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Peak Oil before 2020 a significant risk - Report from the UK

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InfrastructurePublic Transport

The other big theme that I follow is peak oil.  There has been a flurry of articles in the mainstream media that last few days on this topic. 

This is extremely relevant to Bangalore as we design (if at all) our city for the next 20-30 years.  Mobility is a key element of any city and the investments we make should ensure they do not assume cheap petrol or diesel.  Public transport, pedestrianization and cycling should start getting emphasis from now.

What is peak oil?  It is the maximum rate of oil extraction.  Currently oil is being extracted at about 85 million barrels per day or about 30 billion barrels (GB) per year.  This is approximately 1 cubic mile a year.  This has remained fairly static in the last 5 years inspite of growing demand from India and China.  The rate did not go up significantly inspite of record oil prices seen in Aug/Sep 2008.   For more on Peak Oil (PO) please read this link - http://en.wikipedia.org/wiki/Peak_oil

The UK Energy Research Centre published a report a couple of days back.

http://www.theecologist.org/News/news_analysis/333587/peak_oil_before_2020_

http://www.ukerc.ac.uk/support/tiki-index.php?page=Global+Oil+Depletion

Based on the data that they had at their disposal they believe that there is a significant risk to oil supplies being unable to meet growing demand in the next 10 years.  

 The main reason is the relentless treadmill imposed on the industry by the falling output of most existing fields, as a result of falling reservoir pressures and a long-term decline in the size of the fields being discovered. The UKERC found that total production from existing fields is declining at 4 per cent or more each year, meaning the world has to add 3 million barrels of daily production capacity annually just to stand still, equivalent to developing a new Saudi Arabia every three years. This will present 'a major challenge, even if ‘above-ground’ conditions are favourable', says the report.

'If you don’t even recognize the problem you will inevitably be unprepared,' says Sorrell. 'The Government needs to wake up to oil depletion and start planning, because it’s going to mean major changes infrastructure, investment and lifestyles'.
 

The last statement is very true of most governments including our own. 

What about alternatives. It takes time to build alternatives.  And the scale at which we will have to do this is truly massive and will require massive investments.  What does it take to replace 1 cubic mile of oil

Any of these or a combination.  Please see http://en.wikipedia.org/wiki/Cubic_mile_of_oil

So 200 Three Gorges dam each year or 2600 nuclear plants each year.  That shows how much we depend on oil and how much we have taken it for granted.

Srivathsa

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Comments

deepakar's picture

Oil drum

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I agree that this could be one of the biggest factors to shape our future. This site http://www.theoildrum.com/ is an amazing source for articles and studies on Peak Oil.

Deepak Rajanna

idontspam's picture

Self sufficiency

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How about a target for each house in Bangalore by 2020 to take care of its household energy needs via solar panel & windmills on its roof. Energy exchange to buy and sell excess energy produced. Harvest water and channel excess to a community pool. 

Daunting and we havent even learnt to lay roads properly yet. We should probably join Somalia and campaign to stay backward.

s_yajaman's picture

Petroleum and agriculture

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Deepak - yup - I frequent The Oil Drum almost as often as I frequent  our site.  

Professor Albert Bartlett of the Colorado university has this interesting definition of agriculture - "The use of land to convert petroleum to food". 

The US uses approximately 7 calories of energy to produce 1 calorie of food.  The green revolution was possible only because of fertilizers which themselves need petroleum to make. 

I read a report that there was a shortage of 23 lakh tons of fertilizer this year.  It went largely unnoticed because of the drought and therefore lack of demand.  Andwe have a 1.2 billion people to feed and adding 25 million each year.

The twin threats/challenges of PO and CC will make life very interesting. 

Srivathsa

Drive safe.  It is not just the car maker which can recall its product.

s_yajaman's picture

IDS - for that

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The government has to recognize and acknowledge that there is a problem.  Building new energy infrastructure takes energy and money.  Silicon panels don't grow by photosynthesis or by magic.  They need to be manufactured using electricity and transported using oil.  Nuclear power plants take 10 years to build. 

Maybe they will respond when there is a real crisis on their hands - massive power cuts, diesel shortages and drought.  But in general their concern is only the next elections.  And the people who vote for them are concerned more about survival today.

