Global oil depletion: A review of the evidence

Within the polarised and contentious debate over future oil supply a growing number of commentators are forecasting a near term peak and subsequent decline in production. But although liquid fuels form the foundation of modern industrial economies, the growing debate on ‘peak oil’ has relatively little influence on energy and climate policy. With this in mind, the UK Energy Research Centre (UKERC) has conducted an independent, thorough and systematic review of the evidence, with the aim of establishing the current state of knowledge, identifying key uncertainties and improving consensus. The study focuses upon the physical depletion of conventional oil in the period to 2030 and includes an in-depth literature review, analysis of industry databases and a detailed comparison of global supply forecasts. This Communication summarises the main findings of the UKERC study. A key conclusion is that a peak of conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020.     

On properties of royalty and tax regimes in Alberta’s oil sands

Simulation models that include royalty and tax provisions are used to examine the distribution between developers and governments of net returns from the development of Alberta’s oil sands deposits. A specific focus is to assess the effects on the level and distribution of net revenues associated with a number of changes in assumed revenue and expenditure conditions. Developers typically bear a greater share of the consequences of variations in capital expenditures than they do of changes in operating expenditures, prices, and exchange rates. A comparison across royalty and tax regimes suggest that there is a positive relationship between the level of net revenues estimated to accrue to either developers or governments and the share of the consequences of changes in conditions borne by that party. Some differences across production technologies are noted. The role of the federal government as a fiscal player in oil sands development has shrunk over time. In contrast, under the current regime, the Government of Alberta captures a higher share of net returns and typically bears a greater proportion of the consequences of changes in conditions than at any time since the introduction of an explicit royalty and tax regime in 1997.     

Global energy crunch: How different parts of the world would react to a peak oil scenario

Peak oil theory predicts that oil production will soon start a terminal decline. Most authors imply that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society. This article uses historical cases from countries that have gone through a similar experience as the best available analytical strategy to understand what will happen if the predictions of peak oil theorists are right. The author is not committed to a particular version of peak oil theory, but deems the issue important enough to explore how various parts of the world should be expected to react. From the historical record he is able to identify predatory militarism, totalitarian retrenchment, and socioeconomic adaptation as three possible trajectories.     

The peak of oil production—Timings and market recognition

Energy is essential for present societies. In particular, transportation systems depend on petroleum-based fuels. That world oil production is set to pass a peak is now a reasonably accepted concept, although its date is far from consensual. In this work, we analyze the true expectations of the oil market participants about the future availability of this fundamental energy source. We study the evolution through time of the curves of crude oil futures prices, and we conclude that the market participants, among them the crude oil producers, already expect a near-term peak of oil production. This agrees with many technical predictions for the date of peak production, including our own, that point to peak dates around the end of the present decade. If this scenario is confirmed, it can cause serious social and economical problems because societies will have little time to perform the necessary adjustments.     

Greenhouse gas reduction in oil sands upgrading and extraction operations with thermochemical hydrogen production

This paper examines various methods of reducing CO₂ emissions by a thermochemical copper–chlorine (Cu–Cl) cycle of hydrogen production, for in-situ extraction and upgrading of bitumen to synthetic crude oil in Alberta’s oil sands. Particular focus is given to Canada’s SCWR (Supercritical Water-cooled Reactor) as a nuclear heat source for the Cu–Cl cycle, although other heat sources such as solar or industrial waste heat can be utilized. The feasibility of steam generation from supercritical water of a SCWR power plant is examined for bitumen extraction, as well as hydrogen production for bitumen upgrading via an integrated Cu–Cl cycle with SCWR. The heat requirements for bitumen extraction from the oil sands, and the hydrogen requirements for bitumen upgrading, are examined. A new layout of oil sands upgrading operations with integrated SCWR and a Cu–Cl cycle is presented. The reduction of CO₂ emissions due to the integrated SCWR and Cu–Cl cycle is quantitatively investigated based on the expected bitumen production capacity over the next two decades.     

