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ENERGY MANAGEMENT

THE END OF CHEAP OIL

A Public Service PresentationDate : March 2010

ByHarjono Zainal Abidin

Chairman

QUORUM Oil & Gas Sdn Bhd

Kuala Lumpur, MalaysiaE-mail: harjono@geocities.com

INTRODUCTION

The world can now feed a daily oil habit of nearly 80 million barrels.

In the U.S. about two-thirds of the oil goes to make transport fuels.

The synthetic fabrics in our wardrobe and the plastics in just about everything we touch started out as oil too.

As Daniel Yergin writes in his oil history The Prize, we live in "the Age of Hydrocarbon Man."

Oil Trade

The quest for more cheap oil is a losing game:

Oil consumption imposes severe costs on the environment, health, and taxpayers.

The world's oil addiction is hastening a day of reckoning.

Oil Consumption

Oil is cheap.

In the United States, a gallon of petrol can be cheaper than a bottle of water.

It is too cheap for most people to bother conserving.

The U.S. remains the king of consumers, accounting for a quarter of the world's oil even though it has just 5 percent of the population.

The End of Cheap Oil?

National Geographic June 2004The Earth holds a finite supply of oil.

The flood of crude oil from fields around the world will ultimately top out, then dwindle.

"In our lifetime," says economist Robert K. Kaufmann of Boston University, who is 46, "we will have to deal with a peak in the supply of cheap oil."

NATIONAL GEOGRAPHIC June 2004http://ngm.nationalgeographic.com/ngm/0406/feature5/

Sustainable alternatives now ….

The peak marks the change from an increasing supply of cheap oil to a dwindling supply of expensive oil.

We foresee dire consequences: shortages, price spikes, economic disruption, and a desperate push to wrest oil from "unconventional" sources such as tar sands, oil shale, or coal.

We need to curb our oil use and develop sustainable alternatives now.

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Oil Price Spike 2008

This has already caused big spikes in energy prices – including natural gas and electricity – with potentially devastating economic and social impacts.“Global production of oil – including biofuels and so-called ‘nonconventional’ sources – has scarcely risen since early 2005, while the price of oil has soared from $10 per barrel in 1998 to $140 per barrel in June 2008.”(U.S. Energy Information Administration, Argus Media.4)

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Economic crisis?

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The NEXT Crisis …..

AGENDA FEBRUARY 11, 2010, 5:47 A.M. ET

The Next Crisis: Prepare for Peak Oil As Europe's leaders gather in Brussels today, they have only one crisis in mind: the debts that threaten the stability of the European Union. They are unlikely to be in any mood to listen to warnings about a different crisis that is looming and that could cause massive disruption.

A shortage of oil could be a real problem for the world within a fairly short period of time. It was unfortunate for the group which chose to point this out yesterday that they should have chosen to do so on the day the Organization of Petroleum Exporting Countries, or OPEC, reported that the effects of the financial downturn had led to a slight downgrade in its forecast for oil consumption this year.

Against the gloomy economic backdrop that Europe currently provides, siren voices shrieking that a potential energy crisis is imminent and could be worse than the credit crunch are liable to be dismissed as scaremongers.

The North Sea Shearwater platform was producing years beyond expectations.

SOURCE THE NEXT CRISIS: PREPARE FOR PEAK OILBy PATIENCE WHEATCROFTFEBRUARY 11, 2010, 5:47 A.M. EThttp://online.wsj.com/article/SB10001424052748704140104575057260398292350.html?mod=wsj_share_facebooK

Oil Prices To-day …2010

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What is “Peak Oil”?

Peak Oil is also called

"Hubbert's Peak" – Named for the Shell geologist

Dr. Marion King Hubbert. – In 1956, Hubbert accurately

predicted that US domestic oil production would peak in 1970.

The Hubbert Curve

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Decline in Supply

Oil production in a given country tends to go into decline at about the halfway point because of falling pressure in the underground reservoirs, and because oil companies usually discover and exploit the largest oil fields first.

Oil Producing Countries Past Peak

Global view

Plateau

MAX

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Obama

2010 2020 2030

PEAK OIL SCENARIOSeller’s Market

Buyer’s MarketCheap Easy to Extract Oil Expensive – Difficult to Extract Oil

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SHELL “Scramble” Scenario

Considering Scramble, What Will the World be Like?

Environmentally the world will not be the most pleasant place to live, there will not be any taxes on CO2 emmisions, so there will be a high carbon dioxide output. There will be a number of CO2 Reduction plans, but because of rapid change and high prices consumers are not interested and these plans will fail.

Economically the world won't do too great either, due to rapid changes in technology every 5 to 10 years the economy will be unstable, and not very strong. Chances are that the Global Fincancial Crisis will continue for another few years, slowly recovering, and when we change technology again the crisis will go downhill even further.

Will there be an oil war? Yes, in fact there already is an oil war.

America in Iraq. It is an early oil war, and a sign of desperation. We need a drastic change in technology to prevent the further wars.

SourcePRESENT & FUTURE OF OILhttp://fromoiltowhat.com/future.html

Shell strategies!

