10 years of IEA outlooks

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jacob
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10 years of IEA outlooks

Post by jacob »

http://www.resilience.org/stories/2014- ... gy-outlook

As an old peak oiler (before it became cool), this is really interesting, because it basically shows how the IEA's official position slowly rolled over as it became harder and harder reconcile the status quo economic belief that "demand always creates supply" as long as the check is big enough with the reality that oil is a finite resource---as was demonstrated with numerical analysis for the world outlook as far back as 1998 (I believe that was the year of the SciAm article).

You can see how they slowly backpedal and then admit in retrospect with a footnote three years after the fact that conventional oil probably peaked in 2006.

Around 2010, the IEA also discovers climate change (before then the two fields didn't communicate despite being two sides of the same coin) and they get increasingly agitated about it realizing that the critical amount of fossil fuels are close to having been used already. It's a combination of this realization (which again others had already seen) while realizing that they might not be able to meet demand anyway that then began to drive the new attitude. A couple of years ago (2012) there was some new hope describes in terms of shale but that was being tempered by the emission consequences. Now they're concerned about ME stability breaking down.

In other words it's a progression from a somewhat conceited confidence to a backhanded admission that they were wrong all along and then an increasing ratcheting concern that we're running out of time against two hard goals that can't be solve with "more of the same". It's also interesting to note that they express significantly more concern about climate change than the quite understated IPCC organization does. This is despite presuming the 450ppm scenario (higher than recommended).

Scrubby
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Re: 10 years of IEA outlooks

Post by Scrubby »

The production leveled out and decreased a bit after the financial crisis, but it has since increased again. In 2012 it was higher than the previous peak, and the increase has continued since then.

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jennypenny
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Re: 10 years of IEA outlooks

Post by jennypenny »

I'm not sure in which thread I should ask this question ...

How much of a contributor is oil consumption to climate change? If oil consumption declines over the next century because of dwindling supply, what effect will that have on climate change predictions?

Chad
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Re: 10 years of IEA outlooks

Post by Chad »

Scrubby wrote:The production leveled out and decreased a bit after the financial crisis, but it has since increased again. In 2012 it was higher than the previous peak, and the increase has continued since then.
Unfortunately, or fortunately, this is really just due to US shale production. These wells don't have anywhere near the staying power of traditional wells. As a result, by the end of this decade oil production from US shale will see a significant decline.

http://www.businessweek.com/articles/20 ... ying-power

jacob
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Re: 10 years of IEA outlooks

Post by jacob »

@Scrubby/Chad - The peak discussed was for conventional oil. The cheap stuff.

@jp - Oil contributes a lot. (It's shouldn't be too hard to dig up the energy mix.) There's still enough oil in the ground (reserves) to easily reach the worst case climate scenarios should we so desire.

Added links:
http://www.epa.gov/climatechange/ghgemi ... lobal.html
http://burnanenergyjournal.com/petroleu ... -and-coal/

57% of GHG emissions are from fossil fuels and out of those 44% is from oil.

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Re: 10 years of IEA outlooks

Post by Scrubby »

Who makes the rules for which oil production is "cheating"? If it's cost based then you could just as well argue that oil from deep sea drilling shouldn't be included either, because some of it is more expensive than shale oil. Eventually production will peak, but my point is that it hasn't happened yet.

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Re: 10 years of IEA outlooks

Post by Chad »

Not "cheating", but "cheap."

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Re: 10 years of IEA outlooks

Post by jacob »

Conventional anything simply means what is generally done and in the case of oil it refers to drilling a hole in the ground and pumping the oil or gas up.

Unconventional oil refers to alternative methods such as shale fracking, processed heavy oil, gas to liquids, and synthetic production.

As always, this is not really an issue of "winning" a competition or debate but rather a useful way of classification which allows certain predictions and understanding. Of course renaming concepts doesn't matter one iota for the actual implications. In this case a peak in conventional oil has significant cost implications since conventional oil requires much less energy and few other resources (water, chemical processing) compared to unconventional oil.

The significance of passing conventional peak oil and relying on unconventional oil as the marginal production method is that prices moved to a much higher level (from $25-35 to $75-125) from which they can no go below because it's much more costly to develop unconventional oil.

From the perspective of this thread, it is also significant that it was correctly predicted years (simply by doing the actual math properly) before the supposed industry watchdog finally admitted to it ... and that in retrospect as a footnote.

