IEA's 2010 report and the outlook for peak oil - Nov 10
How to read today's big report on the future of energy
Steve LeVine, Oil and Glory (blog), Foreign Policy
The International Energy Agency -- the autonomous Paris-based research group funded by an array of mostly European and Asian governments -- has released its annual energy outlook (English language executive summary here), one of the most eagerly awaited big-picture prognostications in the business. The takeaway from this year's report, which was leaked to the Financial Times last week, is that governments matter: What they do, or don't do, about climate and energy policy in the next decade will determine what we pay for oil, and how much of it we have.
... It's all about China -- and natural gas. In the IEA's middle-of-the-road scenario, virtually all of the growth in energy demand between now and 2035 will come from countries outside of the Organization for Economic Cooperation and Development -- and more than a third of it will come from China. ...
The future of oil is unconventional: Canadian oil sands, Venezuelan extra-heavy oil, and an array of less important sources. The IEA expects production will quadruple from last year's rates by 2035, to 9.5 million barrels a day.
If you want to cut fossil fuel dependence, stop subsidizing it. In June the IEA released a report for the G-20 calculating just how much countries spend underwriting oil, coal, and gas use. The total tab for 2009 came to $312 billion. ...
Peak oil will happen -- if we want it to. We are likely to see oil production begin to fall in the coming decades, the IEA believes -- but because of demand, not supply. The peak could come as early as 2020, if more ambitious emissions reduction targets are met; otherwise, it will likely be another decade and a half down the road. "The message is clear," the authors write: "if governments act more vigorously than currently planned to encourage more efficient use of oil and the development of alternatives, then demand for oil might begin to ease soon and, as a result, we might see a fairly early peak in oil production. That peak would not be caused by resource constraints."
Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent.
(9 November 2010)
Steve LeVine is an EB contributor.
Has the World Already Passed “Peak Oil”?
Mason Inman, National Georgraphic News
New analysis pegs 2006 as highpoint of conventional crude production
The year 2006 may be remembered for civil strife in Iraq, the nuclear weapon testing threat by North Korea, and the genocide in Darfur, but now it appears that another world event was occurring at the same time—without headlines, but with far-reaching consequence for all nations.
That’s the year that the world’s conventional oil production likely reached its peak, the International Energy Agency (IEA) in Vienna, Austria, said Tuesday.
According to the 25-year forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day.
In this scenario, crude oil production "never regains its all-time peak of 70 million barrels per day reached in 2006," said IEA’s World Energy Outlook 2010.
In previous years, the IEA had predicted that crude oil production would continue to rise for at least another couple of decades.
Now, because of rising oil prices, declines in investment by the oil industry, and new commitments by some nations to cutting greenhouse gas emissions, the new forecast says oil production is likely to be lower than the IEA had expected.
(9 November 2010)
World Energy Outlook 2010 - Executive Summary (PDF)
International Energy Agaency
An 18-page PDF with major points of the complete three-volume report.
(9 November 2010)
Energy inaction will cost us trillions
... consider some of the projections the WEO-2010 [the just released report from the IEA] is making:
* Crude oil prices, it predicts, will rise from the average of $60 a barrel seen in 2009 to $113 a barrel in 2035. The problem is, as of today, Brent Crude futures were already trading at more than $88 a barrel — close to the $90 price the IEA doesn’t foresee until 2015. And this in a so-called economic recovery that doesn’t feel like one to many.
* As it has in the past, the IEA continues to assume fossil fuel production will keep up with rising demand, although it’s putting a greater emphasis on growth in natural gas liquids and unconventional fuels like the Canadian oil sands. And it’s basing its energy demand predictions on the hope that governments around the world will meet their stated energy and climate goals … which is optimistic, to say the least. Even under that scenario, demand is seen growing 36 per cent by 2035.
The late Matthew Simmons, author of “Twilight in the Desert,” would certainly have had a lot to say about the IEA’s latest energy predictions. But the new outlook also flies in the face of recent warnings from the UK Industry Taskforce on Peak Oil & Energy Security, the US military and a German think-tank, all of which released studies this year indicating that we have either already reached peak global oil production or will do so within the next two to five years.
(9 November 2010)
IEA releases World Energy Outlook 2010, “peak oil is an inevitability”
Dr Samuel Fenwick, Industrial Fuels and Power
The International Energy Agency (IEA) today launched its eagerly awaited World Energy Outlook 2010 at the Hotel Crowne Plaza Hotel in London. At the press conference, Nobuo Tanaka, executive director of the IEA, began by saying that “recent events have cast an veil of uncertainty over our energy future. In the wake of recession, the pace of economic recovery certainly promises to have a major impact on energy markets over the next few years.”
He highlighted the importance of government actions to energy security and climate change and explained that while considerable progress has been made in the past 12 months in terms of reducing fossil fuel subsidies and the promotion of low carbon technologies (partly due to commitments made by Copenhagen), such policies are not binding. Mr Tanaka went on to say that the new edition of the WEO marks a departure from previous efforts, in that it makes projections not just based on current policies (the so-called business-as-usual scenario), but also on likely policy developments (the new policies scenario), as well as the 450ppm scenario in which global warming is kept below 2˚C, a result that is now “very very difficult” to obtain.
In fact, the WEO 2010 indicates that thanks in part to the collective failure of Copenhagen, the cost of achieving this goal has increased by US$1tn, since the publication of the WEO2009.
The IEA states in no uncertain time that Peak Oil is inevitable, but the timing of the peak will be determined by a combination of government policy and the strength of demand in addition to the more commonly discussed issue of resource constraints. It sees crude oil output hitting an “undulating plateau of around 68-69mbpd by 2020″, while total oil production including unconventional oil and natural gas liquids is expected to peak at around 96mbpd after 2035, under the “new policies scenario”.
The IEA appears to shy away from the wider implications of this shift, such as the potential for the much higher costs associated with unconventional oil production to reduce the amount of net energy represented by oil output, which could actually fall despite an apparent increase in volumes and act as a brake on the world economy. It cautions that “if governments do nothing or little more than at present, then demand will continue to increase, supply costs will rise, the economic burden of oil use will grow, vulnerability to supply disruptions will increase and the global environment will suffer serious damage.
(9 November 2010)
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