Mitigation of maximum world oil production: Shortage scenarios

A framework is developed for planning the mitigation of the oil shortages that will be caused by world oil production reaching a maximum and going into decline. To estimate potential economic impacts, a reasonable relationship between percent decline in world oil supply and percent decline in world GDP was determined to be roughly 1:1. As a limiting case for decline rates, giant fields were examined. Actual oil production from Europe and North America indicated significant periods of relatively flat oil production (plateaus). However, before entering its plateau period, North American oil production went through a sharp peak and steep decline. Examination of a number of future world oil production forecasts showed multi-year rollover/roll-down periods, which represent pseudoplateaus. Consideration of resource nationalism posits an Oil Exporter Withholding Scenario, which could potentially overwhelm all other considerations. Three scenarios for mitigation planning resulted from this analysis: (1) A Best Case, where maximum world oil production is followed by a multi-year plateau before the onset of a monatomic decline rate of 2–5% per year; (2) A Middling Case, where world oil production reaches a maximum, after which it drops into a long-term, 2–5% monotonic annual decline; and finally (3) A Worst Case, where the sharp peak of the Middling Case is degraded by oil exporter withholding, leading to world oil shortages growing potentially more rapidly than 2–5% per year, creating the most dire world economic impacts.     

A decline rate study of Norwegian oil production

Norway has been a very important oil exporter for the world and an important supplier for Europe. Oil was first discovered in the North Sea in late 1960s and the rapid expansion of Norwegian oil production lead to the low oil prices in the beginning of the 1990s. In 2001, Norway reached its peak production and began to decline.     

The role of non conventional oil in the attenuation of peak oil

In this paper, the possible substitution of conventional with non conventional oil is studied using system dynamics models. The model proposed in this paper is based on geological, economic and technological aspects, and it fits approximately the behaviour observed by Hubbert. A first validation of the model has been made with the USA oil production data. These USA data show that there is a good coincidence between our model and the reality. This model has been expanded in order to include the substitution of the conventional oil with the non conventional one for the World. Two models with different ways to treat the contribution of non conventional oil have been developed and tested: a base model (business as usual), which extrapolates the last two decades’ growth of this type of oil into the future, and a model that explores how much non conventional oil would be needed in order to avoid a peak and decrease in the global non renewable fuel production. The results show that, even under some hypotheses that we consider optimistic, the attenuation of the peak oil decline requires more than 10% of sustained growth of non conventional oil production over at least the next two decades.     

Drilling,alternative fuels and efficiency: Can the United States wean itself from imported oil?

Perhaps the most daunting challenge the next generation of Americans will face is what President Bush called our “addiction to oil”. The challenge is to find the means to provide for our transportation needs in the face of declining world oil production. Perhaps the central question is whether we will export the great wealth of America to foreign countries in payment for oil before we tackle the grand challenge of creating a new transportation future that does not rely completely on oil.     

Is peakoilism coming?

Peak oil research and the Association for the Study of Peak Oil and Gas (ASPO) have contributed a great deal to improve people's recognition of peak oil. Although peak oil is becoming a part of public recognition, it is still hard to say whether peak oil discussion will develop into a theory such as “peakoilism”. On one hand, there are still some difficult problems in peak oil research. On the other hand, the peakoilers have the potential for scientific research and have their allies: the climate change researchers and the new energy advocates. Oil is a limited, non-renewable resource, and an oil peak is inevitable. Peak oil theory is a kind of development theory rather than a crisis theory, which promotes reasonable utilization of the limited oil resources, promotes conservation, and encourages the development of renewable energy.     

