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IEA Oil Report: “Time is Running Out”
Chris Nelder, GetRealList
Nothing Short of an Energy Revolution
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After some six months of leaks and previews, the long-awaited World Energy Outlook report from the International Energy Agency (IEA) is finally out. And in many ways, it is the bombshell we expected.
The agency struck a new tone of urgency in the report, as it sharply reduced its outlook for the growth of world oil production.
The opening paragraph was blunt and on the mark:
The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable – environmentally, economically, socially. But that can – and must – be altered; there’s still time to change the road we’re on.[1] It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution.
For the first time, the IEA included in its analysis a study of the depletion rates of the world’s top 800 oil fields. Why they didn’t include that crucial information in the past we don’t know, but as readers of these pages are well aware, it’s the hole in the bucket that is the very heart of the peak oil study.
The rates they found were high enough to surprise even me: 6.7%[2] for past-peak fields, increasing to 8.6% by 2030 (the end date of the report’s “reference scenario”). Averaged across all fields, the rate is 5.1%,[3] but that includes 3.4% for the very largest fields, 6.5% for the next-largest and 10.4% for the next size down.
This is important, because the fields being discovered today are all in the smaller categories. As the world’s largest and most productive fields, which are also its oldest, go past their peaks and into decline, the smaller newer fields with the higher depletion rates play a more dominant role.
… The only way I can see the IEA [optimistic] scenario coming to pass is under the opposite of Murphy’s Law, which Wikipedia tells me is “Yhprum’s Law.” That is, everything that can possibly go right, will.
… In sum, I don’t find their scenario terribly credible. Adding another 64 mbpd of oil production capacity from the existing, very well explored, and very well exploited resource base-a 74% increase over current levels-seems quite impossible even under the best of circumstances, let alone attempting it even as the largest fields are going into decline.
Which means that the real outlook for oil production and its cost is likely much worse than even this dire-sounding warning from the IEA suggests. And the outlook for renewable energy is even greater.
While the report certainly has its flaws, on the whole I think it’s a big move in the right direction for the IEA. It’s heartening to see them stepping up and addressing the twin devils of climate change and peak oil more directly, and I hope that the world is paying attention to its unflinching warning.
(13 November 2008)
The 2008 IEA WEO – The World Energy Model and Energy Demand
Rembrandt, The Oil Drum
The purpose of the World Energy Outlook demand forecast is to show future energy market trends assuming no new government intervention takes place. This is a useful exercise because it tells governments what they need to do now to prevent the realization of an undesired scenario presented by IEA. Such an exercise is useful only if the underlying assumptions sufficiently resemble reality. If not, politicians can be lulled into complacency and/or issue the wrong type of policy response, resulting in disastrous consequences.
In this post I review the demand model of the World Energy Model (WEM) used in IEA’s World Energy Outlook (WEO) 2008. My analysis indicates that the model has major deficiencies of a number of types. These include treating economic growth as an exogenous variable, when it is really depends on other variables, including the amount of fossil fuels available; inadequate analysis of the speed and price at which low grade fuels can be produced; and inadequate review of model outcomes compared to real-world data. Because of these and other issues, in my view, the model is not serving its intended purpose.
… Conclusions
… In order to improve future versions of the WEM and World Energy Outlook, I suggest that it would be worthwhile for the IEA to examine the following key variables/issues more closely:
• Feedbacks between supply, demand, economic growth and energy prices
• Identification of the increase in the energy cost of fossil fuel production in the future that is expected to occur because of a decrease in the quality of the remaining fossil fuels over time
• Review of the empirical relationship between economic growth and energy consumption
• Explicit identification of assumptions and limitations regarding the WEM in the management summary of the World Energy Outlook
(13 November 2008)
Must-read IEA report explains what must be done to avoid 6 degrees C warmin
Joseph Romm, Gristmill
The International Energy Agency is out with its World Energy Outlook 2008. I wrote last week about the report’s stark conclusions on oil. The IEA’s conclusions on climate are even starker: “Without a change in policy, the world is on a path for a rise in global temperature of up to 6 degrees C.”
The report does a good job explaining the practical difference between pursuing 450 ppm and 550 ppm. Yes, I’m aware that 350 ppm is a superior long-term target to minimize the risk of an ice-free planet and that the countless amplifying carbon cycle feedbacks mean 550 probably takes you to 1000 ppm and 6 degrees C anyway, but the IEA is not so up on all the latest, depressing science, and it tends to temper its climate desperation with some practical short- and medium-term energy and political realities.
(13 November 2008)
Kingdom stands vindicated after IEA report on Ghawar
Syed Rashid Husain, Arab News
When Fatih Birol announced that he and his team, while compiling their much awaited annual analysis of the energy world — The World Energy Outlook — would also undertake field by field analysis of the historical production trends of 800 major oil producing fields of the world — on which the world is dependent for its energy supplies — every one was taken by surprise.
