Alternative Energy Sources Bill Pyke Hilbre Consulting Limited October 2012 Delivered on Behalf of: Limitations of Fossil Fuels 1
Outline Definitions Relative Energy Values Global Statistics Remaining Reserves Costs Environmental Impact 2
What are Fossil Fuels? Energy sources created by the decomposition of animal and plant life over millions of years and their transformation into hydrocarbon energy sources 3
Types Solid, Liquids and Gases Solids-coals and lignite, bitumen Liquids- crude oil, condensates Gases- natural gas and gas liquids 4
The Global Primary Energy Mix in 2011 Nuclear 5% Hydro 6% Renewable 2% Oil 33% Coal 30% Gas 24% 5 Source: BP Statistical Review of World Energy, June 2012
The Global Primary Energy Mix by 2035 New Policies Scenario Nuclear 8% Hydro 3% Renewable 13% Oil 29% Coal 25% Gas 22% 6 Source: IEA, WEO November 2011
Headlines Fossil Fuels are not sustainable! Geopolitically insecure Increasingly expensive The biggest challenges Significant decarbonising energy by 2050?? Developing renewables on a commercially competitive basis 7
The Issues Fossil Fuels are depleting, limited and unsustainable in the longer-term Limits of Fossil Fuel Reserves and Resources Limitations of Production Capabilities Cost Implications Global Distribution of Remaining Reserves Energy Security Environmental Issues Fossil Fuels Emissions 8
Limitations Non-renewable Resource Crude oil is a non-renewable resource Fossil fuels take millions of years to develop under extreme conditions Once they are gone, they can no longer be part of the energy mix 9
Limitations of Fossil Fuel Technologies In many areas technologies are becoming more costly Fossil fuels-oil, gas, coal used as the key source (>70%) in global electrical power generation Emission of pollutants/ greenhouse gases Cost of Carbon Sequestration increases costs and prices 10
Fossil Fuel Supply; Present & Future Oil Increasing taxes to host countries-government take Deepwater resources costs Non-Conventional resources Remote Locations Natural Gas Remote locations Investments required for new infrastructure Transportation and tariff costs Coal More imports from remote sources Specification for environmental compliance favours high btu clean coals with low sulphur, chlorides 11
Remaining Proven Global Fossil Fuel Reserves, 2011 Fossil Fuel Solid % of Global energy consumption in 2009 Proven Reserves 10 9 tonnes Coal, Anthracite, Lignite 26% 847 Liquid Crude Oil, Condensate Natural Gas Liquids 34% 205 Natural Gas 20% 188 12 Sources: BP Statistical Review 2012 & IEA, 2011
Remaining Time at Current Rates of Consumption Fossil Fuel Years Solid 332 Coal, Anthracite, Lignite Liquid (Conventional) 37 Crude Oil, Condensate Natural Gas Liquids Natural Gas (Conventional) 62 13
The Uneven Distribution Of Oil And Gas Reserves Key North America Crude oil 73 Natural gas = % of crude oil reserves = % of natural gas reserves 323 Central & South America Crude oil 199 Natural gas 285 W. Europe Crude oil 12 Natural gas Middle East Africa 132 Crude oil 754 Natural gas 2,69 0 Crude oil 128 Natural gas 521 E. Europe and Central Asia Crude oil 125 Natural gas Asia Crude oil 42 Natural gas 2,09 6 574 14 Distribution of proven reserves of crude oil (billion barrels) and natural gas (trillion cubic feet), 2011 Source: BP Statistical Review of World Energy 2012
Crude Oil Resources and Reserves Proven Reserves Published 1,652 billion barrels Probable Reserves 1,300 billion barrels Possible Reserves 2,700 billion barrels Total: 5,652 billion barrels Global consumption at 87mb/d (32 billion barrels/year) Global consumption at 107 mb/d (39 billion barrels/year) 3P Global Reserves Life Index 145 years! 15
International Coal Transportation 16
Current and Future Costs of Fossil Fuel Supply The easy resources have been developed! Future resources will take additional costs to ensure sustainable supply and satisfy supply growth against energy demand Environmental considerations add to cost burden Costly technologies for more difficult primary energy sources Increasing unit labour costs as living standards rise in developing countries 17