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Re: 10 years of IEA outlooks

Post by Scrubby »

You are making up new rules about where the oil should come from to be allowed to be included in the production volume, to make the linked article correct. There were no rules about sources or production costs in the first warnings about peak oil, they only relate to global production of oil. If anything, using more sources just proves the claim that "demand always creates supply" correct. I don't think you'll find many people who believe that claim, though. Almost everyone knows that oil is a limited resource, but the critics were correct when they dismissed Hubbert's claim that production would peak in year 2000.

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Re: 10 years of IEA outlooks

Post by workathome »

Any guess why oil dropped so much recently despite this? A chance to put the hurt on Russia? Slow down the fracking industry?

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Re: 10 years of IEA outlooks

Post by jacob »

@Scrubby - These rules are not new and nor did I make them up. They're standard industry vernacular. In any case, I'm not completely sure what your point is? As I pointed out in my previous post, it's not a question of rules or classifying oil by production cost. It's a question of predicting which sources will last how long. The implications depend on what the actual extraction cost are. In both aspects (cost and duration) there's a clear difference between conventional and unconventional.

I care far more about the implications of the change in underlying dynamics than following some rules for calling the exact year.

The overall predictions aren't wrong and the fracking adventure in the US will not change the long term outcome, especially given that it has not been replicated in other countries.

From the 2013 IEA report:

Light tight oil shakes the next ten years, but leaves the longer term unstirred. The capacity of technologies to unlock new types of resources, such as light tight oil (LTO) and ultra-deepwater fields… But this does not mean that the world is on the cusp of a new era of oil abundance. …no country replicates the level of success with LTO that is making the United States the largest global oil producer. The rise of unconventional oil (including LTO) and natural gas liquids is meets the growing gap between global oil demand, which rises by 14 mb/d to reach 101 mb/d in 2035, and production of conventional crude oil which falls back slightly to 65 mb/d.”

If the question was about predicting the absolute production peak, I'll grant you the victory. However, as far as implications go, it matters relatively little (to the world) that the US has been able to add a bunch of expensive oil and delay the total peak for 10-20 years. The IEA realizes this and they are concerned. I bet there'll be a switch to synthetics (like South Africa or Germany/Japan during WWII) following that at an even more costly level.

...

In any case, I'm interested in IEA's reactions/statements as beliefs and reality is confronted.

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Re: 10 years of IEA outlooks

Post by Tyler9000 »

@Workathome: Summarizing a few articles I've read this morning: The massive growth in US shale oil production has started a price war with OPEC, who can't simply slow production to control prices like they could before. Throw in a stronger Dollar and a general drop in demand worldwide because of a stagnant global economy, and it's a good environment for low prices. Basically, high supply (with strong competition) and low demand.

IMHO, peak "conventional" oil is simply an academic exercise for one snapshot in time that doesn't have too much effect on everyday life because its perspective is quite myopic. True peak oil is an economic one and is a lot more dynamic, and we've clearly not reached that milestone just yet. By the time we do, the goal will have shifted to peak energy, and we'll be lamenting the dwindling resources for the nuclear reactors and whatever new technologies arise by then. The world has an interesting habit of continuing to spin after each predicted doomsday passes.

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Re: 10 years of IEA outlooks

Post by jacob »

@Tyler9000 - I agree with half of what you said. Even peak energy itself is largely an academic exercise. What matters is the current marginal production cost because that is what determines what people pay at the pump or the electric outlet (subject to various economic shocks). Conventional peak oil was significant because the marginal production method changed in kind from quite cheap to substantially more expensive. Because of that we will never see a sustained price level of $25-35/bbl (the OPEC price targets of the 90s) again.

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Re: 10 years of IEA outlooks

Post by Scrubby »

jacob wrote:If the question was about predicting the absolute production peak, I'll grant you the victory. However, as far as implications go, it matters relatively little (to the world) that the US has been able to add a bunch of expensive oil and delay the total peak for 10-20 years. The IEA realizes this and they are concerned. I bet there'll be a switch to synthetics (like South Africa or Germany/Japan during WWII) following that at an even more costly level.
It makes a huge difference if the peak was 8 years ago and it's all downhill from then, or if it's in 20 years. The increase in efficiency over cost of for instance solar panels has been exponential for many years, and the research in electrical cars has taken large leaps as well. If the peak was 8 years ago then there would be a large time gap between fossil fuel and electricity which would seriously hurt the world economy. If it's in 20 years then electricity may have already taken over by the time the lack of fossil becomes a large problem.