I am no fan of the Chinese system of government - but they don't live for the next elections and hence take a longer view of things.  Notice how they have been using their foreign reserves to buy up oil fields and coal fields. 

Srivathsa

Drive safe.  It is not just the car maker which can recall its product.

Naveen's picture

China - clearly marching ahead of others

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Chinese system of government - they don't live for the next elections and hence take a longer view of things.  Notice how they have been using their foreign reserves to buy up oil fields and coal fields.

Well, I am now a fan of the chinese govt - the system, despite it's disregard to freedom on an individual basis (or, should I say - the advantages as a result of this ?), is moving their country clearly with a focus on long-term future goals.

At just about every level, their efforts manifest themselves - be they investemnts into clean energy sources (a report states that they spent 300% of what US spent last year on this alone), or city development or rural development.

I recently visited the Guangzhou higher education mega center - mind boggling size & awesome facilities !  Almost a city in itself with two subway stations catering to it. They have routed the subways entirely underground, which enhances the appearance of the whole area dotted with greenery & nature, with wide 8-lane main streets & excellent bicycle tracks & facilities - will post some pictures over the weekened. Thus, clearly, they have set targets on higher education too, in english. Some Indians were also seen there - didn't get a chance to speak to them.

 

In sharp contrast, what is our system doing ? Encouraging arguments, delaying projects, fostering corruption, retarding progress - all in the name of debates in a democracy - clearly, we are not worthy of democarcy. We need an iron hand to rule us & a guiding light to get us out of the hole we have dug ourselves into.

s_yajaman's picture

Off topic - but just remember

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That a government big and powerful enough to give is big and powerful enough to take it away. 

Asking for an iron hand - be careful what you want, you might get it.  The Nordic countries have excellent corruption free societies as well.  But they did not need any iron hand. 

Srivathsa

Drive safe.  It is not just the car maker which can recall its product.

Naveen's picture

Sorry - Not Off Topic

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The example of china with respect to it's investments for the future including cleaner technologies is relevant in the context of our poor progress with it on this thread, which is about depletion of current sources of energy.

Nordic countries (& many others) have societies that follow rule of law implicitly, unlike ours. The more realistic view (expressed by many even in the west) is that democarcy does not necessarily work wonders everywhere.

s_yajaman's picture

Was talking of my own post

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Naveen,

Was referring to my own post.  Anyway - not sure how I would react if an iron hand one day occupied my house or my building all in the name of the greater good. 

More important - as you are close to the oil business, what are your insights on the main topic.

Srivathsa

 

Drive safe.  It is not just the car maker which can recall its product.

abidpqa's picture

maturing technologies

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Here is an interesting article about new generation fuels from biomass www.scientificamerican.com/article.cfm which could be a solution in the medium term. it seems like options are evolving.

tsubba's picture

initiative

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interesting post sri.

first a side rant. sorry for using your post for this. even as we keep saying this. last evening i saw people using half a dozen gas based lawnmowers to trim grass, get this, growing next to a rail road!!!! not to mention sundry "middle class" people and their acres of lawn. meanwhile, piddly little "third worlder" trying to get to work on a dilapidated set of wheels (coz thats the only thing he can afford) is being educated and lectured. btw., our jairam ramesh is trying to sell, per capita consumption as a metric. good luck selling that to the original snake oil salesmen.

Ghadricholi where maoists slaughtered elite corps of police. (The Hindu)

but we will have to tackle this on our own initiative for our own benefits. bt what can bangalore or even ka do? other than perhaps, use this as a growth sector?

have some qs on PO itself. will have to read somemore before i get back. briefly, we cant use rise of oil prices as an indicator can we? the prices dont necessarily reflect the rarity of the commodity. and is mostly set according to the whims of the cartel, and wall-street-wale speculators, isn't it? now, the issue that we have neither a say nor control in dictating its price should be a powerful motivator by itself.

aside 2: naveen, i see you are quite besotted with the chinese these days. :) you must be aware of the intricate dance and song about treasury bills, non performing assets, and the multi hundred billion economic stimulus that they have doing. sustainability is another ball game altogether. one day somebody has to pay for these things. the olympic stadium is now a white elephant i hear, for example.

