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Peak Oil is the expression used to describe the life and death of a group of oil wells. The oil is discovered, about 6 years later it comes "on stream". As more wells are dug the output grows exponentially until it reaches a peak, thereafter the output falls until it is too expensive to recover the dregs.
The whole process might take 100 years with Peak production taking place at the 50 year point. For a large enough group of wells the output follows a bell curve which is symmetrical and allows prediction of the future production of the group.
These methods reveal that the world has now (2006) reached Peak Oil, that production can only go down and as our economy is dependent on petrol the reduced availability and increase in price will be sufficient to cause the collapse of our civilization unless extreme corrective measures are taken.
This paper is based on the evidence given by Dr Samsam Bakhtiari to the Senate Rural and Regional Affairs and Transport References Committee – "Australia’s future oil supply and alternative transport fuels" on Tuesday 11th July. This is available onhttp://www.aph.gov.au/hansard/senate/commttee/S9515.pdf as a 49-page pdf document being an uncorrected proof copy.
Dr. Bakhtiari is a senior planning expert with the National Iranian Oil Company, he has written numerous papers, books, and has travelled to many places with his message and given many interviews.
In his opening statement he says: "At present worldwide crude oil output is stagnant at around 81 million barrels of oil a day, give or take one million barrels....Thus the world now produces and consumes some 30 billion barrels in each single year,
"Most of the world’s supergiant oilfields are now getting old and some of them have entered terminal decline. Suffice it to mention the three largest ones: Saudi Arabia’s Ghawar, Mexico’s Cantarell and Kuwait’s Greater Burgan oilfields, which are surely and steadily going downhill. The last supergiant to be discovered was the Kashagan oilfield in the North Caspian Sea in 1999, scheduled to begin production in 2008/9.
"Yearly oil finds have plummeted to between four and six billion barrels of oil a day. There is only one unexplored frontier remaining, Antarctica with its pristine wilderness and its population of some 20 million penguins.
"The decline of global oil production seems now irreversible. It is bound to occur over a number of transitions, the first of which I call transition 1, which has just begun in 2006. Transition 1 has a very benign gradient of decline, and it will take months before one notices it at all. Transition 2 will be far steeper and each successive transition will show more pronounced declining gradients. My "World Oil Production capacity (WOCAP) model has predicted that over the next 14 years present global production of 81 million barrels of oil a day will decrease by roughly 32% down to around 55 million barrels a day by the year 2020 .
"Thus in the face of peak oil and its multiple consequences, which are bound to impact upon almost all aspects of our human standards of life, it seems imperative to get prepared to face all the inevitable shock waves resulting from that. Preparation should be carried out on individual, familial, societal and national levels as soon as possible. Every preparative step taken today will prove far cheaper than any step taken tomorrow,"
Having completed his opening statement Dr Bakhtiari proceeded to answer questions most of which came from Senator Joyce. His answers included:
A detailed description of the techniques and problems in getting oil out of Ghawar, now producing 4.5 million barrels per day. When it does collapse, the whole Saudi production system will collapse and the price will skyrocket.
He gave considerable praise to Dr Colin Campbell, whose experience of the oil industry spans more than half a century, who established the best set of oil reserves in the world, and whose books, figures, graphs, tables all fit in very well with the Bakhtiari model.
On the question of price, Dr Bakhtiari said it might go down tomorrow to $55, but eventually will go up to great heights maybe to $200, maybe to $300 and one day there will be the question of availability. If you buy at the stock Exchange 10,000 barrels at $74 today, these are paper barrels, if you try to buy 10,000 barrels of real oil you will have enormous problems getting that much oil on a regular and sustainable basis. In the very near future there will be nothing like business as usual. Nothing is usual from now on in any of the countries involved and the lower you are in the pile the worse it is going to get.
On the steps we can take today he said any step is to your advantage. He praised the City of Perth for its free buses (3 of these are said to be experimental hydrogen powered) and their very light rail service covering 140 kilometres of their coast. One day this light rail service will save all these suburbs.
Senator Milne asked about the question of reserves and Dr Bakhtiari confirmed that in 1988 Saudi Arabia which claimed reserves of 160 billion barrels suddenly took these up to 260 billion barrels: there has been no change to it up to this day. So for 17 years, it is as if they have not produced anything. My opinion is that the actual amount of reserve oil in the Middle East is half the official reserves.