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Re: 10 years of IEA outlooks

Post by jacob »

My argument goes along with what you're saying about fuelling cars, it really does matter what energy costs. That is, it doesn't really matter that more is available if fewer can afford it at the new and higher price. Telling people to "eat cake" while bread supplies are declining and cake supplies are increasing only works if you're rich enough to afford cake. Oil has become 3-4x more expensive compared to pre-(cheap conventional oil)peak. Now consider how the world economy has fared since pre-(cheap)peak. We're essentially living the problem you're describing.

If you go back and read the original http://www.oilcrisis.com/campbell/endofcheapoil.pdf article in Scientific American, they do make a mention of unconventional oil being able to delay the peak [at a higher cost] but ultimately believe that no more than 700Gb will be extracted. I saw that current estimates elsewhere (from the oil companies) are around half that.

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Re: 10 years of IEA outlooks

Post by Scrubby »

jacob wrote:My argument goes along with what you're saying about fuelling cars, it really does matter what energy costs. That is, it doesn't really matter that more is available if fewer can afford it at the new and higher price. Telling people to "eat cake" while bread supplies are declining and cake supplies are increasing only works if you're rich enough to afford cake. Oil has become 3-4x more expensive compared to pre-(cheap conventional oil)peak. Now consider how the world economy has fared since pre-(cheap)peak. We're essentially living the problem you're describing.
No, we're not. Those who could easily afford it (Westerners) are a bit worse off economically, but many of those who couldn't afford it at all are much better off. New cars are selling in mind boggling numbers in China, and the rate is still increasing. This is why the global consumption is up. If there were fewer people who could afford it now than 8 years ago then prices would be *much* lower and/or production would decrease.

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Re: 10 years of IEA outlooks

Post by pooablo »

What a fascinating discussion! I find the part about the IEA backpedalling on its views very interesting.

Ultimately, I am not very optimistic that its changing viewpoint will have any impact on the industry or people's behaviour. I still see people burning up fuel like no tomorrow.

I guess the only way people will change is when oil/fuel becomes prohibitively expensive.

I guess the best self-defense strategy is to reduce one's reliance on fuel. If fuel remains cheap, we'll be fine. If fuel becomes expensive, we'll be fine. In other words, the goal is to become "robust" to oil volatility. I wonder if there is a way to become "anti-fragile" to oil volatility.

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Re: 10 years of IEA outlooks

Post by JL13 »

jacob wrote:...ultimately believe that no more than 700Gb will be extracted. I saw that current estimates elsewhere (from the oil companies) are around half that.
Scrubby wrote:... add a bunch of expensive oil and delay the total peak for 10-20 years.
If my extremely rough calculation are right, 350-700Gb of oil @ 10Mb per day = 10 - 20 years. We may just muddle through.

For my next trick, I'll need to know how many barrels of oil equivalent of solar energy reaches the earth daily?

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Re: 10 years of IEA outlooks

Post by jacob »

I find the backpedalling the most interesting [as a study in organizational behavior]. The other argument is just standard supply-curve vs geology considerations---geology predicting the supply curve. We apparently disagree on the implications of that, but so be it.

Based on very limited anecdotal evidence, the IEA is only important in the sense that what WillS referred to as "aggressive ignorants" (I love that concept) will quote the IEA as THE source of authority regardless of its consistency of position and that that position has now changed. This would impact what a lot of "government drones" say. As well, that it's more hardcore on climate change than the IPCC which blows my mind.

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Re: 10 years of IEA outlooks

Post by Riggerjack »

.I guess the best self-defense strategy is to reduce one's reliance on fuel. If fuel remains cheap, we'll be fine. If fuel becomes expensive, we'll be fine. In other words, the goal is to become "robust" to oil volatility. I wonder if there is a way to become "anti-fragile" to oil volatility.
Old, carbureted cars are easy to convert to run on ethanol. Fuel stills are DIY. Using solar preheat, and wood fire, it's not that difficult to supply yourself with fuel. Or, Fresnel lens and Arizona's climate, go fully solar still. Even the IRS is behind it.

Of course this does nothing to abate the general inflationary pressures of high diesel prices. And nobody is going to convert a 747 to run on ethanol, but it's there if we need it. We just won't be using today's methods of commercial ethanol production, using 7 gallons of oil to produce enough ethanol to replace 8 gallons of oil...

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