1. Australia’s Energy Future Where to from here Annimac / Anni Macbeth Futurist www.annimac.com.au ARC Energy Directors Dinner Keynote 18 November 2006 Perth W Australia

2. November 2006 www.annimac.com.au 2 Mo st powerful industries Technology I C T Energy Oil & gas

3. November 2006 www.annimac.com.au 3 Big Picture Global trends impacting industry Industry trends for the future Where Perth fits in all this

4. November 2006 www.annimac.com.au 4 Rate of Change Exponential Amount in one day same as Grandfather had in one year Younger means faster

5. November 2006 www.annimac.com.au 5 I’m never having kids. I hear they take nine months to download.

6. November 2006 www.annimac.com.au 6 Driving all Change : Technology by 2020 70 % of job types new because

7. November 2006 www.annimac.com.au 7 Driving all Change : Technology by 2020 80 % technology then not imagined yet

8. November 2006 www.annimac.com.au 8 Likely jobs in next 10 years : Director of Emerging Thought Robotics Ethicist Creative Undertaker Biotech Rigger Chief Nanotech Geologist Hacker Relations Manager Valuer of Intangible Assets * Human Interface Manager * * Exists 2003

9. November 2006 www.annimac.com.au 9 Big Picture What’s pushing the industry 1. O&G Peak Oil 2. Political power shift 3. Global economic shift 4. Global values shift

10. November 2006 www.annimac.com.au 10 1. O & G Peak Oil or The Big Rollover  Supply > Demand

11. November 2006 www.annimac.com.au 11 From Chris Skrebowski's recent visit The practical realities world needs oil production flows consumers need delivery flows reserves only useful as flows Peak Oil : flows can’t meet demand worry about flows not reserves

12. November 2006 www.annimac.com.au 12 Why does it matter ?

13. November 2006 www.annimac.com.au 13 Industry attitudes Three Wise Monkeys  Oil Companies : - hear no depletion  Governments & International Agencies : - see no depletion  And all agree it would be best to : - talk no depletion

14. November 2006 www.annimac.com.au 14 Running on empty August 27, 2006 You're about to hear two of the scariest words in the English language — "peak oil". Effectively, they mean the end of the world as we know it. The Prime Minister is selling Australia short by pinning his hopes on a fall in petrol prices. 31/8/06 Min Alannah MacTiernan : major Federal investment in public transport was vital if Australia was to avoid major disruption as global petroleum production reached its peak. Four Corners Peak Oil? 10.7.06 Dr Brian Fisher ABARE : If the price of eggs is high enough, even the roosters will start to lay. Oil production limit reached: expert ABC News July 10, 2006. An international oil industry expert says the limit of global oil production has been reached. Former National Iranian Oil Company executive Dr Ali Samsam Bakhtiari has told the Financial Services Institute in Sydney the world's oil fields are producing as much oil as they can. Oil prices will keep rising: analyst The Age, August 21, 2006 Chris Skrebowski. " The price of oil will continue to rise until world oil production peaks in 2010 at around 94 million barrels of oil per day

15. November 2006 www.annimac.com.au 15 OIL BUYERS MARKET The Peak of World Oil Production CHEAP & EASY-TO- EXTRACT OIL US North Sea Forecast oil production Past oil production We are here Previous Rollovers SELLERS MARKET 0 5 10 15 20 25 30 35 1930195019701990201020302050 EXPENSIVE & HARD-TO-EXTRACT OIL Annual Oil Production Gbbl

16. November 2006 www.annimac.com.au 16 How much O&G is there ? (ASPO 2005 estimate)

17. November 2006 www.annimac.com.au 17

18. November 2006 www.annimac.com.au 18 Typical Oil Depletion Curve Norway (North Sea) Werner Zittel, LBST

19. November 2006 www.annimac.com.au 19 2004 www.SimmonsCo-Intl.com Saudi Reserves Seriously Overstated Matthew Simmons February 2004

20. November 2006 www.annimac.com.au 20 Data from IHS Energy and OGJ annual reports IHS and O & GJ Remaining Reserves Francis Harper ASPO 2004, Berlin www.PeakOil.net

21. November 2006 www.annimac.com.au 21 Oil & Gas Journal 12/4/2004 Douglas - Westwood Ltd Cambridge UK Study : World oil forecast beset with reserves shortfalls 2004 201 6

22. November 2006 www.annimac.com.au 22 ASPO Newsletter 40 April 2004 www.PeakOil.net Oil discoveryOil production Forecast ?

