Back in 2001 I wrote of the National Energy Conservation Program (in the Guide to Energy Efficient House Design) instigated in 1979, which respective governments – local, state and federal – have largely ignored, so it came as more a shock than a surprise to see an acknowledgement by the Rudd government earlier this month.
However, it will be local governments that have escalating financial upkeep problems, extracting money from ratepayers struggling to meet very high transport and food costs on a shrinking householder’s family budget. With exisitng public transport, how will workers get to work with only 15% of their normal fuel usage ?
On 1st March 2010, the Federal Government published a new Australian Energy Resource Assessment (AERA)[1]. In chapter 3 on oil it contains a graph on future oil production on page 79. [fig_3_43_geoscience_australia]. What we can see from this graph (note the inserted comment is by the author of this paper):
* Crude oil production from known oil fields will dramatically decline by 85% over the next 10 years
* This decline is offset by condensate from wet gas (mainly in LNG projects) but because of a lack of condensate splitters in Australian refineries 95% of this is exported and
* The prospect for new oil discoveries is not very good.
Geologically, Australia is better off with natural gas; however, since global oil export volumes are shrinking at the same time (details below), Australia will slide into a huge oil import crisis. While the government hopes coal-to-liquids, gas-to-liquids and 2nd generation bio fuels will come to the rescue, despite the report stating it is very uncertain whether that will materialize in the quantities required, the reality is it will always be too little and forget about the too late; even they do see the light of day, the energy profit ratios of these fuels will be very low:
6/1/2010
Diminishing Returns of Fossil Fuel Energy Invested – http://www.crudeoilpeak.com/?p=909
Checking the above graph compares with previous government reports and Figure 6 is from Geoscience Australia’s 2005 submission 127 to the Senate Inquiry on Oil Supplies:[2] figure6geoscienceaustralia. It shows 3 projections up to 2025: P10, P50 and P90 and each number denotes the probability in percent that this projection will actually occur.
Strangely, the AERA report does not show different probabilities. So let’s superimpose the 2 graphs to see where we are:
fig_3_43_superimposed_ga_subm127_actual_au_petroleum_stats. We can see from the graph that the actual crude production curve (black line 2006-2009) has just hit the P90 estimate from 2005. It remains to be seen whether it will follow the new projection (light blue columns). A lot of condensate has been added and that assumes all LNG projects go ahead as planned.
Read more about:
* Australian oil reserves and resources, how AERA omits Geoscience Australia’s conservative 2P reserves
* AERA’s misldeading statement about “enough” oil for 42 years and a factually incorrect “balanced” oil supply
* the problems with propane deficient LPG and butane exports
* Australia’s coming oil import crisis
* Lack of a Strategic Oil Reserve
* Need to save oil in a hurry
* 3 examples of road projects which make no sense in a period of declining oil production: new Clem7 road tunnel in Brisbane, Hunter freeway and Western freeway in Melbourne; by downloading the full article of 10 pages as PDF file: Australian
Crude Oil Decline 85 Percent Over 10 Years [1.27 MB]
http://www.crudeoilpeak.com/pdfs/28
5 responses so far ↓
1 posconvex // Jul 5, 2010 at 6:56 am
Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:
- China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year
- Transition takes 30 years
- No peak in global production
In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
- Oil demand elasticity of -0.3
- Current production 84 million BOPD, current price US$ 80
- Peak production 100 million BOPD
- Post peak decline rate of 3-4%
If you want to try the model for yourself using your own assumptions it can be found at: http://www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86
2 Daniel Boon // Jul 6, 2010 at 2:44 am
Interesting identification name Convex , sort of resembles the oil bubble that is about to go concave …
You know we all go through life bombarded with massive amounts of information and explaining a theory – any theory – is based on how the information is presented; leave stuff in, take stuff out (that diminishes the argument) and throw on a dollop of fill of facts and figures.
