Peak Oil Values & Policy for 21C Towards 2020 Climate Change Conference Sunshine Coast, Queensland 8-9th June 2007 Ian T. Dunlop Deputy Convenor

The Peak Oil Opportunity Peaking of Oil Supply –oil is not running out –but soon it will not be physically possible to expand oil supply to meet increasing demand Climate Change and Peak Oil are inextricably linked –and converging Solutions to Peak Oil must reinforce, and not conflict with, solutions to Climate Change Convergence will profoundly alter our way of life, our institutions & our prosperity –for the better, as our current lifestyle is not sustainable

Global Drivers Population Growth Poverty & Inequality Liberalisation Globalisation Technological Change Sustainability

World Population Source: J.E.Cohen, Columbia University, New York, 2005 Where to ? BCAD

World Population = 6.5 billion Poverty & Inequality Enjoy 80% of World GDP Source: World Bank Global Database 2004

World Ecological Footprint Source: Global Footprint Network

World Energy Consumption Source: BP Statistical Review of World Energy 2006

Energy & Prosperity

Energy Demand Growth “Official Forecast”

Global Fossil Fuel Resources

World Oil Production Source: BP Statistical Review of World Energy 2006

Peak Oil matters Oil dominates its markets 80-95% of all transport is fuelled by oil products 50-75% of all oil is used for transportation All petrochemicals are produced from oil 99% of all lubrication is done with oil products 95% of all goods in the shops get there using oil 99% of our food involves oil or gas for fertilisers, agrochemicals, tilling, cultivation and transport Oil is the most important source of primary energy on the planet accounting for 36.4% of all energy

Crude Oil Importers

Crude Oil Exporters

The Oil Triangle of the Middle East Qatar Within the Oil Triangle you can find roughly 60 percent of the remaining oil reserves in the world. The 2001 Cheney report, US Energy Policy, says that in year 2020 around 54 to 67 percent of the world consumption of oil needs to come from the Oil Triangle.

Typical Oil Province Production Profile

The Growing Gap Source: Exxon Mobil updated

Oil Availability The “Official Future” in 2005 Availability of oil resources as a function of economic price Source: IEA (2005)

“Official Future” Today “ The energy future which we are creating is unsustainable. If we continue as before, the energy supply to meet the needs of the world economy over the next 25 years is too vulnerable to failure arising from under-investment, environmental catastrophe or sudden supply interruption” Claude Mandil Executive Director International Energy Agency World Energy Outlook 2006

Global Oil Depletion - ASPO Source: Association for the Study of Peak Oil

CRUDE OIL PRICES Source: BP Statistical Review of World Energy 2006

The Economist’s View “If the price of eggs is high enough, even the roosters will start to lay” Perhaps, but if economists were farmers, geologists or petroleum engineers it would be a strange world ! Dr. Brian Fisher Executive Director ABARE May 2006

Why are oil supplies peaking? We are not finding oil fast enough It is getting harder We are not developing fields fast enough Too many fields are old and declining We are short of people and equipment Oilfield inflation is soaring Our societies are totally oil dependent Oil supply will peak soon.

Deepwater Oil - Getting Harder Source: BP

Deep Water Oil vs Mt. Everest Jack 2 8,588 metre to oil reservoir 8,848 metre 2,100 metre to seabed Sea Level New US Gulf of Mexico oilfield

What will the Peak look like ? It could be sharp and nasty –geopolitical supply disruption / constraint –major oilfield depletion acceleration –producing countries consume more oil internally –climate change impact - Hurricane Katrina It could be an “undulating plateau” – demand destruction developing world cannot afford high prices climate change emissions constraints –extra supply accelerates to balance depletion We will probably only see it in the rear-vision mirror –we may already be there

Solutions -- but hurry Efficiency in use Demand management Biofuels Heavy oils and tarsands Clean coal to create syngas Gas to liquids The solutions must not worsen climate change

Global Oil Solutions Filling the gap 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 Gbbls/year no single “Magic Bullet” solution, but lots of “Magic Buckshot” ! probably no replacement ever for cheap plentiful oil urgent preparation and adjustment are vital 2005

Australian Crude Oil & Condensate Supply & Demand Source: APPEA

80% of Australia’s oil usage is in transport If Australia’s 20 M tpa wheat crop was all converted to ethanol: = 9% of Australian oil usage Australia uses 45,000 megalitres of oil each year = a 360m cube Sydney Harbour Bridge is 134 m high

Million barrels/ day 2005 BP Statistical Review, 2006 Australia uses 0.9 China7.0 US20.6 World82.5 US = 1 cubic km oil / year Australia China United States 1 km l l Oil Consumption Comparison

Oil consumption bbl/day/1000 people Aust Eu-15 USA China Japan Registered vehicles /1000 people Total Oil Consumption Production Net imports Aust Eu-15+ USA China Japan M bbl/day EU 15 + Norway 1 km Australia China United States ll

Who Gets The Available Oil ? Market forces –the wealthy win The “Washington Consensus” –send in the marines ! A global “Oil Depletion Protocol” –sharing equitably –an oil equivalent of the Kyoto Protocol

Oil Depletion Protocol A Developed World View: –Every nation would reduce their oil consumption annually by at least the global depletion rate –No country would produce oil at above its present depletion rate –No country would import oil at above the global depletion A Developing World View –Equal per capita oil allocation globally, by a date to be agreed National oil descent budget managed by a Tradeable Energy Quota system –with personal per capita oil allocation Climate change and peak oil TEQ systems work in parallel Sources: Dr. Colin Campbell, ASPO Australia

Community Awareness & Commitment Transition to a low-carbon economy will fundamentally alter lifestyle of entire community Peak Oil is barely on our radar –but it may be the issue which has a greater impact than climate change in the short-term Be aware and prepare! Requires principled, long term leadership Community involvement and pressure are essential drivers A unique opportunity to set humanity on a new course built on sustainable principles

Technology alone is not enough. Values must change Insufficient: Sustainable use of existing technology The Goal: Sustainable use of new technology Unacceptable: Unsustainable use of existing technology The danger: Unsustainable use of new, more powerful technology New Existing New Values Technology Source: Hardin Tibbs

21st Century Value Shift Population Time Values in 20th C Quantity Economy Growth Consumption Materialism Competition Selfism Nationalism Short-term Chains Values in 21st C Quality Environment Sustainability De-materialisation Self-restraint Cooperation Mutualism Globalism Long-term Loops

Adaptive Change “It is not the strongest of the species that survive, nor the most intelligent, rather it is those most responsive to change” Charles Darwin

“Don’t blow it - good planets are hard to find!” Time Thank you

Background Slides

How old are the fields? Of the 18 largest fields, 12 are in decline, 5 have some potential and 1 is undeveloped The 120 largest fields give 50% of total 70% of production from fields 30+ years old Few large recent discoveries We’re dependent on the oil equivalent of ‘Old men and young boys’

Sustainability “ Meeting the needs of the present without compromising the ability of future generations to meet their own needs” Gro Harlem Brundtland, “Our Common Future”,1987 “In a sustainable society, the rates of: use of renewable resources do not exceed their rates of regeneration use of nonrenewable resources do not exceed the rate at which sustainable renewable substitutes are developed pollution emissions do not exceed the assimilative capacity of the environment” Herman Daly

Tradeable Energy Quotas An electronic system for rationing carbon-rated energy… for all energy users… at national level. Also can be used to maintain a fair distribution of a scarce commodity such as oil or water