determinants 2: supply keywan riahi [email protected]

Energy Systems Analysis

ESA-4

Determinants 2: Supply

Keywan Riahi

[email protected]


Microchip

Television

Steamengine

Electricmotor

Gasolineengine

Vacuumtube

Commercialaviation

Nuclearenergy

1850 1900 1950 2000

Nuclear

Hydro

Gas

Oil (incl. feedstocks)

Coal

Trad. renewables

Gto

e1.6 2.5 5.3

10

8

6

4

2

0

World primary energy use (Gtoe)

World population(billion)

World Energy Supply (in Gtoe)


Primary Energy Substitution

100

60

40

20

0

1850 1900 1950 2000

Fra

cti

on

(%

)

Wood

Coal

Oil

GasNuclear

80


Price of Oil and Coal 1870-1915Source: Group Planning SHELL, 1994.


Capacity Cost of Troll Field (North Sea)Source: Group Planning SHELL, 1994.

High prices beget high costs; low prices beget low costs (M. Adelmann)


Oil Price Projections by DOE

60

50

40

30

20

10

0

1975 1980 1985 1990 1995 2000 2005 2010

1985

1986

1987

1988

19901992

1994

BGR, 1988


1859: 292 $/bbl

$/b

bl (c

urr

en

t an

d c

on

sta

nt

US

$2

00

0)

2000197519501925190018751850

75

50

25

0

100

2025 2050

Shadow prices

Average costs

Volatility zone

Crude Oil Prices (History & IIASA-WEC Scenarios)


Fossil Era on Geological Time Scale

10

12 k

wh

/yr)

300

200

100

0

-5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5

Time before and after present (103 years)


Renewable Energy Resource Basein EJ (1018 J) per year

n.e. Not estimated

a. The electricity part of current use is converted to primary energy with a factor of 0.385 (subst.equivalent).

.

ResourceCurrent

usea

Technicalpotential

Theoreticalpotential

Hydropower 13 50 147

Biomass energy 50 >276 2,900

Solar energy 2 >1,575 3,900,000

Wind energy 4 640 6,000

Geothermal energy 0.6 5,000 140,000,000

Ocean energy ~0 n.e. 7,400

Total ~70 >7,600 >144,000,000

© BP 2006

Distribution of proved (oil) reserves 1985, 1995, 2005

© BP 2006

Proved oil reserves at end 2005

© BP 2006

Oil reserves-to-production (R/P) ratios

© BP 2006

Major oil trade movements


Regional Distribution of Global Oil

Production and Consumption, 2002

Source: of Energy Resources,

WEC 2004


The Peak of Oil Hypothesis

Source: Kjell Aleklett 2005


Hubbert Oil Production Curve

Pro

du

cti

on

rate

(10

9 b

bls

/yr)

60

50

40

30

20

10

0

1900 1925 1950 1975 2000 2025 2050 2075 2100

250 x 109

bbls

180 x 109 bbls

382 x 109bbls

Q =1350 x 109 bbls

Q =2100x 109 bbls

80 percent (64 yrs)

80 percent (58 yrs)

784 x 109 bbls


Recurring Perception of Scarcity

“…the data at hand in regard to the gas still

available underground … make it probable that

the annual output will never be very much more

than it was during the period 1916 - 1920.”

R.S. McBride and E.G. Sievers (USGS),

Mineral Resources of the United States, 1921, p.340.

US gas production:

22 Mtoe in 1920

100 Mtoe in 1995

Energy Systems AnalysisSCHOELLER-BLECKMANN OILFIELD EQUIPMENT AG

Global Oil Requirements Perspectives

Producing Fields Decline~ 4 - 8% per year

Existing IndustryProduction

RequiredNew Production

World Oil and Gas Demand

MBDOE

250

200

150

100

50

0

1980 1990 2000 2010 2020 2030

Producing Fields Decline~ 4 - 8% per year

Existing IndustryProduction

RequiredNew Production

World Oil and Gas Demand

MBDOE

250

200

150

100

50

0

1980 1990 2000 2010 2020 2030

Energy Systems AnalysisSCHOELLER-BLECKMANN OILFIELD EQUIPMENT AG

Typical Oil Deposit Formations

1 m3 “Oil deposit”:

➢ 75 % Sandstone,

➢ 10 % Water,

➢ 15 % Oil.