I like the KISS principle, it helps maintain sanity (keep it simple stupid). When I was a kid, I watched a movie (western I think) where a small group were surrounded and outnumbered and during a lull in battle (at nighttime) that got some clothes and hats from somewhere and propped them up with broomhandles etc to give the impression of many more men than were there; the ‘enemy’ duped by this display, rode, ran and slunk away … victory.
Fast-forward (no pun intended but apt) and Julia Gillard has done a deal with the mining industry, all is at peace with the world, the broom handles are poking out from the parrapets and we (the greater unwashed) are once again fooled … or are we … rumours of less tax effectively than more for fossil fuel and mining industry!
The fossil fuel industry is calling for more exploration and no taxes until a profit is made (how much tax did Kerry Packer actually pay … and his wealth is far less than the fossil fuel and mining industry) …. but wait, why would BP drill so deep at at such expense whenthere is abundant oil in another previous colony when Australia has an abundance … and why is Saudi Arabia refusing to waste money on exploration when it has made so much money; afterall it could afford to buy the rights to any country … and why is there a reluctant push to alternative fuel and ethanol is now seen – like the emperor withoit clothes – for more broom handles ?
Whether its 84 or 86 million barrels a day; whether China takes up the as-good-as bankrupt USA’s increasing spare capacity, or some more fishing villages in the Phillipnes go without oil because the supplier can sell it for more to cashed up countries … at the end of the day, Peak Oil has been and gone.
Like a drunk dry retching, there is less and less to bring up. so you can look at models and draw assumptions, but at the end of the day … thats all they are assumptions.
Oil prices reached dizzying heights (in our conditioned ‘cheap energy’ mindset) because of two reasons (my belief/s based on the same data you or anyone else can access); the first is that 86 million barrels a day is the peak output (given the cost of drilling rigs and refineries capacity around the world) and buying and selling of oil to make short term money (speculation).
Oil companies know the gig is up, but they can still put the squeeze on jittery governments around the world and extract that last $ from the public purse; it doesn’t matter which name you say, Obama, Gillard or whomever the (real) ruling members are in China or Russia, they are all boosting production of broom handles to keep the natives from getting restless, but deep down, they know that we know; and like a parent trying to console an injured child, that more unplesant days are ahead.
The ramifications of BP’s demise is what scares every world government; energy is the drug that keeps the massess eyes fixed on the next trinket and because governments have taken the accolades of economies ‘growing’ and spreading affluence, they realize they will also have to face the music when the cash cow of energy (loans against future earnings) runs out … which is whats happening now.
Finding another 44 million barrels of oil a day and economic demand ? it would be infinitley easier picking the winning numbers for lotto.
3 Klaus // Dec 8, 2010 at 4:06 pm
Instead of building more and more houses we should look to increase renewable energy. Australia has more Sunshine + land than most other Countries and Solar Farms in the dessert for Industrial consumption + Nano Photovoltaic panels for houses and most important stop population growth
4 Brian Manner // Jan 19, 2011 at 6:12 am
The solution is personalz personal survival via accumulation of tangable wealth to protect your future. This is what the elites are doing an If you don’t copy them you will standing hungry on the steps of parlament housez protesting futily while the leaders climb into their helicopters and retreat to their secure enclaves.
It always happens this way, greed and aparthy ensure it.
Good luck
5 tom Baxter // Jul 10, 2011 at 12:39 pm
I’m right beside you Brian and am stocking up gold and silver, solar panels and cash. Anything tangible!
I don’t want to be caught wanting when the Aussie masses wake up to this event and begin panicing. It will end within a few decades no doubt, end in mass poverty and mass dieoff. The majority will experience something akin to what the Chinese in Nanking experienced. Those that is who didn’t heed the warnings and stayed behind, hoping for the best as the japanese forces came up the river. those who dont heed this warning will likewise wake up in a hostile world that in no way resembles the debt fueled delusion they are now enjoying.
They will be the weak and stupid, the drones, destined to die before their time so the rest of us can live on and rebuild the world without oil.
History is full of these examples.
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