Asked about the accuracy of the US Geological Survey, Mr. Bakhtiari said the reserves given by the USGS which is an endowment for the world of over 3,200 billion is much higher than the figures we are using of only 1.900 billion. The USGS numbers cannot be accepted as realistic nor can we accept the International Energy Agency in Paris who predict that the world will be consuming 118 million barrels a day in the year 2030 when the world can't get over 81, or say 82 per day right now.
On being asked how can we know (the true position) or revise the estimates to be more accurate. Mr. Bakhtiari said there are two ways. One is the price. The second is production. If the production remains stagnant for the next two years the predictions of 100 or 110 are wrong. If you see the price returning to $50 and staying there, we were wrong. The best way is to take a bet and bet that we are right, because the ones who bet that way have not much to lose. If we are wrong, everything is going to be fine. But if we are right, the ones who took precautions will be much rewarded in the future.
Asked by Senator Hutchins, What should governments do? Dr Bakhtiari replied that every city, every government should do many things, 1001 things. There is no one solution. There is no silver bullet. The Airbus A380 is not a valuable aeroplane, it has been built at the wrong time. You can make investments in copper, oil exploration, or in agriculture, but not ethanol or biodiesel.
W.A. does not have enough water and the water table is falling. They are obliged to put in two desalination plants powered by gas. They have no alternative so they are obliged to do this. Australia’s main problem is water. Every litre of ethanol or biodiesel will need in production between 3 or 4 litres of water. You have to reconsider the economics of all that in the near future.
Gas is a big issue. In 2008/9 we are going to have global peak gas, now ridiculously cheap, the price of gas will go sky high. Fortunately Australia has an enormous amount of gas.
Dr Bakhtiari discussed the production of Ethanol by Brazil, due to their enormous amount of sugarcane it makes some sense, but he doubts that it makes a lot of sense in terms of energy. The day will come when there is a conflict between producing ethanol and biodiesel, and producing food, food is going to win because we have to eat. I am not keen on the bio alternatives, they are not going to make a big difference but there are many things that should be done. Everyone should study their own situation and see what can be done locally, and not one thing, not two, but 10, 20 or 50. In my opinion the first thing to develop is free public transport for everybody. It may not make much economic sense now, it will in the future. Then you need to plan; get new ideas from the grass roots, create steering committees to start setting the priorities. Get younger people to come in, set priorities for the use of petrol. Have these in place soon, may be in the next year or two. You will not need them in two years, but have them in place so that you are prepared. Get prepared for any eventuality. Have a special committee for that now, so you have a team already prepared who have thought these problems through.
He stated his estimates do not include shale oil, now being produced in Canada at 1.1 million barrels a day at an enormous consumption of gas and very bad pollution of Canadian rivers. Americans have indicated that they would prefer the gas.
Senator Sterle asked: If we were to take all the alternatives around the world, solar, hydro, gas, CTL, GTL...could we supply the world’s demands?
Dr Bakhtiari said "Very, very little. In any field for the next 20 years it is a drop of water.. It is still a drop of water in solar, in biodiesel, in anything."....
"You must have an organisation, develop it to take care of the crisis. The Europeans do not want to believe this reality. Next year they will have to start, they have already started, dying from the cold. At least 900 people in eastern European countries froze to death last year. This year it will be double or triple this amount. This is the reality already."
The future is to rails because rails are the most fuel efficient system. The figures at tonne kilometres per litre of fuel, aeroplanes are between 2 and 3, cars are between 10 and 22, trucks between 65 and 85 and trains are around 320. Aeroplanes will be the first casualty, many are already making losses. Shipping is also good, shipping will come back because the time factor will not be as important as energy efficiency.
The Chair, Senator Siewert, asked You are saying that we should be investing now in public transport?
Dr Bakhtiari replied "Yes. Right now. As soon as possible. Start tomorrow, it is better than starting the day after tomorrow. People who think they will undertake projects in 10 years time do not realise the problems. For example the Europeans want to bring gas from the Persian Gulf to Europe. This is a 20 year project costing at least $25 billion. It is not feasible today, it is too late, projects will have to be smaller and smaller and you have to start them as soon as possible and not get caught up by the events."
This concluded Dr Bakhtiari’s evidence which may I remind you is expert evidence, what follows is merely my inexpert opinion. Is he right? If accurate reports are issued by the oil companies we could know in six months time. Anyone can check the situation by typing in to Google search "World oil production 2006". A look at www.theoildrum.com/story/2006/7/2/205758/5414 has a detailed report by Stuart Staniford, based on American figures showing that many areas in the world have production peaks in 2005 and while the number of oil rigs have increased in the last 18 months, sometimes doubled, there has been no corresponding increase in output. The Australian story is worse, now in steep decline, 40% down in 4 years, we are now dependent on overseas oil and a new field to come on stream in 2008 wont make much difference.