Economically recoverable:

ca. 5 %

i.e.: 2/3 of oil in place are not recoverable economically today!

recoverable

Not recoverable at

current prices and

with current

technologies

30 %

70 %

Original Oil in Place:

Source: Grohmann, 2005


SCHOELLER-BLECKMANN OILFIELD EQUIPMENT AG

New Technologies Increase Reserves

3D-Seismics

Micro DrillingSource: Grohmann, 2005

© BP 2006

Distribution of proved (natural gas) reserves 1985, 1995, 2005

© BP 2006

Proved natural gas reserves at end 2005

© BP 2006

Natural gas reserves-to-production (R/P) ratios


Regional Distribution of Global Gas

Production and Consumption, 2002

Source: of Energy Resources, WEC 2004

© BP 2006

Proved coal reserves at end 2005

© BP 2006

Coal production - Coal consumption

Energy Systems AnalysisPacific Northwest National Laboratory 2

The Joint Global ChangeThe Joint Global Change

Research Institute Research Institute

22nd WGCTokyo 2003

fossil fuel resources

Fossil fuel resources are not a constraint on future energy use.nThe conventional resource base is small.

nThe total resource base—conventional plus unconventional gas and oil—is HUGE

Source: Jae Edmonds


Increasing degree of geological assurance

Incr

easi

ng d

egre

e of

eco

nom

ic f

easi

bil

ity

Resource Classification: The McKelvey Box

Subeconomic

Economic

Not economic

Reserves

Resources

Unconventional and low-grade

occurrences

InferredMeasured Indicated

Demonstrated

Identified Reserves

Hypothetical Speculative

Probability range (or)

Undiscovered Resources

McKelvey Diagram


0

50

100

150

200

250

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Gto

e

0

10

20

30

40

50

60

70

Ye

ars

Total

Cumulative

consumption

Remaining reserves/annual production

300

80

2000

Remainingreserves

0

50

100

150

200

250

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Gto

e

0

10

20

30

40

50

60

70

Ye

ars

Total

Cumulative

consumption


300

80

2000

Remainingreserves

0

50

100

150

200

250

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Gto

e

0

10

20

30

40

50

60

70

Ye

ars

Total

Cumulative

consumption


300

80

2000

Remainingreserves

Remainingreserves

Recoverable Conventional Crude Oil

Reserves and Cumulative Production

Nakicenovic et al., 1988; BGR, 1988


600

500

400

300

200

100

0

1940 1960 1970 1980 19901950 2000

1840884

950

1

2

3

4

5

6

7

8

9

10

11

12

13

15

16

1814

17

19

20

21

22

23

2627

28

29

30

31

3233

34

35

36

37

38

39

40

41

24

25

42

43

44

45

4647

48

49

50

51

52

5354

55

56

57

58

59

60

61

62

63

6465

66

67

68

69

70

35a

Source: BGR, 1998.

Estimates of “ultimately recoverable” Conventional Oil


0

50

100

150

200

250

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Gto

e

0

10

20

40

50

60

80

Ye

ars

TotalRemaining reserves/

annual production

300

2000

30

Cumulativeconsumption

70

Remaining

reserves

0

50

100

150

200

250

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Gto

e

0

10

20

40

50

60

80

Ye

ars

TotalRemaining reserves/

annual production

300

2000

30

Cumulativeconsumption

70

Remaining

reserves

Remaining

reserves

Remaining

reserves

Recoverable Conventional Natural Gas

Reserves and Cumulative Production

Nakicenovic et al., 1988; BGR, 1988


600

500

400

300

200

100

0

1955 1965 1975 1985 1995

1

2

3

4

5

6

7

89

10

11

12

13

15

16

18

14 17

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37 38

39

40

41

42

Source: BGR, 1998.

Conventional Gas: Estimates of “ultimately

recoverable” Resources


Changing Mineral Reserves (Cohen, 1995)

Mineral Reserves

1950

Production

1950-1980

Reserves

1980

Copper 100 156 494

Iron 19,000 11,040 93,466

Aluminum 1,400 1,346 5,200

Lead 40 85 127


USGS Estimates of “ultimately recoverable Reserves”

in 1987 and 2002 Data (Source: Masters, 1987; BP, 2002)

Reserves Undiscovered

95%

probability

Resources

5%

probability

Reserves

BP 2002

Saudi

Arabia 166 20 65 262

Kuwait 73 1 7 96

Oman 5 <1 4 5

Middle

East 421 62 199 686

1987 USGS estimates

Energy Systems Analysis 14

Carbon Reservoirs

BiomassBiomass

~500 ~500 GtCGtC

SoilsSoils

~1,500 ~1,500 GtCGtC

Atmosphere 800 GtC (2004)

