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30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
World Oil Production (Thousand Barrels)
1,400.00
$100.00
1,200.00
$90.00
$80.00
1,000.00
$70.00
800.00
$60.00
$50.00
600.00
$40.00
$30.00
400.00
$20.00
200.00
$10.00
$0.00
0.00
40
35
30
25
20
15
R/P
35,000,000
($2007)
Oil Price
(bbo)
Reserves
Global
Global Annual Production (mbo)
Global Reserves and Production
World Oil Reserves (Billion Barrels)
Oil Price Average in $/bbl Inflation Adjusted 2007
Source: 1980-2007 Energy Information Administration As of January 2008
(www.eia.doe.gov/pub/international/iealf/crudeoilreserves.xls ), 1950-1980
OPEC (http://www.opec.org/library/)
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M
If China and India grow from
1 B/P/Y today to 5 B/P/Y by The Conventional Oil
2030, it will create 48 MMBD
“Wedge”
of new demand
~35 MMBD
new demand
ExxonMobil, 2005. http://www.exxonmobil.com/Corporate/Citizenship/Corp_citizenship_energy_outlook.asp
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Options to Conventional Oil
Option
Time to Initiate Impact (+10 Yrs)
(Yrs)
– Enhanced Oil Recovery
– Heavy Oils / Oil Sands
– Shale Oil
– Coal Liquids
– Gas-To-Liquids
– Biofuels
5
3
10
4
3
2
(MM bpd)
3
8
2
5
2
1
21
after Hirsch et.al, 2005
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One More Option to Conventional Oil…
1 MMBOPD and 1.4 TCFY in 15 years
Access Restrictions
ARI, 2006
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Global Natural Gas Supply and Demand
*Supply = world natural gas production & Demand =world natural gas consumption.
110
Natural Gas (Tcf)
100
Supply
Demand
90
80
R/P
(yrs)
70
70
60
60
50
Year
Data: EIA, October 2007
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(Bcf)
Production
U.S. Natural
(TCF)
Gas Production
Natural
AnnualGas
U.S. Natural Gas Production
10
9
Total Natural Gas
Conventional Gas
Difference
8
725,000
Tight Gas
6
5
20,000
4
3
15,000
Coalbed Methane
2
1
Gas Shales
10,000
0
1990
1995
2000
2005
2010
2015
2020
2025
Year
5,000
Unconventionals
0
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
Year
Conventionals: EIA (1949-1990) and NPC (1991-2015)
Unconventionals: 1970-1988 data from GRI, 1999. Updated data from 1989-2005 is from EIA, 2007
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US Dry Natural Gas Reserves
Technology and Ideas
350,000
Reserves (Bcf)
300,000
250,000
Unconventionals
200,000
150,000
100,000
50,000
0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Source: Energy Information Administration (EIA)
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Myth 8 Realities
• Easy to produce (but hard to find!)
conventional oil will plateau and then decline;
i.e. the conventional oil “plateau”
• Global natural gas production is a few decades
away from a plateau
• Easy to find (but hard to produce!)
unconventional oil and natural gas are playing
a growing role (function of environmental
policy, economics and technology)
• Fossil fuel resources combined (oil, natural gas
and coal) could provide over two hundred
years at current consumption rates
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Myth 2
“Renewable energy” can
reduce dependence on fossil
fuels significantly in the next
25 years.
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Global Energy Consumption
Percentage of total market
100
80
60
H/C<1
(Wood, Coal)
H/C~2
40
(Oil)
H/C>4
20
0
1850
(Natural Gas,
Nuclear,
All others)
1900
U.S. Data: Annual Energy Review 1999 (EIA, 2000)
World Data: International Energy Annual 1999 (EIA, 2000)
1950
Year
2000
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% Total Consumption
Global Energy Consumption (Quads)
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1.25% Global Annual Demand Growth
700
600
Future
Global
Trends 80%
91%
87%
50%
500
45%
Petroleum
40%
400
35%
30%
300
25%
200
20%
15%
100
10%
5%
0
0%
Sound energy policy is necessary to
prevent an energy crisis, yet crisis is
seemingly necessary to cause (poor)
1980 policy
1985 1990 1995
2000 considered.