When I first read the transcript I realised that the fall in oil output of 32% in 14 years would reduce CO2 production by an amount better than most targets set by greenhouse proposals. This is not to suggest that climate change is no longer important, fortunately corrective measures can help both oil shortage and climate change. However we must beware of industry building more coal power stations, making the situation worse. The fact that business is currently booming is deceiving us all as it will make the change to a contracting oil economy all the more sudden and difficult.
Very recent news shows that the output from the Prudhoe Bay field in Alaska has been reduced by 290,000 barrels a day due to pipe corrosion, and production in Nigeria has been reduced by 500,000 barrels a day due to sabotage, (Living standards should be up in Nigeria due to oil revenue, but in fact they are as bad as the other west African countries due to the uncivilised behavior of the owners) The oil is still there and will be available in time, meanwhile 70% of the world's oil wells are producing less each year so again we are unlikely to see more than 82 million barrels a day in future. Attempts to pump more out of existing wells may result in recovering less oil overall.
Little thought has been given to the plight of Middle East countries when the oil does dry up. This could result in a huge emigration process which would be most unwelcome in other countries.
My suggestions for the future are:
Transport: (1) use your 2 feet, (2) use a cycle, (3) use an electric powered cycle (they are on the market now!) (4) use a mini car utilising electric or air power, (5) use public transport converted to an alternative fuel. - Demand that rail services be converted to electricity. Farmers to receive subsidised bio diesel units to run farm equipment..
Water: build large solar desalination plants in many locations with steam driven pumps. (Townsfolk don't realize the serious drought now in many parts of Australia.)
Power: convert some coal stations to gas. Support Hot Rocks projects at Innamincka by building generators and extra transmission lines now,
Duplicate power lines to cities and suburbs. (needed to recharge minicars etc..)
Encourage everyone to install solar cells on their roofs. Manufacturers to investigate the possibility of making small panels which DIY owners could erect and add one every year.
Builders and Developers: must re-examine all materials to
find those that cause less CO2 in their manufacture, transport and
erection. All new projects must be carefully reviewed to ensure low
oil consumption by use of good planning i.e. minimum earthworks, closeness
to work, transport, shops, services etc.. Small projects preferred as
these can be completed before prices rise.
Governments, State and Federal: must conduct an active program covering both climate change and alternate energy. Oil and coal industries should be required to reinvest in alternative energy systems and caps placed on oil and coal production and consumption. Transport authorities should adopt higher registration on vehicles over 2 litres capacity and lower registration on cars that use alternate energy. They should license small economical vehicles and provide new legislation requiring all vehicles to reduce speed when traveling close to mini cars.
Churches: Should re-visit their teaching on stewardship and realising that the base cause of our troubles is overpopulation, should give consideration to at least recommending the one child family and the importance of family planning.
You, Me, Firms, Businesses, Governments: should review last years performance and work out ways of using less oil in the following year. The largest to publish their reports and forecasts on the web. There are businesses and industries who have realised the importance of taking corrective measures. They deserve our support.
The Media: to publish detailed articles on this subject without regard to the objections of their advertisers. Congratulations to The Independent Weekly for their issue dated 12th August and to the Sunday Mail for publishing: "World with no oil is grim face of the future" by Bill Adair in their issue dated 13th August.
Educators, Teachers: to provide new courses on how to live without oil with emphasis on gardening, arts and crafts etc.
Our Universe has had 3 generations of stars, allowing the higher elements to be built up, necessary for life to develop. Our world has allowed life to develop but there were occasions when life was almost wiped out. For the past 8 million years man and woman has developed so that the current homo sapiens has produced the most sophisticated civilisation that we know of. But our greed, our insistence on unsustainable development, our high consumption of limited resources, our pollution and production of CO2 may well change the climate and make life untenable for most.
Many have forgotten that we are creature of this earth and
dependent on it. But when faced with a problem most will buckle-to and do
whatever is necessary. We have to inform everybody, other nations and the
U.N., and obtain cooperation. We are very well equipped with tools to enable
this to be done. There is the Internet, the media, including newspapers,
books. magazines, radio and TV. It is up to you and me. Please spread this message far and wide, talk about it
with your neighbour, write about it to your overseas friend, discuss it with
your M.P., your partner and your children.
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