Tuesday, May 11, 2010

It's worse than you think: plotting global hydrocarbon collapse

More than 90 per cent of the world’s energy comes from non-renewable sources – and its decline can be projected on a Hubbert bell curve.

It’s just that we are more familiar with the concept of peak oil. After all, oil is the world’s largest source of energy, and the size and immediacy of the problem tends to overshadow debate on the remaining energy sources. But Hubbert’s model proves versatile, as the exploitation of any non-renewable resource – from oil to uranium – follows similar patterns.

plotting global hydrocarbon collapse

Experts in the fields of coal, natural gas and nuclear power are beginning to talk of vastly inflated reserves figures and pointing to resource depletion within the next two decades. This, if it comes about, would involve all our main sources of energy declining drastically, all within a relatively short timeframe.

But first, some background. Using heavily rounded figures, global energy supply can be broken down as follows: oil supplies 36 per cent of our needs, coal 28 per cent, natural gas 24 per cent, nuclear 6 per cent and hydroelectric 6 per cent. (Solar and wind are less than one per cent so don’t figure in this kind of broad-brush approach – the aim here is to establish the ratios.)

plotting global hydrocarbon collapse

Meanwhile, global demand for all energy sources is growing. Rising energy use is inextricably linked to rising GDP, which is essential both for developing nations to improve their quality of life and for our debt-based economies to function. According to the US Energy Administration Information’s (EIA) International Energy Outlook 2009, “total world consumption of marketed energy is projected to increase by 44 percent from 2006 to 2030.” (From 472 quadrillion Btu in 2006 to 678 quadrillion Btu in 2030.)

Looking at this by fuel, in order of importance:

Peak oil

The beginning of 2010 has seen a slew of reports pointing to the immediacy of peak oil. It saw the British government meeting to discuss the predicted energy crunch that’s five years away, and the US Joint Forces command report suggesting that the military needs contingency plans as surplus oil production capacity could disappear within two years, with serious shortages by 2015. Meanwhile, the “massive reserves” of unconventional oil are not living up to their hype. Reports are indicating that the Canadian oil sands are falling well behind projected outputs, and deepwater drilling is emerging as the risky, expensive venture we’ve always suspected, following the explosion of the Deepwater Horizon rig in the Gulf of Mexico. The fact that we are so desperate to find reserves itself speaks volumes about the reality of peak oil (Al Gore likened the oil sands to the last vein the junkie finds in his big toe).

plotting global hydrocarbon collapse

Even a rogue slide from a 2009 US Energy Information Administration PowerPoint presentation has recently become an internet sensation. The diagram, World’s Liquid Fuels Supply, projects oil output peaking in 2012 and immediately declining sharply – falling away from a line showing rising demand. The distance between the two is marked ‘unidentified projects.’

According to the projection, by 2016 there will be a gap between supply and demand of 10 million barrels per day. And the EIA has absolutely no idea how that shortfall will be met.

Peak coal

A 2008 New Scientist article, The Great Coal Hole, written by David Strahan tackles the commonly held belief that “coal is generally seen as our safety net in a world of dwindling oil.” Unfortunately, like oil, coal reserves seem to have been routinely inflated, he finds. However, global coal consumption “rose 35 per cent between 2000 and 2006,” particularly in China and India. He observes: “China is by far the world’s largest producer of coal, but such is its appetite for the fuel that in 2007 it became a net importer.”

Energy Watch, a group of scientists led by the German renewable energy consultancy Ludwig Bölkow Systemtechnik (LBST) produced a 2007 report stating commonly accepted coal reserves are unreliable, notes Strahan:

“As scientists we were surprised to find that so-called proven reserves were anything but proven,” says lead author Werner Zittel. “It is a clear sign that something is seriously wrong.”

Since it is widely accepted that major new discoveries of coal are unlikely, Energy Watch forecast that global coal output will peak as early as 2025 and then fall into terminal decline. That’s a lot earlier than is generally assumed by policy-makers, who look to the much higher forecasts of the International Energy Agency, which are based on official reserves. “The perception that coal is the fossil resource of last resort that you can come back to when you run into problems with all the other is probably an illusion,” says JГ¶rg Schindler of LBST.

We constantly read that the world has enough coal for centuries of “dirty power,” with environmentalists warning that more and more carbon will be released into the atmosphere as the world struggles to come to terms with declining oil supplies. This may not be the case. An item in Walrus magazine, An inconvenient talk, written by Chris Turner states:

A Caltech engineer named David Rutledge, meanwhile, applied the same methods used in peak oil prediction to the coal question, and he discovered a paucity of supply so great that he now argues it will be impossible to create the worst-case scenarios in the Intergovernmental Panel on Climate Change’s reports, because there are simply not enough economically viable coal reserves left on earth to cloud the atmosphere with more than 460 parts per million of carbon dioxide.