OilOil

~270 ~270 GtgCGtgC

N. GasN. Gas

~260 ~260 GtCGtC

Unconventional Fossil Fuels

15,000 to 40,000 GtC

Coal

5,000 to 8,000 GtC


Hydrocarbon Reserves and Resourcesin ZJ (1021J)

Consumption Reserves Resources Resource Additional

1860-1998 1998 base Occurrences

Oil Conventional 4.85 0.13 6 6 12 Unconventional 0.29 0.01 6 16 22 60

Gas Conventional 2.35 0.08 6 11 17 Unconventional 0.03 -- 9 26 35 800

Coal 5.99 0.09 21 179 200 140

Total 13.51 0.31 48 238 286 1000

Source: Nakicenovic et al., 1996; Nakicenovic, Grübler and McDonald, 1998; WEC, 1998; Masters et al., 1994; Rogner et al., 2000


Hydrocarbon Reserves and Resourcesin GtC (109 tC)

Consumption Reserves Resources Resource Additional

1860-1998 1998 base Occurrences

Oil Conventional 97 2.7 120 120 240 Unconventional 6 0.2 120 320 440 1200

Gas Conventional 36 1.2 90 170 260 Unconventional 1 -- 140 530 670 12200

Coal 155 2.4 530 4620 5150 3600

Total 295 6.5 1000 5760 6760 17000

Source: Nakicenovic et al., 1996; Nakicenovic, Grübler and McDonald, 1998; WEC, 1998; Masters et al., 1994; Rogner et al., 2000


Methane hydrate



Alternative Sources of Hydrocarbons

➢ Methane Hydrates



“Unconventional” Hydrocarbons

Tarsands:• Alberta

Opencast SAG-D

process

• VenezuelaPotential SAG-D use

Steam Assisted Gravity Drainage




Hydrocarbon Supply Perspectives


The role of technology &

innovation – gas shale US➢ Shale is the most abundant sedimentary rock on Earth

➢ No two shale deposits are created equal

Slide 43

Source: Schlumberger, 2011

Average weekly gas prices by major region

0

2

4

6

8

10

12

14

16

18

20

Jan

-00

Jul-

00

Jan

-01

Jul-

01

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jul-

14

Jan

-15

US$

pe

r m

illio

n B

TU

RF-FRG

EU-Imp

Henri Hub

LNG Asia-Pacific

Sources: Adapted from EIA (2015), World Bank (2015), Index Mundi (2015)

Only one third of sedimentary basins has

been searched for oil with modern techniques

Far more exploration wells (each yellow dot represents 2,000) have been drilled in the U.S. than in any other country.

Source: Maugeri, 2009


Something Wrong with Theory?

• Historical success rate in US oil/gas drilling: Not better than with random drilling

• Depletion of fields postponed: Refill from below: Jean Whelan=“state of art”

• Deep gas hypothesis: Tommy Gold=highly controversial

• Gas tracers (C-14): Abiogenic gas=Yes, but minor curiosity?

• Gas hydrates: How to explain quantities and occurrence (e.g. in deep sea bottom)?

• Methane abundance in extraterrestrial environments: Relevance for planet Earth?


Why is Neptune’s Atmosphere Blue?

(Methane=Natural Gas)


Renewable Energy Resource Basein EJ (1018 J) per year

n.e. Not estimated

a. The electricity part of current use is converted to primary energy with a factor of 0.385 (subst.equivalent).

.

ResourceCurrent

usea

Technicalpotential

Theoreticalpotential

Hydropower 13 50 147

Biomass energy 50 >276 2,900

Solar energy 2 >1,575 3,900,000

Wind energy 4 640 6,000

Geothermal energy 0.6 5,000 140,000,000

Ocean energy ~0 n.e. 7,400

Total ~70 >7,600 >144,000,000


0

50

100

150

200

0 10 20 30

Cumulative production 10 6

bbl

Producer price

Regression

Oil price

1978 1985 1988 1990 1995

Data: Goldenberg, 1996

Cumulative

subsidy

1billion $

0.6 billion $0.3 billion $ ?

30 % cost reductionfor each doubling

of cum. production

Pro

ducer

price $

(199

6)/

bbl

Brazil - Ethanol Learning Curve:

“Hold your breath!”

determinants 2: supply keywan riahi [email protected]

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