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Peak OilWhat is it? When?

And what might it mean for Public Transport?

Bruce RobinsonConvenor, ASPO-Australia

30th October 2007

Bus Industry ConfederationNational Conference 2007

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Outline What is Peak Oil ?

the time when global oil production stops rising and starts its final decline

We will never "run out of oil"

● When is the most probable forecast date ? perhaps 2010-2015 (or earlier)

● Why isn’t there any sign of Peak Oil being taken seriously? I don't know

● What might it mean for public transport? LOTS, opportunities and risks

● Should Governments and especially public transport authoritiesbe preparing for Petrol Droughts and Peak Oil ? YES, indeed !

● We should have plans for petrol rationing AND for public transport rationingready, in case they are needed soon.

1930 1970 2010 2050

Peak Oilbutwhen?

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www.ASPO-Australia.org.auAn Australia-wide network of professionals working to reduce oil vulnerability

ASPO-Australia Working groupsFinance SectorHealth Sector Social Services SectorRemote indigenous communitiesActive transport (bicycle & walking)Agriculture, Fisheries and FoodBiofuels Urban and transport planning Oil & Gas industryBehavioural changeLocal Government sectorRegional and city working groupsConstruction IndustryFreight sectorPublic transport sectorDefence and Security EconomicsTourism Young Professionals working group

Senate inquiry submission

ASPO-Australia is part of the international ASPO movement

Senate Inquiry into Australia's future oil supply and alternative

transport fuels

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Rolf WillkransDirector Environmental Affairs

ASPO Lisbon 2005www.PeakOil.net

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Unexpected transport pattern changes,infrastructure & planning decisions

Fremantle Passenger Terminalcompleted 1962

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Passengers p.a. Fremantle Port 1961-2001

Fremantle Passenger Terminal opened

Unexpected transport pattern changes, and infrastructure

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Passengers p.a. Fremantle Port 1961-2001

Fremantle Passenger Terminal opened

Unexpected transport pattern changes, and infrastructure

World Air travel 1950-2001

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Fremantle Passenger Terminal

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Many books about Peak Oil

Campbell & Laherrère March 1998

Campbell 2003

Brian Fleay Perth 1995

Deffeyes 2001

Heinberg 2003 Roberts 2004

2005

2006

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•Please put your hand up if you think that we have crossed the Hubbert Peak

•and hands up those who don’t?

•Undecided

Eric StreitbergEric StreitbergExecutive Director Executive Director ARC Energy LimitedARC Energy Limited

Australian Petroleum Production & Exploration Association conference

APPEAApril 2005Perth

•1/3rd

•1/3rd

•1/3rd

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Mb/d

US oil production: Peak in 1970

2007

Jeremy Gilbert, ex BP www.PeakOil.net

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Steep decline in oil production brings risk of war and unrest, says new study

Output peaked in 2006 and will fall 7% a year

Ashley SeagerThe Guardian

World oil production has already peaked and will fall by half as soon as 2030.

The German-based Energy Watch Group will release its study in London today saying that global oil production peaked in 2006 - much earlier than most experts had expected.

Monday October 22 2007Fig. 7 Oil production world summary

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01930 1970 2010 2050

IEA 2002

Shell

Bauquis, Total Deffeyes

ASPO & Skrebowski

Gb pa

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2007

Past World Oil Production and Forecasts

Prof. BauquisFrance

Dr Ali Samsam BakhtiariIranSchindler & Zittel, Oct 2007Germany

Chris SkrebowskiUK

Prof. Aleklett, ASPOSweden

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Chris Skrebowski Editor, Petroleum Review, London

The practical realities

• The world needs oil production flows

• Reserves are only useful as flows

• Worry about flows not reserves• "Deliverability"

"40 years reserves left at current production rates"....This is a very misleading statement

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A simple observation -- or why peak will be earlier than most people expect

‘Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.’

Decline

Expansion

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Why are oil supplies peaking?