23. November 2006 www.annimac.com.au 23 What about Australia ? Haven’t we got plenty ? (Geosciences Australia)

24. November 2006 www.annimac.com.au 24

25. November 2006 www.annimac.com.au 25 Why Peaking sooner than expected ‘Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.’

26. November 2006 www.annimac.com.au 26 Why supplies are peaking We are not finding oil fast enough We are not developing fields fast enough Too many fields are old & declining We are short of people & equipment Oilfield inflation is soaring

27. November 2006 www.annimac.com.au 27 Past discovery according to Exxon Mobil The real discovery trend

28. November 2006 www.annimac.com.au 28 Discovery to Production: takes 2 to 25 years Current supply 84mn b/d or 30bn b/y Global new field discovery (7-10bn b/y) Tar sands and Heavy oil Biofuels + others Known oil reserves in production (90%) NIP 10% Yet-to-find probable Yet-to-find possible 2 to 25 years EOR

29. November 2006 www.annimac.com.au 29 Ageing fields 18 largest fields  12 are in decline  5 have some potential  1 is undeveloped 120 largest fields give 50% of total 70% of production from fields 30+ yrs old few large recent discoveries dependent on ‘Old men & young boys’

30. November 2006 www.annimac.com.au 30 BP statistics OECD production peaked 1997 OECD output declined by 2 million b/d : 8.8% Non-OPEC non-FSU production peaked 2002 North America/ Mexico peaked 1997 North Sea - UK/Norway/Denmark peaked 2000 now declined by 1.2 million b/d (19.2%) 25 significant producers in decline 28% of global production from decliners

31. November 2006 www.annimac.com.au 31 Top five decliners 2005

32. November 2006 www.annimac.com.au 32 Others about to decline Denmark 2005 Malaysia 2005 Mexico 2005 Vietnam 2005 India 2006/07 China 2007/08 Iran struggling -- next to go ? 9.9m b/d or 12.3% of all production

33. November 2006 www.annimac.com.au 33 Real new capacity to 2012 ( Peak in first quarter of 2011 )

34. November 2006 www.annimac.com.au 34 Chris Skrebowski's conclusions Supply will remain tight & prices high barring major economic setback Oil supply will peak in 2010/2011 at around 92-94 million barrels/day Oil supply in international trade may peak earlier than oil production peak Collectively we are still in denial Only 1,500 DAYS to PEAK !

35. November 2006 www.annimac.com.au 35 ABARE forecasts Random number generator "If the price of eggs is high enough, even the roosters will start to lay." ABARE to Senate inquiry into Australia's future oil supplies ABARE differs

36. November 2006 www.annimac.com.au 36 Common Myth (super +) Leonardo Maugeri, Economist ENI SPA Rome “.. just as the Stone Age did not end for the lack of stones, the Oil Age will not end because of the scarcity of oil. Rather oil will inevitably be surpassed in convenience by a new source of energy in the future ” Biomass Walking, horses, horse & cart, horse-drawn barge Coal 40% world’s electricity Trains Oil ( & gas) Cars, trucks, trains, planes ?? Thermodynamics ? Theology ? Nuclear Thorium ? 15 th December 2003

37. November 2006 www.annimac.com.au 37 “ oil, the most energy-dense of the natural, non-nuclear fuels on the planet. But there isn't anything conceivable that could replace conventional oil, in the same quantities or energy densities, at any meaningful price…” Whom should we believe ? 12 th January 2004 Whom should we believe ? Common Myth (-) Richard Miller BP Exploration Operating Co. Ltd. Middlesex, UK

38. November 2006 www.annimac.com.au 38 Everyone agrees : Change is inevitable. Bookies’ odds : Peaking in 2010 - 2015

39. November 2006 www.annimac.com.au 39 What’s pushing the industry : 1. O&G Peak Oil 2. Political Power Shift 3. Global Economic Shift 4. Global Values Shift

40. November 2006 www.annimac.com.au 40 Global Economic Power

41. November 2006 www.annimac.com.au 41 Economic domination 200 yrs

42. November 2006 www.annimac.com.au 42 shifting shifting to Western Pacific Rim

43. November 2006 www.annimac.com.au 43 Global Cultural power

44. November 2006 www.annimac.com.au 44 Christian domination 500 yrs 

45. November 2006 www.annimac.com.au 45 2 billion people watched world media Pope’s Funeral

46. November 2006 www.annimac.com.au 46 to Confucian / Islam influence  

47. November 2006 www.annimac.com.au 47 Chi master class with MIT engineers

48. November 2006 www.annimac.com.au 48 Fastest Japanese Robanoids 2006 Your next receptionist ? Mine site tour guide ?

49. November 2006 www.annimac.com.au 49 What’s pushing the industry : 1. O&G Peak Oil 2. Political Power Shift 3. Global Economic Shift 4. Global Values Shift