Oil Wars!

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What does peak oil mean for our societies?

Our industrial societies and our financial systems were built on the assumption of continual growth

Growth based on ever more readily available cheap oil.

Oil in particular is the most convenient and multi-purposed of these fuels.

Oil currently accounts for about 43% of the world's total fuel consumption, and 95% of global energy used for transportation.

Oil and gas are feedstocks for plastics, paints, pharmaceuticals, fertilizers, electronic components, tyres and much more.

Oil is so important that the peak will have vast implications across the realms of war and geopolitics, medicine, culture, transport and trade, economic stability and food production.

Significantly, for every one joule of food consumed, around 10 joules of fuel energy have been used to produce it.

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Economic Impact

When oil production starts to decline, the economic impact will be dramatic.

Economic growth is largely dependent upon a growing oil supply. The International Energy Agency has forecast oil demand to expand at a rate of 1.3% annually over the period 2004-2030.

But after the peak, many forecasters expect global oil production to fall at 2-4% a year, meaning that the deficit between the oil we want and the oil we get will expand by 3-5% a year. Within 10-15 years of the onset of decline we could have just half the oil supply that projections say is required to sustain economic growth.

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How do we manage an Energy crisis?

Reacting to crisisShort term– Building Services

• Power• Water• Comms• Waste

– Transport• Natural Gas!• Encourage people to use

– trains & bus– bicycles– Not cars

– Telecommute• Internet for work

NGV Natural Gas Vehicles!

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Longer Term Alternatives?

Alternative fuels may help but ….unless we change our lifestyles these new technologies will come to naught.

Wind power!

Solar power!Ethanol/Methanol?

Nuclear!

NOTE On Alternative fuels

The best non petroleum source of power is

Hydroelectricity!

Most alt fuels have a negative EROI*

Oil Shales/Kerogen?

Coal to gas!

Hydrogen?

Nuclear Fission?

Nuclear Fusion!

*EROI Energy Return on Investment

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What to expect?

Lifestyle changes …..go green!Sustainable economics!

A balance between capitalism & socialism!

BUT ….

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What Behavioral changes are necessary?

Western consumer lifestyle in the East?

CHINA?

NEW YORK!

What happened to the Bicycles in Beijing …?The millennia-old Middle Kingdom can claim to have invented many things _ fireworks, the umbrella, paper and the compass among them _ but not the bicycle.

According to Amir Moghaddass Esfehani, a historian at the Technical Institute of Berlin, the Chinese first learned of bicycles from a customs official named Binchun who visited Paris in 1866 and wrote of Parisians riding vehicles made of "two wheels with a pipe in the middle."Back then, well-heeled Chinese generally got around in rickshaws or sedan chairs, both hauled by manpower. It was only after expatriate Americans and Europeans began cycling around Chinese cities that the fashion took off, Moghaddass writes in "The Bicycle and the Chinese People."

Through the three decades of Communist central planning, bicycles were encouraged as transport; buses were crammed and infrequent, taxis virtually unheard of.

For the Beijing Olympics, the city is offering visitors 50,000 bicycles for rent, but many bike pathways in Beijing and Shanghai have been taken over by right-turn and bus-only lanes. Big offices and hotel buildings generally provide bicycle parking onsite only for employees.

Shanghai's 10 million bikes are banned from many main streets. A trip from Hongqiao, in the western suburbs, to the busy Nanjing Road shopping district is an obstacle course around no-go zones and subway construction projects. The riverside bike paths so familiar in Western cities are nonexistent.

SOURCE Bikes, China's icon, thrive despite car invasion

ELAINE KURTENBACH | July 7, 2008 07:27 AM ESThttp://www.huffingtonpost.com/2008/07/07/chinas-bike-culture-bikes_n_111144.html?just_reloaded=1

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Paris!

A New Fashion Catches On in Paris: Cheap Bicycle Rentals By STEVEN ERLANGER

Published: July 13, 2008PARIS — They’re clunky, heavy and ugly, but they have become modish — and they are not this season’s platform shoes.

A system for renting Vélib’ bicycles has become hugely popular in Paris, where about 20,600 of the bikes are in service. Self-service rental stations are ubiquitous in Paris. A year after the introduction of the sturdy gray bicycles known as Vélib’s, they are being used all over Paris. The bikes are cheap to rent because they are subsidized by advertising, and other major cities, including American ones, are exploring similar projects.About 20,600 Vélib’ bicycles are in service here, with more than 1,450 self-service rental stations. The stations are only some 300 yards apart, and there are four times as many as there are subway stations, even in a city so well served by its metro system.

A system for renting Vélib’ bicycles has become hugely popular in Paris, where about 20,600 of the bikes are in service.

Self-service rental stations are ubiquitous in Paris.