Fossil Fuel Supply Costs: Present & Future Oil Increasing taxes to host countries-government take Deepwater resources costs Non-Conventional resources Remote Locations Natural Gas Remote locations Investments required for new infrastructure Transportation and tariff costs Coal More imports from remote sources Specification for environmental compliance favours high btu clean coals with low sulphur, chlorides 18
Cash Needs To Find, Develop And Produce New Oil and Refined Products The easy oil has been found or depleted New reserves will be more capital intensive Higher proportion of CAPEX will be required to sustain existing (and declining) production New oil likely to be lower viscosity, higher gravity and higher sulphur content Upstream Costs for Finding and Developing New Oil (2008-2030) have been estimated at $17.6trillion* Downstream Costs (2008-2030) have been estimated at $6 trillion* 19 * Platts Capital Expenditure Forecast for Global Hydrocarbon Demands through 2030 L.G,Chom, October, 2007
Annual CAPEX $billion Oil Industry Estimated Annual Capital Spend to 2030 Sources: IEA, Platts, 2007 (Nominal Costs) 1600 1400 1200 1000 800 Downstream Upstream 600 400 200 0 20 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
million barrels/day Global Supply Run-out without new investment 90 80 70 60 50 40 Existing Non-OPEC Existing OPEC 30 20 10 0 2006 2010 2015 2020 2025 2030 Years 21
million barrels/day Global Supply Where Will New Oil Production Come From? 120 100 80 60 40 Where is the new oil coming from? New Existing Non-OPEC Existing OPEC 20 0 2010 2015 2020 2025 2030 Years 22
Future Global Crude Oil Supply To Meet Demand Oil production rises to 99mb/d by 2035 23 Source: IEA, World Energy Outlook, November, 2011
World Unconventional Liquids Production, 2005-2030 (million barrels per day oil equivalent) 24 Source: EIA, International Energy Outlook, 2007
New Sources of Crude Oil Supply in this Decade Country Additional production Mmb/d Comments Iraq +5.4 Field refurbishments, new developments Saudi Arabia +4.0 Empty quarter, new developments and discoveries Brazil +3.2 Santos basin Kazakhstan +1.8 Kashagan Ghana + 2.0 Deepwater developments Uganda +1.0 New discoveries, developments U.S Light, tight oil +1.4 Bakken, Niobrara TOTAL +18.8 25 Source: IEA WEO, November 2011 and personal communications
Global Emissions 27 billion tonnes carbon released each year Emissions have increased at 2% per year In 2011 95% emissions due to fossil fuels Oil produces 40% more emissions per unit of energy than gas, and coal 80% 26 26
CO 2 (ppm) Carbon Dioxide Levels CO 2 (ppm) 420 370 320 270 220 Muana Loa Readings CO 2 Levels Since 1958 370 350 330 310 40 30 20 10 0 170 27 Dome Concordia Vostok Ice Core 600000 400000 200000 Time (YBP) 0
Carbon (10 9 metric tons) Worldwide Carbon Emissions 28 8 7 6 5 4 3 2 1 Total Oil Coal Natural Gas 0 1750 1800 1850 1900 1950 2000 Year
Global Carbon Emissions by Sector Agriculture 14% other Fuel Combustion 10% Fugitive Emissions 1% Power Generation 24% Industry 15% Deforestation 18% Transportation 18% 29 World Resources Institute, 2006 et al 29
Transport Carbon Emissions by Sector note: 18% of all Global Emissions Light Road Vehicles 40% Aviation 9% Shipping 22% Heavy Road Vehicles 27% Rail 2% 30 World Resources Institute, 2006 et al 30
million tonnes oil equiv./yr 20000 18000 16000 Renewables Hydro 14000 Nuclear 12000 10000 8000 Coal 6000 Natural Gas 4000 2000 Crude Oil 0 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2036 2041 31 Global Energy: Past Consumption & Future Energy Trends, Sources; various
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Conclusions (1) The era of cheap oil is over 75% of major oilfields are now in decline Global consumption of 30bn barrels/year are not being replaced at the same rate. Unsustainable! Future global oil supply is under pressure from increasing global demand 33
Conclusions (2) Population growth, rising living standards will accelerate increased energy demand Increasing Purchasing power will enable growth of vehicles 10-fold in Asia by mid-century Investment focusing on energy supply chain will be considerable. Driven by changes in energy sources. Higher capital costs for extraction of remaining fossil fuels combined with environmental investment requirements Development of entirely new technologies hydrogen economies, clean coal,?fusion 34