50. November 2006 www.annimac.com.au 50 Global Shifting Values Gap widening :  knowledge  haves / have nots  age generations  technologically connected

51. November 2006 www.annimac.com.au 51 Chinese Technology Centre Knowledge gap

52. November 2006 www.annimac.com.au 52 Haves / Have Nots Gap “ The world gap is no longer based on wealth - It is now based on access to & skill to use technology ” WHO United Nations

53. November 2006 www.annimac.com.au 53 Generational gap Three worlds : Materialism Baby Boomers 45-60 Generation X 30-45 Sustainability DotComs 15-30 Virtual Ferals 0-15

54. November 2006 www.annimac.com.au 54 Technological Gap Half the people in world have never made a phone call.

55. November 2006 www.annimac.com.au 55 So what’s ahead for Perth

56. November 2006 www.annimac.com.au 56 Perth’s Central Park building is 249 m high, to top of tower Australia uses 45,000,000,000 litres of oil each year A cube of about 360 metres size 100 ml of oil contains 1 kWh of energy. Enough to get small car to top of 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

57. November 2006 www.annimac.com.au 57 Million barrels/day 2004 Oil & Gas Journal July 5 th 2004 Australia uses 0.8 China6.3 US20.5 World81 US 1 cubic km oil / year Australia China United States 1 km l l Comparisons

58. November 2006 www.annimac.com.au 58 Mortgage & Oil Vulnerability In Perth

59. November 2006 www.annimac.com.au 59 VAMPIRE Index Car dependence Proportion of workers who journeyed to work by car (as driver or passenger) Proportion of households with 2 or more cars Income level Median weekly household income Mortgages Proportion of dwelling units being purchased (mortgage or rent/buy scheme)

60. November 2006 www.annimac.com.au 60 Mortgage & oil vulnerability in Perth

61. November 2006 www.annimac.com.au 61 What to do ? David Kilsby ASPO “Do nothing” not an option no magic bullet Commonwealth to become involved ASPO Australia advocates  community engagement  individualised marketing  fuel tax escalator  tradeable fuel allocation system David Heinberg : oil protocol leadership required buy time !

62. November 2006 www.annimac.com.au 62 What now - ASPO 1. acknowledge oil depletion - industry governments community - media academia... 2. grab opportunities - policy options for less fuel usage 3. globally well placed - long awareness of oil depletion - leading management skills - TravelSmart & water conservation - uncommitted gas reserves 4. Oil Vulnerability task forces - govts www.ASPO-Australia.org.au

63. November 2006 www.annimac.com.au 63 Global Trends i mpact for O&G  transiting two worlds - accelerating  values shifting to sustainability  Peak Oil value driven  industry cooperation not competition  young non negotiators for future  relationships : consumers partners innovators

64. Thriving with change : Thriving with change :

65. Thank you www.annimac.com.au www.annimac.com.au

66. November 2006 www.annimac.com.au 66 In appreciation much O&G Industry material provided by Association for the Study of Peak Oil & Gas Australia www.ASPO-Australia.org.au International ASPO www.PeakOil.net Bruce.Robinson@ASPO-Australia.org.au 08-9384-7409 0427 398 708 Personal thanks once again, Bruce. Annimac www.annimac.com.au

67. November 2006 www.annimac.com.au 67 For further information : thx to Bruce Robinson & Dave Kilsby ASPO Australia for sharing their wisdom www.sydneypeakoil.com  Sydney Peak Oil Group www.aspo-australia.org.au  ASPO Australia www.aph.gov.au/senate/committee/rrat-ctte  over 180 submissions to an Inquiry into oil supply & alternative fuels: …/oil_supply/submissions/sublist.html www.peakoil.net  ASPO www.energybulletin.net  (one of many good international sites for Peak Oil info)

68. November 2006 www.annimac.com.au 68 IndicatorProportion H/holds ≥2 cars Proportion work trips by car Income level Proportion H/holds w mortgage Potential points: 5510 Weighting33.3% Variable weighting Vampire Assignment of ratings to map shadings Value1 to <1010 - <1515 - <1717 - <1919 - <22 Shading 33.3%

69. November 2006 www.annimac.com.au 69 VAMPIRE Value Assignment relative to Census District percentile PercentileCar own ≤ 2 JTW by car IncomeMortgage 1005505 904414 753323 502232 251141 100050