1 The approach of Peak Oil Bruce Robinson Convenor ? ? Look out !! Something serious is looming on the radar

2 An Australia-wide network of professionals working to reduce oil vulnerability ASPO-Australia Working groups Finance Sector Health Sector Social Services Sector Remote indigenous communities Active transport (bicycle & walking) Agriculture, Fisheries and Food Biofuels Urban and transport planning Oil & Gas industry Local Government sector Regional and city working groups Construction Industry Public transport sector Defence and Security Economics Tourism Young Professionals working group Senate Inquiry into Australia's future oil supply and alternative transport fuels Feb 2007 Part of the international ASPO alliance = Senate inquiry submission

3 Outline What is Peak Oil ? the time when global oil production stops rising and starts its final decline We will never "run out of oil" "Peak Exports" is even more important, and sooner ● When is the most probable forecast date ? ? /- 5 years ● Governments & industry should be preparing for Petrol Droughts & Peak Oil ● Conservation and demand management is very promising "exploring for Negabarrels of oil" ● Oil vulnerability assessment and risk management is important for all sectors, including the mining industry Peak Oil but when?

4 Hurricane Katrina New Orleans US Federal, State and local Governments were shown to be shortsighted, ill-prepared, uncaring and disorganised. Australian governments are much less organised for Peak Oil

5 US oil peak 1970

6 "A MIDDLE EAST VIEW OF THE GLOBAL OIL SITUATION" A.M. Samsam Bakhtiari National Iranian Oil Company May 2002 Major and inescapable trends The world's supergiant and giant oil fields are dying off Even OPEC's oil production has its limits Global oil crunch at the horizon --- most probably within the present decade. "...It would take a number of miracles to thwart such a rational scenario.. A series of simultaneous miracles is not possible --for there are limits even to God Almighty's mercifulness". “Noah built his ark before it started raining”

7 Dr. Sadad I. Al Husseini, ex Saudi Aramco Oil and Money Conference, London, October 30, 2007 Oil and NGL production have remained flat in spite of rising prices...predict a 10 year plateau a structural ceiling determined by geology

8 Monday October Fig. 7 Oil production world summary 2007

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10 Chris Skrebowski Editor, Petroleum Review, London The practical realities Worry about flows not reserves "Deliverability" “It isn't the size of the tank; it’s the size of the tap” (ASPO-USA) "40 years reserves left at current production rates"....This is a very misleading statement (ASPO-Aus)

11 A simple observation -- or why peak will be earlier than most people expect ‘Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.’

12 The real oil discovery trend Longwell, 2002

13 Why are oil supplies peaking? We are not finding oil fast enough We are not developing fields fast enough Too many fields are old and declining 54 of 65 oil producing countries are in decline! Oil supply will peak in 2010/2011 at around million barrels/day Oil supply in international trade may peak earlier Collectively we are still in denial

14 Jeff Rubin September 2007 Canadian Imperial Banking Corporation Iran 10 c /litre Venezuela 2 c /l

15 from Oilwatch Monthly: ASPO-Netherlands Rembrandt Koppelaar World Liquids Exports estimate to July 2007 “Peak Exports” occurs before “Peak Oil” forecast Rubin 2007

16 Please put your hand up if you think that we have crossed the Hubbert Peak and hands up those who don’t? Undecided Eric Streitberg Executive Director ARC Energy Limited Australian Petroleum Production & Exploration Association conference APPEA April 2005 Perth 1/3 rd

17 Perth’s Central Park building is 249 m high, to top of tower Australia uses 51,000,000,000 litres of oil each year a cube of about 370 metres size 100 ml of oil contains 1 kWh of energy. Enough to move a small car to the top of the Eiffel tower 80% of Australia’s oil usage is in transport If Australia’s 20 M tpa wheat crop → ethanol = 9% =1.3 EfT 3

18 Australia China United States 1 km l l Million barrels/ day 2006 BP Statistical Review, 2007 Australia uses 0.9 China7.4 US20.6 World83.7 US 1 cubic km oil / year

19 Actual Forecast Australia } $12.5 billion 06/07 P50 Consumption Production

Years After Crash Program Initiation Impact (MM bpd) EOR Coal Liquids Heavy Oil GTL Efficient Vehicles Worldwide Crash Program Mitigation of Conventional Oil Production Peaking A Study for US DOE NETL Hirsch, Bezdek and Wendling, 2005 Delay / Rapid growth. Roughly 35 MM bpd at year Study

21 Time Cost of Error COST AS A FUNCTION OF START TIME (Notional) Premature Start Peaking Scenario I - 10 Years Scenario II - 20 Years Scenario III “It is also certain that the cost of preparing too early is nowhere near the cost of not being ready on time.” Alannah MacTiernan, 2004

22 Mortgage and Oil Vulnerability in Perth at

23 Another analogy: The Canberra fire-storms of January 2003 destroyed over 400 houses, on the outer edge of the outer suburbs Reliable predictions had been ignored and there was no effective action to minimise the risks

24 Oil shocks may well wipe out entire outer rows of suburbs from Perth and other cities with the same results of destroyed homes, broken dreams and broken marriages.