• We are not finding oil fast enough

• We are not developing fields fast enough

• Too many fields are old and declining

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The real oil discovery trendLongwell, 2002

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-2000

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1965 1970 1975 1980 1985 1990 1995 2000 2005

1000 Barrel/day

UK

Consumption

Export/Import

Quelle: BP Analyse: LBST, ß

Production decline rate ~ 10%UK already a net importer

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Indonesia

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Export

Quelle: BP; Analyse: LBST, ß

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Data: BP. Analyse: Zittel LBST, ß, Pang Xiongqi

2020

Production

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Chris Skrebowski's conclusions

• Supply will remain tight and prices high barring a major economic setback

• Oil supply will peak in 2010/2011 at around 92-94 million barrels/day

• Oil supply in internationaltrade may peak earlier

• Collectively we are still in denial

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Jeff Rubin Canadian Imperial Banking Corporation

Chief Economist and Chief Strategist, Managing Director, CIBC World Markets

Jeffrey Rubin has been the top-ranked economist in Canadian financial markets over the last decade. Prior to joining CIBC World Markets in 1988, he was a Senior Policy Advisor at the Ontario Ministry of Finance

Cork, Ireland

17-18th September 2007

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Lord Ron OxburghFormer Chairman, Shell UK Chairman, House of Lords Select Committee on Science and Technology Honorary Professor, Cambridge UniversityFellow of the Royal Society

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Geoscience Australia, APPEA, ABARE

Australia’s oil production and consumption1965-2030

Million barrels/day

Actual Forecast

Consumption

Production

P50

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Perth’s Central Park building is 249 m high, to top of tower

Australia uses 45,000,000,000 litres of oil each yeara cube of about 360 metres size

100 ml of oil contains 1 kWh of energy. Enough to move a small car to the top of the Eiffel tower

80% of Australia’s oil usage is in transport

If Australia’s 20 M tpa wheat crop → ethanol = 9%

=1.3 EfT3

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Australia China United States

1 kml l

Million barrels/ day 2005 BP Statistical Review, 2006

Australia uses 0.9 China 7.0US 20.6World 82.5 US 1 cubic km oil / year

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"Federal agency efforts that could reduce uncertainty about the timing of peak oil production or mitigate its consequences are spread across multiple agencies and are generally not focused explicitly on peak oil.

....there is no coordinated federal strategy for reducing uncertainty about the peak’s timing or mitigating its consequences".

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PEAKING OF WORLD OIL PRODUCTION:IMPACTS, MITIGATION, & RISK MANAGEMENTRobert L. Hirsch, Roger Bezdek & Robert Wendling

February 2005for US Dept of Energy

"The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem.

without timely mitigation, the economic, social, and political costs will be unprecedented.

Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking."

"The world has never faced a problem like this.

.. oil peaking will be abrupt and revolutionary".

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Years After Crash Program Initiation

Impact (MM bpd)

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Coal Liquids

Heavy Oil

GTL

Efficient Vehicles

Worldwide Crash Program Mitigation of Conventional Oil Production Peaking

A Study for US DOE NETLHirsch, Bezdek and Wendling, 2005

Delay / Rapid growth.

Roughly 35 MM bpd at year 20.

2005

Study

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3. HIGHER PRICES WILL CREATE MORE OIL?Not true“Economists are better at finding oil on paper than geologists are at finding it in the ground”

7. GOVERNMENT INTERVENTION NOT REQUIRED?Wrong: Intervention by governments will be requiredEconomic and social implications of oil peaking would otherwise be chaotic

Dr Roger Bezdek is a senior energy economist in Washington

On his June 2007 Australian tour for ASPO he briefed ministers for Transport and ministers for Energy in Victoria and Queensland, prominent multinational firms, nationwide TV, the Defence Department, the Federal Shadow Minister for Resources and Energy and had a number of meetings at Queensland Transport

Full presentation slides and video at www.ASPO-Australia.org.au

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Time

Cost of Error

COST AS A FUNCTION OF START TIME (Notional)

Premature Start

Peaking Scenario I

- 10 Years Scenario II

- 20 Years Scenario III

“It is also certain that the cost of preparing too early is nowhere near the

cost of not being ready on time.”

Alannah MacTiernan, 2004

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Is there a possible transition to another fuel for most cars?. Probably notCan we swap to public transport for most trips? No Will an urgent change now in transport planning practices help us? Yes, dramatically in the long term

Les Magoon, USGS 2001

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Mortgage and Oil Vulnerabilityin Perth

at www.aspo-australia.org.au/content/view/120/55/

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$10 PER LITRE PETROL: A SCENARIODavid Rice, Senior WA Transport Planner

But why $10/l?

