1. Peak Oil Probabilities, risks and opportunities Bruce Robinson Convenor 5th September 2006

2. 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 Behavioural change Local Government sector Regional and city working groups Construction Industry Freight sector Public transport sector Defence and Security Economics Tourism www.ASPO-Australia.org.au A network of professionals working to reduce oil vulnerability

3. What is Peak Oil ? We will never "run out of oil" When is the most probable forecast date ? What might it mean for the oil industry ? What might it mean for Australia ? What mitigation and adaptation strategies are practical? What could the oil industry do to warn people to prepare for Peak Oil ? Check your superannuation is not going into urban toll-roads, tunnels and airports 1930 1970 2010 2050 Peak Oil but when?

4. Running on empty August 27, 2006 You're about to hear two of the scariest words in the English language — "peak oil". The point where oil production reaches its absolute peak; the point when supplies start running out. 31/8/06 Planning and Infrastructure Minister Alannah MacTiernan said that 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? 10/07/2006 Dr Brian Fisher of ABARE was positively jovial. 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. 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

5. Please put your hand up if you think that we have crossed the Hubbert Peak and we are entering a demand driven pricing era, and hands up those who don’t? Eric Streitberg Executive Director ARC Energy Limited Australian Petroleum Production & Exploration Association conference APPEA April 2005 Perth 1/3 rd

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7. Chris Skrebowski Editor, Petroleum Review, London The practical realities The world needs oil production flows Consumers need delivery flows Reserves are only useful as flows Worry about flows not reserves "40 years reserves left at current production rates"....This is a very misleading statement

8. Alaskan North Slope Production Reserves grow -- Production falls

9. 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.’

10. Introducing the Gator

11. 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 We are short of people and equipment Oilfield inflation is soaring

12. Past discovery according to ExxonMobil The real discovery trend

13. Oil production flows -- all new flows take two to twenty-five 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

14. 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’

15. What are the BP statistics saying? OECD production peaked in 1997 and has now declined by just under 2 million b/d (8.8%) Non-Opec, non-FSU production peaked 2002 North America/Mexico peaked in 1997 North Sea - UK/Norway/Denmark peaked in 2000 now declined by 1.2 million b/d (19.2%) Around 25 significant producers in decline About 28% of global production from decliners

16. The UKCS depletion reality -- production down to 1mn b/d by 2010

17. North Sea production by field Forties monthly production to date

18. The top five decliners in 2005 1970

19. How the Megaprojects database is created and used All publicly available data 2006-2012 148 Opec and 70 non-Opec projects Opec data (from their website) Incremental production allocated by start up date Graphed to show volumes available to meet demand

20. This is the real new capacity to 2012 (Peak in first quarter of 2011)

21. Global liquids capacity to 2015

22. Chris Skrebowski's conclusions Supply will remain tight and prices high barring a 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 the oil production peak Collectively we are still in denial WE HAVE JUST 1,500 DAYS TO PEAK

23. 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 "Forecasters' Droop" ??

24. ABARE oil price forecasts US$/bbl 2002 for 2004 $26 2004 for 2005 $32 2004 for 2005 $37.95 – 4.8% ABARE US$39 in 2011 NYMEX US$67 in 2011 ABARE 2005 US$35 in 2006 ABARE australiancommodities vol. 12 no. 1 march quarter 2005

25. Mortgage and Oil Vulnerability in Perth

26. VAMPIRE Oil vulnerability and mortgage rate risk VIPER Oil vulnerability and socioeconomic factors

27. Common Myth Leonardo Maugeri 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 Trains Oil ( & gas) Cars, trucks, trains, planes ?? Is there anything else better than oil & gas ?? or even as good ? Thermodynamics? Theology? Economist Ultra-optimist 15 th December 2003

28. Richard Miller BP Exploration Operating Co. Ltd. Middlesex, UK …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… Realist ?, Pessimist ? 12 th January 2004

29. Is there a possible transition to another fuel?. Probably not. Can we run all our cars on water, snake oil, hydrogen, ethanol.. ?? Changing the vehicle fleet to hybrids will be very slow and expensive. 17 years just to change from leaded petrol engines, Mandatory in 1986

30. 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 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. Office of Oil Vulnerability 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.

31. We must acknowledge oil depletion All of us: industry, governments community, media, academia... We must not let the opportunities slip away Many of the policy options to reduce fuel usage will also lead to economic opportunities and healthier and happier communities. We are very well placed globally  Long, growing awareness of oil depletion, but no reliable information from Federal Govt, only ABARE, BTRE  World-leading demand management skills TravelSmart and water conservation  Considerable uncommitted gas reserves Failure to act now will prove incredibly costly Govt should set up "Office of Oil Vulnerability" "Oil vulnerability risk assessment and management" www.ASPO-Australia.org.au

32. more extra slides follow, in case they are needed for a later presentation

33. 1965 20252005 1985 1.0 0.0 0.2 0.4 0.6 0.8 Geoscience Australia, APPEA, ABARE Australia’s oil production and consumption 1965-2030 Million barrels/day Actual Forecast Consumption Production P50

34. 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 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

35. Million barrels per 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

36. 0 5 10 15 5 0 25 Years After Crash Program Initiation Impact (MM bpd) 20 35 EOR Coal Liquids Heavy Oil GTL Efficient Vehicles Worldwide Crash Program Mitigation of Conventional Oil Production Peaking A Study for DOE NETL Delay / Rapid growth. Roughly 35 MM bpd at year 20. 2005 Study

37. Evolution of Forecasts of Australian Oil Production Geoscience Australia (Australian Geological Survey) k bbl/day Actual Forecasts

38. Evolution of Forecasts of Australian Oil Production Geoscience Australia (Australian Geological Survey) k bbl/day Actual Forecasts Past liquids production forecasts have often proven too low. NGL production depends on gas contracts