I suggested at the outset of this series that I did not want it to turn into yet another exercise in mocking those who do not accept the implications of peak oil. A legitimate argument could be made that I’ve failed in that objective.
I view the tone adopted in a number of comments I’ve offered not as mocking so much as it is an attempt to point out that there is a communication problem emanating from the Right [not a news bulletin], and by doing so in the manner I’ve chosen—more wry, in my mind, than mockery—I’m trying to suggest that “the opposition” consider how their tactics and failure to substantiate their positions carries risks for them as well.
Actions and words create impressions and responses and outcomes. If the objective of one’s behavior—individually or in abiding by the expectations of one’s group—is to produce a satisfactory objective however defined or relevant to the issue, ignoring the impact on those who do not share the same considerations, values, or goals is a risk rarely considered to the degree necessary.
Reality will not be impressed by efforts to ignore it or deny its impact. Uttering statements as if their mere appearance online is sufficient to refute opposing viewpoints cannot sustain itself as a strategy for much longer. What Happens Then?
It may not be a message many wish to hear, but when it comes to peak oil and climate change—among other critical issues of at least national scope—we are all in this together. The sooner we move past the spite and sarcasm and outright animosity [based largely on a healthy dose of misinformation and an unwillingness—failure—to consider what the other side proposes and why], the sooner we can start dealing with the issues at hand rather than creating more and more layers of obstacles. Is it worth pausing for just a moment and asking ourselves when is enough, enough?
The author of the first of two articles I’ve been discussing made ExxonMobil’s “The Outlook for Energy: A View to 2040” report a focal point of and the basis for the statements he made dismissing concerns about peak oil. Let’s first consider some of the report’s assessments. I’ll discuss them in next week’s installment.
* From 2014 to 2040, we see global demand for energy rising by 25 percent. This increase is equivalent to the total energy used in North America and Latin America today. [p 6]
* For a century, these sources have been the foundation of the modern energy that has enabled modern living. Today, they remain abundant, reliable and affordable, and available on the scale required to serve 7 billion people 24 hours a day. [p 6]
* Thanks to economic development opportunities powered by abundant energy, we see the world standing at the cusp of decades of enormous growth and better living standards for billions of people. [p 6]
* By 2040, the world’s population will have reached 9 billion – up from about 7.2 billion today – and global GDP will have more than doubled. This growth will create more need for affordable, reliable energy – energy for homes, transportation, business and industry [p 11]
* Income growth and urbanization in developing economies are expected to spur demand for fuels used in the home, as well as the energy needed to produce and ship all types of manufactured goods. The number of cars on the world’s roads will rise by 80 percent. [p 16]
* Global energy demand for transportation is projected to increase by about 30 percent from 2014 to 2040
.…we expect the global light-duty fleet to rise by close to 800 million vehicles by 2040 with about 90 percent of this growth outside the OECD32 countries [p 17]
* Global energy demand for heavy-duty vehicles is expected to increase by about 45 percent from 2014 to 2040, with about 85 percent of the growth coming from non-OECD32 countries, where economic activity is increasing most rapidly . [p 19]
* we also expect the world to see more demand for ships, planes and trains to carry supplies to factories and goods to markets. In total, energy demand from these three subsectors will likely grow by about 65 percent….We expect over 90 percent of the demand to be met by oil through 2040, reflecting its advantages as a practical, energy-dense and cost-effective source of fuel to meet the needs in these sectors. [p 20]
* we expect most of the growth through 2040 to come from technology-driven supplies including tight oil, NGLs, oil sands and deepwater production. These supplies are projected to represent 40 percent of global liquid production by 2040, up from 25 percent in 2014.
Output from developed conventional oil fields is expected to decline through 2040, but will be mostly offset by gains from the development of new conventional fields. In fact, new conventional crude and condensate development will likely represent almost 30 percent of global liquid production by 2040.
Barely on the radar screen a decade ago, tight oil – oil dispersed in shale and other tight rock formations – is expected to account for 10 percent of world liquids production by 2040.
Deepwater production is seen increasing by around 70 percent from 2014, with global output exceeding 10 MBD by 2040. Key deepwater areas include Angola, Brazil, Nigeria, and the U.S. Gulf of Mexico.