2005 2010 2015 2020 2025 2030
to be
Coal
Natural Gas
Unconventionals/Res Growth
Nuclear
Hydroelectric
Biomass, Geothermal, Solar & Wind
1980
Global Energy Consumption (quads)
Unconventional Gas
200.00
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
1.25% annual demand growth
and
The road to an alternate (clean) energy
future must be paved with fossil energy.2X
4
1980
1985
1990
1995
2000
2005
2010
8
2015
16
2020
32 every
7 yrs
2025
2030
Historical Data: EIA October 2007: Forecasts: Tinker, QAd3931x
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Myth 2 Realities
• Energy is not “renewable”
• One of the great challenges of alternate
energy is scale
• Energy transitions take time and are
expensive
• Oil is beginning to plateau
• Disruptive breakthroughs in electricity
storage and transmission are needed to
facilitate alternate energy
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Myth 1
The US can be energy
independent in the next
25 years.
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US Economy and Oil Price
GDP Growth (Percentage points at annual rates)
Crude Oil Domestic Wellhead Price ($2000)
8.00
60
Nixon Ford Carter
Reagan
Bush 1
Clinton
Bush 2
50
6.00
40
4.00
30
2.00
20
0.00
1970
1975
1980
1985
1990
1995
2000
Oil Domestic Wellhead Price ($)
GDP Growth (% points at annual rates)
10.00
2005
10
-2.00
-4.00
0
Year
Data: EIA February 2007 and US department of Commerce
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Electricity’s Role
Annual Use (Quads)
100
Electricity will play an ever
greater role in the energy
end use mix.
Total Energy
10
Energy
used
to produce
electricity
1
0.1
45Q
1800
1855
1910
1965
2020
After Huber and Mills, 2005.
Data: EIA, Annual Review, 2003. US Census Bureau, Historical Statistics of the US Colonial Ties to 1970
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Electricity
Uranium
Transportation
Imports
Conventional Oil
Coal
Natural Gas
Heat
Data from EIA 2007
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Electricity Options
• Natural Gas
– Abundant, reliable, price volatility, and cleaner
– Challenges: Global deliverability (LNG) and Access
• Coal
– Abundant, reliable, cheap and dirty
– Challenge: Sequestration (IGCC w/CCS), financing, public perception
• Nuclear
– Abundant, reliable, moderate price and cleaner
– Challenges: Waste disposal, security, public perception
• Renewables
– Cleaner, less reliable and more expensive
– Challenge: Capacity impacts cost and reliability
• Efficiency
– Fuel, lighting, electronics, insulation
– Challenge: Rebound effect
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Annual Anthropogenic CO2 (mmT)
Global Carbon Emissions
12,000
10,000
8,000
6,000
4,000
2,000
NA
Europe
Eurasia
EIA, 2007
Africa
ME
Cent & SA
Asia & Oceania
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GDP/Carbon Emissions
GDP ($B2000)/CO2 (MMT)
2.50
2.00
Emissions from the combustion of fossil
1.50
fuels enhance global warming which
harms the economy, yet a healthy
1.00
economy relies on fossil energy today.
0.50
0.00
and
Government policies are needed to
Year
enhance free market
behavior.
NA
Africa
Eurasia
Europe
ME
Cent & SA
Asia & Oceania
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Myth 1 Realities
• The world is “flattening;” resource
interdependence is becoming the norm
• Independence requires realistic, scalable
alternatives, which take time and are very
expensive ($ trillions)
• Concerns about climate and security have
placed the public sights squarely on fossil
energy, especially coal and oil
• Energy and economies are inextricably
linked and mandated transitions don’t
really work
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Summary Thoughts
• The Three E Waltz (Energy, Economy,
Environment) is a sensitive dance
• Oil and natural gas provide nearly 2/3 of the
world’s energy
• We need to be realistic about a carbon
constrained world
– It is coming, it will take time, it won’t be cheap
– Everyone needs to play and pay
– Research funding and talent are vital
– Government, private, academic partnerships
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