last updated: February 20th 2003
In the 21st century the world must solve two great problems. These problems are rarely discussed by the public and have received little media attention. Neither are they discussed by those in power, at least not publically. The two problems are:
Of course it's all about resources: Either too many people consume a few resources each totaling a lot of resources, or a few people each consume too many resources again totaling a lot of resources. What is important to note is the absolute consumption, not the relative consumption.
It is difficult to differ between the developing world and the developed world, but the canonical values usually used are that:
Today (spring 2002) there are about 6,200 million persons in the world. In 1998 energy was consumed at a rate of about 12.69 (US) trillion Watts (12.69TW) [USGSE98].
I have reasons to believe that
The problems mentioned above have similarities and they are not separated as the developed world interacts with the developing world in many ways. The problems in the developing world are water shortages, droughts, floods, famines, forest losses, soil erosion and loss of biodiversity. These all decrease the carrying capacity of the life support system. The number of people and their behavior determine the rate of loss of this support system. Usually their behavior is motivated by personal survival instincts. E.g. energy is required to cook and make the available low-quality foods edible, but as most of the trees have been cut down already, dung is collected and burned which in turn decreases soil fertility and increases erosion. Many of these people already live using a minimum of resources. Their problems are determined by their huge numbers which increase rapidly since most choose to have many children.
The problems in the developed world - and these problems are not so visible - are pollution, damage of eco systems, loss of biodiversity, loss of forests, soil erosion and depletion of the mineral and energy resource base on which their society is based. The loss of resources is determined by the behavior and rate of consumption of these people. Their behavior is motivated by greed - to sell and buy an increasing number of consumer goods, but also by necessity, since it is easier to successfully fit into society and swim with the stream than to drop out or swim against the stream. Their problem is their overconsumption and dependence on a great and cheap resource base to fuel their economy and the setup of their society.
These problems are grand in scope and it is unfortunately impossible to be an expert on all aspects of the problems. Experts tend to focus too much on their own area and might even be completely ignorant on other areas which is worse, but with this caveat in mind, I will try to give a general non-expert overview of the problems facing the developed world. The developed world consume the greater amount of power which indicate that they also have the greater power in the geopolitical sense. Furthermore I am lucky to live in the developed world, which makes a focus on this part of the problem personally relevant.
In dealing with several problems it is worth to spend time singling out the most important problem of the set such as not to waste too much time on relatively trivial matters. I believe that the primary problem is that of a sustained energy supply. Energy unlocks all other resources. Energy is required to transport raw minerals, to refine these, to manufacture goods, and to transport the goods to their destination. Without energy none of these functions which are essential to society are possible.
Today the primary energy source is oil. Oil accounts for 40% of all energy use [USGSE98], therefore continued access to this resource or an equivalent or an improved replacement is essential to continue the world as we know it.
A reader with some foresight may suspect that I believe that continued access to the oil resource is not possible. He may also suspect that I do not believe that any immediate replacements exist. He would be absolutely correct. Now I will try to explain why.
To solve a problem one must understand the magnitude of the problem. To reiterate previous numbers energy is consumed by humans at a rate of about 13TW (1TW equals one (US) trillion Watts). A very large fraction (around 40%) comes from oil. Oil is therefore the primary energy source, and it is the primary energy source which should concern us.
The world consumes 77 million barrels (one barrel is 42 (US) gallons or 159 (SI/metric) liters) of petroleum daily, which makes 26 billion barrels annually. The largest extractors are Saudi Arabia, the United States, Russia, and Venezuela. The largest exporters are Saudi Arabia, Russia, and Norway.
A nuclear power plant produces about 0.5-1.0GW. It does not run continuosly and is offline some 20-40% of the time. A rough calculation shows that a replacement of the energy of oil by nuclear energy will require the construction of at least 5,000 nuclear power plants. A modern off-shore wind turbine produces about 2MW depending on the wind speed. Hydroplant power depends on the site, so I can not give an estimate. Solar power using PV cells depends on the sun facing area of the cells. I do not know the output of coal or gas fired plants. If anyone has some good numbers, please tell me.