Explaining the price of oil 1971–2014 : The need to use reliable data on oil discovery and to account for ‘mid-point’ peak

This paper explains, in broad terms, the price of oil from 1971 to 2014 and focuses on the large price increases after 1973 and 2004. The explanation for these increases includes the quantity of conventional oil (i.e. oil in fields) discovered, combined with the decline in production of this oil that occurs typically once ‘mid-point’ is passed. Many past explanations of oil price have overlooked these two constraints, and hence provided insufficient explanations of oil price. Reliable data on conventional oil discovery cannot come from public-domain proved (‘1P’) oil reserves, as such data are very misleading. Instead oil industry backdated proved-plus-probable (‘2P’) data must be used. It is recognised that accessing 2P data can be expensive, or difficult. The ‘mid-point’ peak of conventional oil production results from a region's field-size distribution, its fall-off in oil discovery, and the physics of field decline. In terms of the future price of oil, estimates of the global recoverable resource of conventional oil show that the oil price will remain high on average, unless dramatic changes occur in the volume of production and cost of non-conventional oils, or if the overall demand for oil were to decline. The paper concludes with policy recommendations.     

China's oil reserve forecast and analysis based on peak oil models

In order to forecast future oil production it is necessary to know the size of the reserves and use models. In this article, we use the typical Peak Oil models, the Hu–Chen–Zhang model usually called HCZ model and the Hubbert model, which have been used commonly for forecasting in China and the world, to forecast China's oil Ultimate Recovery (URR). The former appears to give more realistic results based on an URR for China of 15.64 billion tons. The study leads to some suggestions for new policies to meet the unfolding energy situation.     

Future oil supply: The changing stance of the International Energy Agency

The IEA was established in 1974 with a mandate to promote energy security amongst its members, namely the states of the OECD, and to advise those members on sound energy policy. Its recent forecasts of the medium and long term prospects for oil supply, however, have wavered, alternating from optimistic to pessimistic and back again. For policy-makers, such inconsistency is difficult to deal with. Firstly we examine whether the changing outlooks seen in IEA forecasts made between 2007 and 2010 truly reflect a demonstrable, underlying change in the known facts, and we can find no such factual changes reported by the IEA. Secondly we examine whether the serious criticisms of the IEA's (2008) forecast made by other analysts have yet been addressed, and we conclude that they have not. Thirdly we consider the possible effects of the current economic downturn upon the IEA's assumptions and upon future oil supply. We conclude that all the forecasts made by the IEA appear to be too optimistic throughout this period.     

The end of cheap oil: Current status and prospects

This paper, analyses the factors impacting the price of crude oil in order to examine the likely evolution of the oil market and attempts to answer the question, whether cheap oil is already a thing of the past. Based on data made publicly available mostly by the major oil companies, it examines the effects of demand and supply, the evolution of world oil reserves, the trends in new discoveries of new oilfields, the evolution of world Gross Domestic Product (GDP), and the depletion of oil resources. The analysis concludes that the world peak in conventional oil production—the point beyond which oil production will irreversibly start declining—is approaching and will be reached, even according to the most optimistic scenarios, before 2040 and quite possibly much sooner. If the appropriate solutions for substituting crude oil and for conserving the use of energy are not implemented in time, then the current upward trend in oil prices is bound to continue.     

Evaluating the role of cogeneration for carbon management in Alberta

Developing long-term carbon control strategies is important in energy intensive industries such as the oil sands operations in Alberta. We examine the use of cogeneration to satisfy the energy demands of oil sands operations in Alberta in the context of carbon management. This paper evaluates the role of cogeneration in meeting Provincial carbon management goals and discusses the arbitrary characteristics of facility- and product-based carbon emissions control regulations. We model an oil sands operation that operates with and without incorporated cogeneration. We compare CO₂ emissions and associated costs under different carbon emissions control regulations, including the present carbon emissions control regulation of Alberta. The results suggest that incorporating cogeneration into the growing oil sands industry could contribute in the near-term to reducing CO₂ emissions in Alberta. This analysis also shows that the different accounting methods and calculations of electricity offsets could lead to very different levels of incentives for cogeneration. Regulations that attempt to manage emissions on a product and facility basis may become arbitrary and complex as regulators attempt to approximate the effect of an economy-wide carbon price.     