25 Oil shocks may well wipe out entire outer rows of suburbs from Perth and other cities with the same results of destroyed homes, broken dreams and broken marriages.

26 Oil shocks may well wipe out entire outer rows of suburbs from Perth and other cities with the same results of destroyed homes, broken dreams and broken marriages.

27 Oil shocks may well wipe out entire outer rows of suburbs from Perth and other cities with the same results of destroyed homes, broken dreams and broken marriages.

28 The outskirts of all Australian cities will be hard hit by oil depletion, as public transport infrastructure is very poor

} Oil Gboe/pa World All Oil ASPO 2006

30 Priorities 1: Awareness and engagement 2: Frugality 3: Efficiency Last: Alternative fuels Failure to act now will prove incredibly costly. Oil vulnerability assessment and risk management is an important way of minimising exposure and maximising opportunities. Hint: Check your superannuation is not being invested into urban toll-roads, tunnels and airports.

31 a few more slides follow, in case they are needed for questions

32 1: “Talk about it, Talk about it” 2. Engage people, “Participatory democracy” 3. Dismantle the "perverse policies" that subsidise heavy car use and excessive freight transport. Australian Government Policy and Action Options 4. Encourage frugal use of fuel, and disadvantage profligate users. Fuel taxes should be incrementally raised to European levels to reduce usage. 5: SmartCard tradable personal fuel allocation system. A flexible mechanism for short- term oil shocks, as well for encouraging people to reduce their fuel usage.. 6. Concentrate on the psychological and social dimensions of automobile dependence, not just “technological fixes” 7. Implement nationwide "individualised marketing" travel demand management. 8. Railways, cyclepaths and public transport are better investments than more roads. 9. Give priority for remaining oil and gas supplies to food production, essential services and indigenous communities, using the Smart-Card system. 10. Review the oil vulnerability of every industry and community sector and how each may reduce their risks. 11 Promote through the United Nations an Intergovernmental Panel on Oil Depletion, and a Kyoto-like protocol to allocate equitably the declining oil among nations. An international tradable sliding scale allocation mechanism is one hypothetical option.

33 Bicycles are powered by biofuel, renewable energy, either Weetbix or abdominal fat No shortage of either

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37 World oil shortfall scenarios Past Production of Oil Forecast Production Demand Growth Deprivation, war City design/lifestyle Pricing / taxes Transport mode shifts Efficiency Other petroleum fuels gas, tar-sands Other fuels Gb/year no single “Magic Bullet” solution, probably no replacement ever for cheap plentiful oil Urgent preparation and adjustment are vital 2007

38 Blue is water, green is water and oil mixed and red/purple is “dry” oil with little water in it Ghawar is Saudi Arabia's and the world's biggest oilfield If it is at peak, then global peak is probably very close

39 Petrol taxes OECD IEA Dec 2003 Portugal UK Australia US € Au$ cents/litre

40 The UK Fuel Tax Escalator Margaret Thatcher Australian fuel taxes should be raised to European levels on a fuel tax escalator Nominal tax per litre (pence) Real tax pence

} Oil Gboe/pa World All Oil ASPO 2006

} Oil } Gas Gboe/pa World All Oil & Gas (gas at 10,000 cft=1bbl) ASPO 2006

43 } 2007 World oil shortfall scenarios Past Production of Oil Forecast Production Demand Trend Gb/year Shortfall By 2030, the gap is equivalent to 6,000 nuclear reactors 2030

44 Urban passenger mode shares Australia Potterton BTRE 2003 High automobile-dependence Public transport share is very low Car

45 February 2004 By 2015, we will need to find, develop and produce new oil and gas equal to eight out of every 10 barrels being produced today.

46 China US Australia

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48 EWG: Zittel & Schindler, LBST, October 2007

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56 Global liquids capacity to 2015

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58 Prof. Aleklett, ASPO Sweden

59 Lord Ron Oxburgh Former Chairman, Shell UK Chairman, House of Lords Select Committee on Science and Technology Honorary Professor, Cambridge University Fellow of the Royal Society