out here, everything from schools to churches to centuries old race courses are closing. you heard everything on high fat, done mostly to "look nice" is getting it.

 the issue is not which system of governance is better. the issue is who decides what needs to be done, whether something has to be done etc etc. in our system, decisions get infinitely delayed. so whimsical, knee jerk interventions are not possible. flip side, even reasonable and needed intervenions take time. but thats a tradeoff.

i think our main problem is adhoc thinking about the issues. not governance or buerocracy. you should always streamline g&b, but you cant eliminate them.

s_yajaman's picture

@TS

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Oil prices will be very volatile.  That is one characteristic of any commodity where demand and supply are very close.  That is the real problem.  We saw a high of 150 and a low of 30.  Saudi used to talk of a price range of 25-30; now hear no mention of it.

Cartel does not set it.  cartel tries to keep production so that prices don't go too high or too low.  Cartel (OPEC) now controls about 50% of production.

Discoveries as you must have been reading are all in the deep waters.  From discovery to commercial production can take 10-15 years. 

Biggest issue of all.  Net exports.  Oil while being found underground, belongs to the country where it is found.  They are not bound to share it.  They sell it because there is money.  They also consume their own production.  We depend on exports and not on production. Indonesia e.g. no longer exports.  Mexico might not be a net exporter by 2013.

But did not understand what you meant by initiative.  Could you clarify.

Srivathsa

Drive safe.  It is not just the car maker which can recall its product.

Naveen's picture

Oil Crunch - Others better prepared

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I think it's amply clear that the oil crunch is only a matter of time & will effect India more seriously than it does other countries despite lower levels of per-capital oil consumption. This will be mainly because of the slow pace of creation of PT infrastructure, which will mean fewer alternatives for cleaner forms of travel that also consume less fuel per individual, such as bicycling, electric trains, CNG buses, 4-stroke engines, etc. Private transport would become more & more expensive, eventually to become unaffordable to most - all over the world.

Other countries, particularly those in Europe & soon to be joined by China, will be much better positioned then as they would already have such infrastructure or are creating them now when oil supplies are cheaper to transport goods & services for such developments.

As mentioned here previously, I don't think we need to plan for oil shortages immediately since there will be many such PT systems in the world that will also be hit & efforts will most certainly be to find ways to develop alternatives to ensure that these systems can continue to be used, as before, perhaps even with alternate fuels.


What we need is a govt or system that delivers & delivers infrastructure fast for the future since we have been left far behind & the gaps are clearly increasing. We claim credit for a 6 or 7% growth when most of this growth is with reference to benefits for urbanites. When is it going to be time to address the rural poor ? We are seeing an example in China of a similar large country that has lifted some 400 million out of poverty within the last couple of decades. In sharp contrast, our poor have become even more poorer now. During the recent economic crisis, China was largely uneffected & it may soon begin to lecture the west about preventive measures for such eventualities ! It hasn't just created things that "look nice" - it is creating things carefully that look nice today & are also of value for the future. American media may claim that white elephants are being built, but this is probably out of frustration & to cover up their own predicament.

Contrary to what you state, I think that issues exist because people decide & the politicians are scared of losing elections. Thus, they are unable to focus on the issues & are restrained from using their own judgement as leaders, as they should be doing. Also, I think knee-jerk reactions are what have been emerging when issues have reached critical proportions, not long-term or futuristic solutions, as we have been seeing. Thus, it has been a case of too many cooks spoiling the broth, repeatedly, like some chronic, incurable disease.
 

s_yajaman's picture

Oil vs. GDP

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Some data on GDP/barrel of oil.  For India and China this is about $800.  For the US it is about $1600.  For the European countries is is in the $2500-3000 range. 

http://en.wikipedia.org/wiki/Gross_domestic_product_per_barrel

The data there is a bit old with India still at 655B GDP.  

If India and China have to reach $10000 GDP per capital it means we will need 5GB of oil each year assuming we reach the USA's efficiency.  That is about 7B barrel more demand from India and China.  So supply struggling to cross 30GB/year.  And India and China have only just begun their journey.

Does not make a for a good story.

Srivathsa

 

Drive safe.  It is not just the car maker which can recall its product.

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