Supply from oil sands is also projected to grow. By 2040, oil sands production is expected to grow to nearly 7 MBD, which is about two and a half times higher than it was in 2014. Near-term gains will likely be led by Canada, while longer-term growth will likely be led by Venezuela. [p 58-59]
* Delivering global energy supply is a tremendous technological challenge and one that requires investment on a grand scale. Of the approximately $750 billion a year of upstream oil and gas investment the IEA estimates will be required, almost 85 percent will be needed to simply keep production at current levels. Yet the global oil and gas industry continues to demonstrate that through investment and innovation, it can keep pace with global energy needs. [p 61]
A lot of optimism, to be sure, and a not insignificant amount of hold-your-breath projections about future energy demands.
Anyone who knows me would agree that I’m a dedicated proponent of optimism….Always a better choice in my world. But it’s one thing to choose an optimistic approach to life in general, and it’s another to ignore the realities and challenges which temper the expectation of clear sailing start to finish.
Western oil companies, which have announced investment reductions worth about $200 billion this year….
Just one condition must be met. The managements of leading energy companies must face economic reality and abandon their wasteful obsession with finding new oil. The 75 biggest oil companies are still investing more than $650 billion annually to find and extract fossil fuels in ever more challenging environments. This has been one of the greatest misallocations of capital in history – economically feasible only because of artificial monopoly prices
Companies that grew quickly thanks to the shale boom are trying to weather the dramatic slide in oil prices with measures like scaling back production and laying off workers. But for many, sunk costs and high debt levels mean cutbacks are not enough.
As a result, defaults and bankruptcies are mounting in the U.S. energy industry….
According to Texas-based law firm Haynes and Boone, 42 U.S. energy companies in debt for more than $17 billion went bankrupt last year….
And there’s reason to believe the shakeout will continue. A report from consultant AlixPartners said the projected revenues of 134 North America-based exploration and production companies show there could be a gap of $102 billion against their operating and capital expenditures in 2016…..
‘Drilling activity in the United States declined by more than 50% in the past 12 months,’ the AlixPartners report stated.
Oil companies delayed making decisions on 68 major projects world-wide last year, accounting for some 27 billion barrels of oil and equivalent natural-gas volumes and bringing total 2015 deferred spending to $380 billion industry-wide, energy consultancy Wood Mackenzie said in a report Thursday….
The put-off projects indicate a development slowdown that could lead to supply constraints — and rising oil prices — years down the road.
There may be no shortage of oil in general but there is a real shortage of low cost (easy to find and cheap to develop) oil in countries outside the Middle East….
For oil the industry is expecting that the current low oil prices are not sustainable beyond 2017/2018 when non OPEC supply will start to drop in earnest as a result of the recent drastic investment cuts.
Companies are continuing to lay off staff, cut back on projects, and report eye-opening losses.
These cutbacks will eventually bite at some point, whether as early as the second half of this year or later on this decade. The current low price environment, and its fallout, will lead to a tighter market and possibly a shortage given that supply projects are capital intensive and typically involve significant lags before coming online….
Both Exxon and Chevron will slice capex by around 25 percent this year, while BP is also scaling back. Some of the biggest U.S. independents, which have been instrumental in the shale boom, are slashing spending at even more dramatic levels. Continental, led by CEO Harold Hamm, announced that it would cut capex by an enormous 66 percent this year, with the company planning to reduce production by 10 percent. New York-based Hess, meanwhile, has said its capex would come it at $2.4 billion this year, down 40 percent from 2015.
How do optimistic projections square themselves in the face of the realities? How long do those opposed to climate change and peak oil implications dance away from the unpleasant truths? What is the benefit beyond avoiding painful discussions today? At what point do those contrarian viewpoints give way to a recognition that there is more than enough evidence already at play to make those challenges both very real and quite formidable now?
How does postponing not just acknowledgment but any and all efforts to come to mutual understandings and a commitment to work cooperatively in addressing these matters make it any easier or better for anyone?
NOTE: This series will run on Fridays through June 17
~ My Wife’s Photo: sunset at Good Harbor Beach, MA – 08.14.10
We face a choice going forward. There’s a kind of false dichotomy, a false choice that we’re being presented between policies on the left or policies on the right. It’s not left or right, it’s forward or backward. It’s a choice between investing in the future, leaving a better future for the next generation just like parents and grandparents did for us, or ignoring these hard choices and sentencing the next generation to a lower standard of living, to fewer opportunities, and a future that we could do better by. Michael Brownlee
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Peak Oil Matters offers observations and insights about the realities of declining fossil fuel production, and its impact on our future well-being