Research in 2009 from the University of Newcastle in Australia concluded that global coal production “may well peak as soon as 2010.” Overall, it concludes, production will most likely peak “between 2010 and 2048.”

Peak natural gas

In an article titled The Future of the Oil and Gas Industry: Past Approaches, New Challenges, Exxon Mobil director and executive vice president Harry J. Longwell writes that most global natural gas resources were discovered “between roughly 1960 to about 1980,” and that discovery rates have subsequently been declining. He continues:

In the recent past, we have seen increasing demand for oil and gas, but generally decreasing discovery volumes. . .

It’s getting harder and harder to find new oil and gas. Industry has made significant new discoveries in the last few years. But they are increasingly being made at greater depths on land, in deeper water at sea, and at more substantial distances from consuming markets.

According to an interview in Walrus magazine, Canadian hydrocarbon geologist David Hughes predicts a global peak of natural gas reserves by 2027. Hughes, an expert in calculating how natural gas might someday be mined from coal bed methane deposits, includes “unconventional” gas reserves in his calculations:

Dave now places Canada’s natural gas production plateau between 2001 and 2006; he supports predictions of a global peak of conventional gas reserves by 2027.
He is calmly, logically, witheringly dismissive of rosier scenarios involving unconventional reserves.

Gas is looking unlikely to be the “bridge fuel” that saves us from declining oil.

Peak uranium

Like the hydrocarbons mentioned above, uranium is a finite resource. A 2006 report by the Energy Watch Group, Uranium Resources and Nuclear Energy, suggested that proved uranium reserves will be “exhausted within the next 30 years at current annual demand.” It states:

Eleven countries have already exhausted their uranium reserves. In total, about 2.3 Mt of uranium have already been produced. At present only one country (Canada) is left having uranium deposits containing uranium with an ore grade of more than 1%, most of the remaining reserves in other countries have ore grades below 0.1% and two thirds of reserves have ore grades below 0.06%. This is important as the energy requirement for uranium mining is at best indirect proportional to the ore concentration and with concentrations below 0.01-0.02% the energy needed for uranium processing – over the whole fuel cycle – increases substantially.

The proved reserves (=reasonably assured below 40 $/kgU extraction cost) and stocks will be exhausted within the next 30 years at current annual demand. Likewise, possible resources – which contain all estimated discovered resources with extraction costs of up to 130 $/kg – will be exhausted within 70 years.

It concludes that “In the long term beyond 2030 uranium shortages will limit the expansion of nuclear power plants.”

This is currently being reflected in the market. A March 2010 report in Bloomberg Businessweek, with the straight-talking headline Uranium May Have ‘Hyper’ Price Run, Uranium Energy Corp Says, interviews key personnel at Uranium Energy Corp:

Prices may jump to $100 a pound from about $40 a pound now, Amir Adnani, president and chief executive officer of the U.S.- based company, said today in interview in Hong Kong, without giving a timeframe for the target price.
Prices may average about $75 a pound in the next 5 to 10 years, he said.

About 200 gigawatts of atomic capacity are planned or under construction globally, and China, India, Russia and South Korea are set to be the main drivers of uranium demand growth, according to Nomura International.
Atomic-power plants risk running short of fuel within a decade because suppliers can’t build enrichment facilities or recycle Soviet-era warheads fast enough, the World Nuclear Association said in a 2009 report.

Nuclear power is clearly not the answer to peak oil.


Many peak oil proponents suggest oil either is about to peak, or has already, and that production will fall below demand sometime before 2020.

In addition, many independent researchers believe the world’s natural gas, coal and uranium are likely to peak during the following decade. This is based on current usage, and does not consider what will happen to demand once we hit peak oil, and the price of oil goes high enough to push the market to find alternatives.

When oil peaks, and the price rises, it may well cause our fragile, debt-ridden economies to collapse. But the worst will be yet to come. When other energy sources subsequently peak, we will be left with no affordable “bridge fuel” to carry us to a sustainable, renewable future. In addition, whereas oil is mainly used in transportation, natural gas and coal together account for the generation of 60 per cent of our electricity, according to EIA figures. If the grid goes down, modern life is over.

(Abridged from the page Global hydrocarbons peak.)

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