1. RMS-AAPG and COGA Denver, CO July, 2008 Myths, Realities and Paradoxes
Global Energy
Myths, Realities and Paradoxes
Scott W. Tinker
Bureau of Economic Geology Jackson School of Geosciences The University of Texas at Austin

2. 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.

3. 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

4. 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

5. 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.

6. 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.

7. Crisis/Policy Paradox
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.

8. Economy/Carbon Paradox
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.

9. Energy Paradoxes Government/Markets Paradox
Government policies are needed to enhance free market behavior.

10. Nationalization/Globalization Paradox
Energy Paradoxes
Nationalization/Globalization Paradox
The US should be energy independent in order to remain a global leader in an interdependent world.

11. Myths and
Myth Busters!

12. Myth 8
Global production of oil and natural gas are “peaking” and we are running out of fossil energy soon.

13. Energy Use (Quadrillion Btu) We depend upon fossil fuels today.
Global Energy
Energy Use (Quadrillion Btu)
Asia & Oceania
United States
Europe
Coal
Eurasia
Oil
Gas
Central & South America
Nuclear
Middle East
All Other
Canada & Mexico
Africa 20 40 60 80
100
120
140
160
Quadrillion Btu
We depend upon fossil fuels today.
Data: EIA, October 2007

14. US Energy Mix US Transportation Energy Demand (2006 Btu) Electricity
16407
618
264
4892
2647
1333
611
147
592
688
Light-Duty Vehicles
Commercial Light Trucks 1
Buses
Freight Trucks
Air 3
Water
Rail
Lubricants
Pipeline Fuel Natural Gas
Military Use
Uranium
Conventional Oil
Hydro
Electricity
Transportation
Coal
Natural Gas
Biomass
We depend upon fossil fuels today.
Heat
Data from EIA 2007

15. Global Reserves and Production Global Annual Production
(mbo)
35,000,000
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
Global Reserves (bbo)
World Oil Reserves (Billion Barrels)
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
Oil Price ($2007)
Oil Price Average in $/bbl Inflation Adjusted 2007
30,000,000
World Oil Production (Thousand Barrels)
25,000,000
20,000,000 15 20 25 30 35 40
R/P
Global Annual Production
15,000,000
10,000,000
5,000,000
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Source: Energy Information Administration As of January 2008 ( ), OPEC (

16. The Conventional Oil “Wedge”M
If China and India grow from 1 B/P/Y today to 5 B/P/Y by 2030, it will create 48 MMBD of new demand
The Conventional Oil
“Wedge”
~35 MMBD
new demand
Unconventionals
Plus EOR
ExxonMobil,

17. Options to Conventional Oil
Option Time to Initiate Impact (+10 Yrs)
(Yrs) (MM bpd)
Enhanced Oil Recovery 5 3
Heavy Oils / Oil Sands 3 8
Shale Oil
Coal Liquids
Gas-To-Liquids
Biofuels 21
after Hirsch et.al, 2005

18. One More Option to Conventional Oil…
1 MMBOPD and 1.4 TCFY in 15 years
Access Restrictions
ARI, 2006

19. Global Natural Gas Supply and Demand
*Supply = world natural gas production & Demand =world natural gas consumption.
110
Supply
Demand
100 90 60 70
R/P
(yrs)
Natural Gas (Tcf) 80 70 60 50
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Year
Data: EIA, October 2007

20. U.S. Natural Gas Production1 2 3 4 5 6 7 8 9 10
1990
1995
2000
2005
2010
2015
2020
2025
Year
Annual Natural Gas Production (TCF)
Gas Shales
Coalbed Methane
Tight Gas
Total Natural Gas
Conventional Gas
Difference
25,000
20,000
15,000
U.S. Natural Gas Production (Bcf)
10,000
Unconventionals
5,000
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
Year
Conventionals: EIA ( ) and NPC ( )
Unconventionals: data from GRI, Updated data from is from EIA, 2007

21. US Dry Natural Gas Reserves
Technology and Ideas
350,000
300,000
250,000
Unconventionals
200,000
Reserves (Bcf)
150,000
100,000
50,000
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Source: Energy Information Administration (EIA)