These numbers do not tell the entire story. A nuclear power plant produces electricity, and one can not use electricity to make plastics, fertilizer, and a whole bunch of other industrial products. Additionally the world's transportsystem is based on the internal combustion engine which in terms of output/mass is much more effective than any other engine (steam, Stirling, electric, etc.) only gas turbines are more effective, but they are not as robust, and they also depend on fossil fuels. Electricity is an inconvenient source of energy for many purposes. It is only transportable through batteries, by cable, or by converting water into hydrogen. Both conversion methods loose energy in the process, especially the former. In conclusion oil is a source of energy as well as a mineral source which is difficult or impossible to replace.
Do not forget Leibig's law. Even if the energy problem is solved the world will still be facing water shortages, topsoil loss, and loss of biodiversity. One can only hope that possible replacement sources will be used wisely.
Now I will explain why these substitution calculations are not mere academic exercises.
Generally the easy to reach and rich resources will be found and used first. These resources can be exploited using simple technology and often a hole in the ground in the right place which is not so hard to find will do the trick. Later more complex technology is required. Oil fields will be smaller, require more effort, and ultimately yield less oil than the first big fields. Later still, advanced technology like 3D or 4D seismic searches, directional drilling, steam injection, and drilling in difficult terrain like off shore or arctic conditions is required. At some point the effort, namely the energy which goes into the process i.e. of manufacturing drilling rigs, actually finding the oil, keeping the crews supplied, and getting the oil to the surface will surpass the energy yield at which point further drilling makes no sense. Presently the limits are determined by economical arguments i.e. the money-price of oil since the energy yields are still much greater than the energy efforts. If the development of an oil field will cost less than the estimated price of the oil which is pumped up the field will be developed.
There is some uncertainty attached to the estimation of oil resources. Although it is reasonably clear how much oil has been extracted from the ground (cummulative production) and what the current rate of extraction is, it is debated how much oil is actually left (resources) and how much of it will be extracted (reserves).
It turns out that there are actually two quite opposing views, because people confuse reserves with resources and tend to focus too much on one or the other. Reserves include the amount of oil which can and will be extracted with a given probability. The P90 reserve i.e. the amount of oil which can be extracted with a 90% probability is usually refered to as proven reserves. A P50 reserve is called proven and probable.
The two different views are:
Please keep these differing views in mind while reading the rest of this section.
Governments and oil companies some of which have economic turnovers compared to the BNP of entire countries might not benefit from revealing their true reserves, since many political and economic decisions depend on these numbers. Thus data are divided into freely available official data and confidential "technical" data which determine the development strategies of the oil companies. The freedom in reporting official data leads to so-called "reserve growth" which is not true growth, since the amount of oil in the ground does not increase, but an increase in the reported official number.
Reserves are inherently unknown, but they can be estimated within a range and assigned to a probability. A P90 estimate denominate the amount of oil which can be extracted economically with a probability of 90%. Naturally a P10 estimate will be higher than a P90 estimate, and oil companies are free to report whatever number suits their purposes. Usually they will not even give the probability but simply give the official reserves.
Economists may then add all these official numbers and arrive at the total world reserve which tend to grow suggesting that more and more oil is discovered/available. This growth is not surprising. Initial estimates will be conservative since a company would develop the field only if they were quite sure that the investment would be returned. As the initial estimate is conservative, later times will demonstrate that the field most likely contains more oil. US companies are required by SEC to report "proven reserves with a reasonable certainty". As the fields are likely to be bigger than what is reported most likely the reserves will "grow" in subsequent reports. Updating of the official number will tend to increase the stock value of the company.
The opposing view is that the initial estimate was wrong and the reserves (amount of oil) has not grown. Instead of marking the increase as newly discovered oil the addition is backdated and added to the original estimate of the size of the field at the time when it was first discovered. This gives a discovery curve which has been corrected for wrong initial estimates.
Today about 6Gb are discovered and 26Gb are consumed each year. Since oil has to be discovered, before it can be extracted the known reserves are being depleted. This is clearly not sustainable. Next I will consider why the rate of extraction is more important than the final amount which will be extracted.
