Energy Security

[Rick M]

Thanks, Steve

You beat me to it... I see you have a second posting before I was able to respond to #42, which is the subject of what follows.

I’ll try to get those graphs up.

Let’s start with our points of agreement, which are mostly at the end of your post:
- There are serious potential problems, especially supply disruptions.
- The peak does eventually come.
- We need sustained higher prices (and I think $100 is about right as a minimum).
- The immediate problem is not a lack of resources (but I will qualify that later on).
- Insufficient investment is a more imminent hazard.

I think we can also agree on some other points:
- Both the content and the tone of the 2008 WEO are quite different from its predecessors
- Its tone of concern is reinforced by subsequent verbal statements by Mr. Birol.
- People can haggle over terminology (call it a peak or a plateau or maxing-out) and which combination of factors “cause” this limitation of production (physical resources, net energy, investment, geopolitics, infrastructure, climate change, sea-level rise, terrorism or war, etc.), but the bottom line is that it will surely present “an unprecedented risk management problem” (to quote the Hirsch Report).
- Our world (and North America most of all) is most unprepared for such an event, whenever it may arrive and whatever the causes.

I disagree with your point that "reading the Executive Summary creates a different picture."

Let’s consider various details (emphasis added):
a. Projected growth in production
Yes, this WEO projects 106 mbpd in 2030. The previous WEO projected 116, and we have seen earlier projections from various quarters of 130.
For a world that has enjoyed all the cheap petroleum it wanted for 150 years, these recent downward revisions indicate that we will not have this luxury in the future.
We are in for a serious shift.
Note the beginning of its final paragraph: “For all the uncertainties highlighted in this report, we can be certain that the energy world will look a lot different in 2030 than it does today. The world energy system will be transformed, but not necessarily in the way we would like to see” (p.49).

b. Near peak
You said that “they certainly do not see a ‘near peak’ in production” but I can’t find where they said that.
What they did say is this:
- “Non-OPEC conventional oil production is already at plateau and is projected to start to decline by around the middle of the next decade, accelerating through the projection period” (p. 41).
- Translation: We have already maxed out on the easy oil from the non-OPEC sector (ie. all but 12 countries), and the flow-rate from this sector will be less starting around 2015, decreasing more rapidly to 2030 and beyond.
- “Production has already peaked in most non-OPEC countries and will peak in most others before 2030” (p. 41).
- Translation here is less clear: the first part simply restates what they said in the previous sentence. But what do they mean by “most others”: the non-OPEC countries that haven’t yet peaked (eg. Canada) or do they mean that most of the 12 OPEC countries will peak by 2030?
- I presume they mean the latter, which fits with the Chatham House study which foresees at least half of the OPEC countries with reduced export capacity prior to 2030 (see #28 above). Furthermore, four of the 12 OPEC countries already appear to be post-peak (Venezuela, Libya, Iran & Iraq).

Also, you will note in Birol’s interview with Monbiot (above, #39) that he says in response to Monbiot’s request that he be more specific on the “before 2030” time-frame, “Assuming that OPEC will invest in a timely manner, global conventional oil can still continue [to increase] but we still expect that it will come around 2020 to a plateau, which of course is not good news for global oil supply….”
Translation: The flow of conventional oil from OPEC may increase for another decade but not beyond, and this potential growth cannot occur without timely and massive investment.
But if non-OPEC conventional has peaked and is about to decline, and OPEC conventional peaks in a decade (sooner without investment), then what is left?
Does anyone seriously believe that unconventional can deliver the volumes required? At an affordable price? At a sustainable net energy ratio?

Steve, you said, “I see nothing here at all that supports the ‘near peak’ hypothesis: quite the opposite. The IEA Executive Summary suggests that the peak oil scenario is alarmist….”
I don’t know what “near” means to you, but when we consider our collective dependencies, the volumes involved, our existing infrastructure and the apparent lack of viable alternatives to liquid fuels, I consider a decade or two to be an historical eye-blink and not worth quarreling over.
As for “alarmist”, the IEA (and many others) may have used that term a few years ago, but I did not find it in this WEO. Their final sentence, “Time is running out…” sounds rather alarming to me, especially given its source.

That’s all for now.
Last month was our wettest-ever July, and the hay (which I raked yesterday and got soaked overnight) has to be re-raked… it’s sunny out so I'd better run.

Which brings up another point: affordability is a key element of energy security, and the WEO is very explicit on that one: “the era of cheap oil is over” (p. 49).
But what does that mean for my tractor and your food, to choose just one example? (On this web-site, I guess I should have asked, "What does it mean for our military?")
Our Ag ministry believes our energy ministry’s determination that “there is no imminent peak oil challenge” and will not begin research on the effects to the agri-food system of the “end of cheap fossil fuel” until the energy ministry says that this is a foreseeable problem.

So farmers have no direction on this at all, and most of us are near the bottom of the income scale and will have difficulty contending with the high fuel prices that you and I agree are necessary to effect an orderly transition.
But a transition to what? Solar and wind cannot do field-work.

Our problem will be in affordability long before physical supply, though the result is effectively the same for low-income folks. And as Robert Hirsch continually emphasizes, our problem will be primarily in liquid fuels… the very stuff that keeps us fed, mobile and protected.

I think you could drop the word “potential” from your prognosis, Steve.
There are serious problems with our future supply of affordable liquid fuels, especially here in North America.
If I have a large tree with an increasing lean over top of my house, I would regard that as a problem, not a potential problem, since its falling is not a potentiality but rather an eventual certainty, and the threat of it falling is continual and can only increase.
To me, that's a problem, and the sooner I acknowledge it and address it, the better.

I'll say more after the haying.