22. Technology in Action!

32. 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

33. Myth 2
“Renewable energy” can reduce dependence on fossil fuels significantly in the next 25 years.

35. Global Energy Consumption1 8 6 4 2
Percentage of total market
H/C>4
(Natural Gas,
Nuclear,
All others)
H/C<1
(Wood, Coal)
H/C~2
(Oil)
1850
1900
1950
2000
U.S. Data: Annual Energy Review 1999 (EIA, 2000)
World Data: International Energy Annual 1999 (EIA, 2000)
Year
QAc9841c

36. Global Energy Consumption (Quads)
100
200
300
400
500
600
700
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Global Energy Consumption (Quads)
Future Global Trends
1.25% Global Annual Demand Growth
91%
87%
80%
50%
45%
Petroleum
40%
Sound energy policy is necessary to prevent an energy crisis, yet crisis is seemingly necessary to cause (poor) policy to be considered.
and
The road to an alternate (clean) energy future must be paved with fossil energy.
35%
30%
Coal
Unconventional Gas
Unconventionals/Res Growth
% Total Consumption
25%
Natural Gas
20%
15%
10%
Hydroelectric
Nuclear 5%
Biomass, Geothermal, Solar & Wind 0%
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
200.00
1.25% annual demand growth
180.00
160.00
140.00
120.00 4 8 16 32
2X every
7 yrs
Global Energy Consumption (quads)
100.00
80.00
60.00
40.00
20.00
0.00
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Historical Data: EIA October 2007: Forecasts: Tinker, 2008

37. 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

38. The US can be energy independent in the next 25 years.
Myth 1
The US can be energy independent in the next 25 years.

39. Summary: It Takes a Team!
Policy Maker!
Academic!
Industry!

40. US Economy and Oil Price
GDP Growth (Percentage points at annual rates)
Crude Oil Domestic Wellhead Price ($2000)
10.00 60
8.00
Nixon
Clinton
Bush 2
Bush 1
Reagan
Carter
Ford 50
6.00 40
4.00
GDP Growth (% points at annual rates)
Oil Domestic Wellhead Price ($) 30
2.00 20
0.00
1970
1975
1980
1985
1990
1995
2000
2005 10
-2.00
-4.00
Year
Data: EIA February 2007 and US department of Commerce

41. Electricity will play an ever greater role in the energy end use mix.
Electricity’s Role
1800
1855
1910
1965
2020
Annual Use (Quads) 1
0.1 10
100
Electricity will play an ever greater role in the energy end use mix.
Total Energy
Energy used
to produce electricity
45Q
After Huber and Mills, 2005.
Data: EIA, Annual Review, US Census Bureau, Historical Statistics of the US Colonial Ties to 1970

42. Electricity Transportation Heat Uranium Hydro Imports Conventional Oil
Coal
Natural Gas
Biomass
Heat
Data from EIA 2007

43. Electricity Options Natural Gas Coal Nuclear Renewables Efficiency
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

44. Global Carbon Emissions Annual Anthropogenic CO2 (mmT)
12,000
10,000
Asia & Oceania
8,000
Annual Anthropogenic CO2 (mmT)
6,000
4,000
2,000
1980
1983
1986
1989
1992
1995
1998
2001
2004 NA
Africa
Europe ME
Eurasia
Cent & SA
EIA, 2007

45. Government policies are needed to enhance free market behavior.
GDP/Carbon Emissions
2.50
2.00
Emissions from the combustion of fossil fuels enhance global warming which harms the economy, yet a healthy economy relies on fossil energy today.
and
Government policies are needed to enhance free market behavior.
1.50
GDP ($B2000)/CO2 (MMT)
Asia & Oceania
1.00
0.50
0.00
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year NA
Africa
Eurasia
Europe ME
Cent & SA

46. 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

47. 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

48. Dave Barry
Never be afraid to try something new. Remember that a lone amateur built the Ark. A large group of professionals built the Titanic.