Policy makers have previously been concerned with R/P ratios to strategically account for resource depletion. R/P means the total amount of reserves divided by the current production rate. This number does not take into account that the reserves may grow, and in particular it does not consider that the extraction rate will change later on. The R/P ratio gives the false impression that the current rate of extraction can continue for a time of R/P until we one day abruptly run out. In a more realistic scenario one would expect that the extraction rate would decrease and finally slow to a trickle after which it might not even be feasible using either money-economy or energy-economy to extract the last drop. In that case the resource might in principle last forever, but that is irrelevant to society. What we are interested in is the extraction rate, at present and in the future. The extraction rate determines the amount of oil which will reach the market in the near future. After it has passed through the refineries and the distribution system the free market will try to determine the market value. The market value is quite susceptible to the supply rate. So-called swing producers use this to control/increase the prices. Oil importers can counteract/decrease the prices by selling oil from their strategic reserves to the market or by decreasing their demand, perhaps involuntarily.
Adding the extraction rates for all the wells in an oil field gives the total extraction rate for the field as a function of time. According to the central limit theorem the total extraction rate of several such fields is distributed as a Gaussian (bell shaped) curve, if they all have the same individual distribution. The integrated area under this curve is the total amount of oil which will ever be extracted. It is evident from the curve that the extraction rate will decrease after half of the oil has been extracted. This point is called the peak year. The peak year is dependent on the estimate of the total reserves.
It is not known when the extraction rate will peak. There has been a few local peaks in history, so the peak year will not be known until several years after when it can be confirmed that the extraction rate will never again reach its previous maximum.
The peak year depends on the total amount of oil(unknown), the future extraction rate (unknown) which is correlated to future demand(unknown). Prediction is a highly uncertain business. People have been wrong before and they will be wrong again. However, what is important is not the exact peak year rather it is a range of years. Everybody who subscribes to the Hubbert school calculate a peak year within the next two decades. The most popular year at the moment of writing seems to be around 2007. This is certainly within the life time of most people alive today.
It is obvious that oil has to be found before it can be pumped from the ground. A plot of the (backdated) discovery curve shows the extraction curve lagging by about 40 years. The discovery curve peaked in the 1960s.
One can get a good estimate of the total reserves by plotting the integrated discovery rate. This graph approaches an asymptotic value as the newly discovered fields are becoming increasingly smaller and more rare. Such a plot is called a creaming curve.
The world consumes energy at a rate of about 13TW and petroleum accounts for 40%. Predictions estimates a world drop in supply by 3%/a with less in some regions and more in other regions e.g. the North Sea. Therefore the world must find a substitute and construct and bring it online quickly enough to alleviate the effects of a diminishing oil supply after the peak year.
Using the above figures about 150,000 MW has to be brought online each year for the next several decades in order to continue to meet demand which will increase if possible. Compare this number to a large nuclear power plant (1000 MW) or a modern off-shore wind turbine (2 MW).
Obviously the current energy infrastructure is not designed to handle alternative forms of energy so this has to be replaced. Neither are the current users like aeroplanes, ships, cars, etc. These will have to be replaced as well.
Some replacements under consideration are listed below.
The population pressure of the developed world is already quite high. It has been estimated that 30-40% of the biosphere is already exploited by the human species leaving the rest for all other species. Gains in efficiency allows a further increase of the number of humans which will increase the other limiting factors. Furthermore gains in efficiency e.g. more fuel efficient cars, efficient lighting, etc. is typically eaten up by increased use of the efficient device as long as the rate of use is has not reached its natural maximum limit. This is also known as Jevon's Paradox.
These sites and articles are good points to start learning about the Hubbert peak and the interplay and relevance of other energy resources.
The consequences of a decline of the power available to the world is not understood. Different scenarios are suggested. They can adequately be divided into slow crash scenarios and fast crash scenarios. Nobody knows what will happen but everybody seem to have an opinion. Judge for yourself!
As for the format the full address is given in the hyperlink to assist those who print out the page. Most links have been culled from the ER discussion group. The most recently added links are at the bottom of this list.
Many thanks to Murray Duffin, Jean Laherrere, Kristian Mandrup, Ted Swarts, and Robert Wilson for helpful comments, corrections, and suggestions. Of course any remaining errors are entirely the fault of the author.
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Copyright © 2002,2003 by Jacob Lund Fisker. This material is subject to the terms and conditions set forth in the Open Content License, v1.0 or later (the latest version is presently available at http://www.opencontent.org/opl.shtml).