Global oil risks in the early 21st century

The Deepwater Horizon incident demonstrated that most of the oil left is deep offshore or in other difficult to reach locations. Moreover, obtaining the oil remaining in currently producing reservoirs requires additional equipment and technology that comes at a higher price in both capital and energy. In this regard, the physical limitations on producing the ever-increasing quantities of oil are highlighted as well as the possibility of the peak of production occurring this decade. The economics of oil supply and demand are also briefly discussed showing why the available supply is basically fixed in the short to medium term. Also, an alarm bell for economic recessions is shown to be when energy takes a disproportionate amount of total consumer expenditures. In this context, risk mitigation practices in government and business are called for. As for the former, early education of the citizenry of the risk of economic contraction is a prudent policy to minimize potential future social discord. As for the latter, all business operations should be examined with the aim of building in resilience and preparing for a scenario in which capital and energy are much more expensive than in the business-as-usual one.     

Net energy yield from production of conventional oil

Historic profitability of bringing oil to market was profound, but most easy oil has been developed. Higher cost resources, such as tar sands and deep off-shore, are considered the best prospects for the future. Economic modelling is currently used to explore future price scenarios commensurate with delivering fuel to market. Energy policy requires modelling scenarios capturing the complexity of resource and extraction aspects as well as the economic profitability of different resources. Energy-return-on-investment (EROI) expresses the profitability of bringing energy products to the market. Net energy yield (NEY) is related to the EROI. NEY is the amount of energy less expenditures necessary to deliver a fuel to the market. This paper proposes a pattern for EROI of oil production, based on historic oil development trends. Methodology and data for EROI is not agreed upon. The proposed EROI function is explored in relation to the available data and used to attenuate the International Energy Agency (IEA) world oil production scenarios to understand the implications of future declining EROI on net energy yield. The results suggest that strategies for management and mitigation of deleterious effects of a peak in oil production are more urgent than might be suggested by analyses focussing only on gross production.     

A variant of the Hubbert curve for world oil production forecasts

In recent years, the economic and political aspects of energy problems have prompted many researchers and analysts to focus their attention on the Hubbert Peak Theory with the aim of forecasting future trends in world oil production.In this paper, a model that attempts to contribute in this regard is presented; it is based on a variant of the well-known Hubbert curve. In addition, the sum of multiple-Hubbert curves (two cycles) is used to provide a better fit for the historical data on oil production (crude and natural gas liquid (NGL)).Taking into consideration three possible scenarios for oil reserves, this approach allowed us to forecast when peak oil production, referring to crude oil and NGL, should occur.In particular, by assuming a range of 2250–3000 gigabarrels (Gb) for ultimately recoverable conventional oil, our predictions foresee a peak between 2009 and 2021 at 29.3–32.1 Gb/year.     

Modelling the costs of non-conventional oil: A case study of Canadian bitumen

High crude oil prices, uncertainties about the consequences of climate change and the eventual decline of conventional oil production raise the issue of alternative fuels, such as non-conventional oil and biofuels. This paper describes a simple probabilistic model of the costs of non-conventional oil, including the role of learning-by-doing in driving down costs. This forward-looking analysis quantifies the effects of both learning and production constraints on the costs of supplying bitumen, which can then be upgraded into synthetic crude oil, a substitute to conventional oil. The results show large uncertainties in the future costs of supplying bitumen from Canadian oil sands deposits, with a 90% confidence interval of $7–12 in 2030, and $6–15 in 2060 (2005 US$). The influence of each parameter on the supply costs is examined, with the minimum supply cost, the learning rate (LR), and the depletion curve exponent having the largest influence. Over time, the influence of the LR on the supply costs decreases, while the influence of the depletion curve exponent increases.     

A note on US royalty relief,rent sharing and offshore oil production

This paper offers an economic analysis explaining why royalty relief under US Federal legislation is expensive in terms of revenue foregone, but is largely ineffective in increasing US offshore oil production. Repeal of royalty relief is therefore justified.