SOURCEA New Fashion Catches On in Paris: Cheap Bicycle Rentals By STEVEN ERLANGER Published: July 13, 2008http://www.nytimes.com/2008/07/13/world/europe/13paris.html?_r=3&oref=slogin

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Electric Bicycle Transportation SystemMonday, July 27, 2009 12:30PM - By Chris WeissWinners of the Future City Mobility competition, Marten Wallgren, Il Choi, David Seesing and Miika Hekkinen designed this project dubbed London Garden, envisioning a cleaner, more integrated future for London’s transportation. The design begins with electric bicycles that operate in three modes: standard; exercise mode, in which resistance is added to generate and store electricity; and electric, which uses stored electricity to power a motor. The foldable bikes are designed for community use and stored in bus stops modeled to look like trees, blending seamlessly with the natural landscape. The bus stops also generate electricity using sun, wind and rain water. The bicycles work in conjunction with electric buses and taxis, where they’re brought aboard and used as seats, bringing their energy reserve in for use by the vehicles. [via Tree Hugger]

Using the Bicycle

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Building Energy Efficiency?

Buildings today account for – up to 40 percent of the world’s energy

use and – are responsible for nearly 40 percent of

the world’s greenhouse gas emissions.

Technology is available today to reduce these by up to 70 percent.

– That’s as much as taking every single car, truck and bus off the road around the world.

With prompt action and smart policies, we can fundamentally and dramatically reduce the energy needed for the buildings we live and work in every day.

EXAMPLES from around the globe.

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Sustainable Vancouver ….

Vancouver, CanadaVancouver is a coastal city, home to more than 560,000 people, and was named the world’s most livable city by the Economist magazine. It’s proved to be not only the most livable, but also Canada’s model for using renewable energy sources.

Vancouver has an ambitious 100-year plan for clean and green living. The city already leads the world in hydroelectric energy, which currently makes up 90 percent of its power supply. It also plans to reduce its greenhouse gas emissions to levels 20 percent lower than reported in 1990 during the formation of the Kyoto P rotocol. Fossil fuels will be reduced with city investments in wind, solar, wave and tidal energy systems.

Additionally as part of its energy-efficient plans, Vancouver hasn't been shy with implementing emerging technologies. Solar-powered trash compactors have sprung up around the city, each the size equivalent to a normal trashcan but able to hold five times the waste (which puts fewer emissions-spewing garbage trucks on the roads).

SOURCE Sustainable Vancouverhttp://www.cityofvancouver.us/sustainability.asp

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Masdar Abu DhabiNORMAN FOSTER’S GREEN DESERT UTOPIA In Abu Dhabihttp://www.inhabitat.com/2007/05/09/norman-fosters-green-desert-utopia-in-dubai/

Not settling for mere zero-energy, Adrian Smith + Gordon Gill’s Masdar Headquarters are setting new design standards for green building, with their scheme that generates more energy than it consumes. The Masdar Headquarters building outside of Abu Dhabi is also the first building in history to generate power for its own assembly, using a solar roof pier that will be built first to power the rest of the construction.

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ChinaUS-China collaboration:

– Green Building Design: For the 2008 Olympics in Beijing China, the U.S. Department of Energy (DOE) teamed up with the Beijing Science and Technology Group to focus on developing green goals, one of them being the development of Chinese green building standards. With the assistance of Joseph Huang of the Lawrence Berkeley National Laboratory, the DOE also provided technical design review and energy analysis for the design of the Beijing Olympic Village.

– Sustainable Development: Heller Manus Architects based in San Francisco, California was selected by Guangzhou City, China’s third largest city, to develop and design a master plan based on eco-city and smart growth design principals.

– Smart Grid: Intel and the State Grid Corporation of China Lab worked together to develop grid modeling and simulation software, network isolation, power station automation, and applications of embedded technologies.

Guangzhou - China’s third largest city

Source Green Architecture And Building Reporthttp://www.gabreport.com/gabreport/2009/11/2nd-annual-uschina-green-energy-conference-a-catalyst-for-change-and-innovation.html

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Conclusion

Global oil production is at or near a peak

and a permanent decline will follow. Life and societies will change

forever: – our transport systems,

– how we produce food,

– where we work and live • esp in cities with tall buildings &

highways.

Local government policies need to be changed, if we are to have any chance of mitigating the economic effects of peak oil.

– The continued expansion of road and air infrastructure

– no longer makes any sense.

Food supplies should be our primary concern.

– In a world of constrained transport,

– food security will increasingly depend upon local supply.

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Where are we today?

Based on consensus it is likely that global oil production will ‘peak’ and go into sustained decline within the next few years if it has not done so already.

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Last word …

The most fundamental change needed is in the way people think. Local policy will be fundamental to the transition to a lean-energy future.

Thank You

CARTOONS from Ken Taylor: POST PEAK OIL CRISIShttp://www.islandbreath.org/2006Year/14-energy/0614-07PeakOilWorldView.html

READINGS

Peak Oil Primerhttp://www.energybulletin.net/primer.php

Life After the Oil Crash

http://www.lifeaftertheoilcrash.net/

Post Oil Citieshttp://www.postoilcities.org/?p=142

Prepared by

Harjono Zainal Abidin

QUORUM Oil & Gas Sdn Bhd

Kuala Lumpur

18-Mar-2010

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