Simplememorablean illustration of ‘expensive’

see www.aspo-australia.org.au in "bibliography"

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Analogy:

The Canberra fire-storms of January 2003 destroyed over 400 houses; on the outer edge of the outer suburbs

Reliable predictions had been ignored by the authorities,

and there was no effective action to minimise the risks

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Landsat image of Canberra region showing fire-damage from the west. January 2003.

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Oil shocks, like the $10/litre scenario, may well wipe out the entire outer rows of suburbs from Perth, with the same results of destroyed homes, broken dreams and broken marriages.

Perth30 km

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Oil shocks, like the $10/litre scenario, may well wipe out the entire outer rows of suburbs from Perth, with the same results of destroyed homes, broken dreams and broken marriages.

Perth30 km

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Oil shocks, like the $10/litre scenario, may well wipe out the entire outer rows of suburbs from Perth, with the same results of destroyed homes, broken dreams and broken marriages.

Perth30 km

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Oil shocks, like the $10/litre scenario, may well wipe out the entire outer rows of suburbs from Perth, with the same results of destroyed homes, broken dreams and broken marriages.

Perth30 km

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Perth30 kmThe outskirts of all Australian

cities will be hard hit by oil depletion, as public transport infrastructure is very poor

People who have borrowed heavily to buy a house in a distant suburb and a 4WD may be left with a lot of negative equity and have to walk away from their homes.

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2007 }Oil

Gboe/pa World All Oil

www.PeakOil.net ASPO 2006

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Perth

Sydney

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Government of Western Australia

STATE LIQUID FUEL SHORTAGE

EMERGENCY PLAN

OPERATIONAL PLAN PREPARED BY

ENERGY SAFETY DIRECTORATEDEPARTMENT OF CONSUMER

AND EMPLOYMENT PROTECTION20 Southport Street, W Leederville WA 6007Tel: (08) 9422 5200 Fax: (08) 9422 5244

January 2003

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We need both petrol rationing plans and public transport rationing plans in place in case of fuel emergencies.

There must be public transport input into State and Federal fuel emergency planning.

0%

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Walk Bicycle Transit Car

Perth Mode Share (2003)

{If 25% of car users change to public transport

PERTH TRAVEL SURVEY - 2003

Mode Shares

Walk only 10.6%

Cycle 1.6%

Public transport 3.9%

Car passenger 29.1%

Car driver 53.2%

Other (taxi, motorbike, etc.) 1.5%

Total 100.0%

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PrioritiesFirst: Awareness and engagement (including within public transport planning)

2: Frugality3: EfficiencyLast: Alternative fuels

Bruce.Robinson@ASPO-Australia.org.au 08-9384-7409

Failure to act now will prove incredibly costly. Why are we waiting?

www.ASPO-Australia.org.au

ASPO-Australia is keen to help with Public Transport advocacy

Oil vulnerability assessment and risk management is an important mechanism of minimising exposure and maximising opportunities. It is a new and very promising field.

Hint: Check your superannuation is not being invested into urban toll-roads, tunnels and airports.

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a few more slides follow,in case they are needed for questions

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1: “Talk about it, Talk about it”2. Engage people, “Participatory democracy”3. Dismantle the "perverse policies" that subsidise heavy car use and excessive freight transport.

Australian Government Policy and Action Options

4. Encourage frugal use of fuel, and disadvantage profligate users. Fuel taxes should be incrementally raised to European levels to reduce usage.5: SmartCard tradable personal fuel allocation system. A flexible mechanism for short-term oil shocks, as well for encouraging people to reduce their fuel usage..6. Concentrate on the psychological and social dimensions of automobile dependence, not just “technological fixes”7. Implement nationwide "individualised marketing" travel demand management.8. Railways, cyclepaths and public transport are better investments than more roads.9. Give priority for remaining oil and gas supplies to food production, essential services and indigenous communities, using the Smart-Card system.10. Review the oil vulnerability of every industry and community sector and how each may reduce their risks.11 Promote through the United Nations an Intergovernmental Panel on Oil Depletion, and a Kyoto-like protocol to allocate equitably the declining oil among nations. An international tradable sliding scale allocation mechanism is one hypothetical option.