… The IEA report on Ghawar, when seen in the above perspective, appears reassuring in many, many ways. It is music to ears in real, real sense.
The just released IEA report does not include Ghawar among the post-plateau fields, as production in 2007 was still less than 15 percent below the peak of 5.6 million bpd reached in 1980.
As per the ‘audit report’ compiled by Fatih and his team, Ghawar produced 5.1 million bpd of crude oil in 2007, down from a peak of 5.5 million bpd in 1980 (when the field’s capacity was fully utilized in response to the loss of Iranian production following the revolution.) and a recent peak of 5.3 million bpd in 1997. The observed post-peak decline rate is thus a mere 0.3 percent per year. Ghawar is still at the plateau phase of production, the report underlined — and this must get steam out of the peak oil bogey — one can’t help assuming.
The IEA report specifies that Ghawar has been developed in distinct stages, which have progressively raised the field’s capacity keeping the field at plateau. The most recent project involving the Haradh area in the southern part of the field was completed in 2006, tripling capacity to about 900,000 bpd. This has helped to offset natural declines in other parts of the field, the report agreed.
“The overall capacity of Ghawar is sustained by infill drilling and well work-overs to maintain flow pressure in various parts of the field. Reports suggest that enhanced oil recovery techniques are being used to boost capacity in the mature zones of the Shedgum and Uthmaniya areas, where extensive drilling programs have recently been undertaken,” the report added.
Coming form a second party, the above definitely enhances the credibility of the Kingdom. After all whatever Riyadh has been claiming all these months and years had some basis, one feels like strongly underlining here. Let’s give credit where it is due.
And by the way, many people, me including, could definitely heave a sigh of relief and go to bed with some comfort. After all we are not running out of crude. Thank you Fatih!
(14 November 2008)
IEA Says Fading Oil Production Threatens Supply
Guy Chazan, Wall Street Journal
Production at the world’s oil fields will decline faster in coming years, putting more pressure on future oil supplies, the International Energy Agency said on Wednesday.
As current fields fade with age and the industry moves offshore and into smaller fields, decline rates will accelerate, the agency found, and more investment will be required to make up the shortfall.
The Paris-based watchdog, which represents the interests of energy-consuming nations, made its prediction in a detailed analysis of 800 of the world’s oil fields — the first report of its kind.
Its conclusions are likely to deepen the pessimism about long-term oil supply that is taking root among some oil executives, economists and market analysts
(13 November 2008)
IEA’S dire warning (video)
Brett Harris, Business News Network (BNN)
The International Energy Agency is issuing a dire warning which could have a direct impact on the Canadian dollar and energy prices. The agency says investment in global exploration is not enough to meet expected increases in oil and gas demand…and the financial crisis is making the situation worse.
(13 November 2008)
Report urges fuel revolution
Matthew Knight, CNN
The International Energy Agency has called for a global energy revolution to ensure future supplies and to stem the rise of greenhouse gas emissions.
The IEA said the economic crisis must not delay urgent action on energy supplies and emissions.
The IEA said the economic crisis must not delay urgent action on energy supplies and emissions.
In its annual report — 2008 World Energy Outlook (WEO) — published this week, the agency describes the world’s energy system as being “at a crossroads” and calls for traditional supply and consumption methods to be overhauled.
Nobuo Tanaka, Executive Director of the International Energy Agency (IEA), said: “Current trends in energy supply and consumption are patently unsustainable — environmentally, economically and socially — they can and must be altered.”
… In a statement, the WWF welcomed the IEA calls for an energy revolution and described the IEA’s climate friendly scenario as “truly ambitious compared to earlier IEA scenarios.”
“Governments have shown that they have a pivotal role in regulating the financial markets,” said Dr Stephan Singer, Director of WWF’s Global Energy Program. “They need to assume a similar role in relation to energy markets and their emissions into the atmosphere.”
(1X November 2008)
Energy revolution vital
Marian Wilkinson, Sydney Morning Herald
WITHOUT an energy revolution to create cleaner power, warns the world’s peak energy body, global greenhouse gas emissions will rise to a level that could increase temperatures by six degrees by the end of the century, triggering catastrophic climate change.
In its annual World Energy Outlook, the International Energy Agency also warns that oil prices could rise to $200 a barrel by 2030 as the demand for energy, driven by India and China, continues to soar.
The disturbing report was released last night as the Australian Coal Association launched a new $2 million advertising campaign to win public support for “clean coal technology”, which it has rebadged as “NewGen” or new generation coal. The campaign is designed by advertising guru Neil Lawrence, who led the “Kevin 07” marketing, with research by a long-time Labor pollster, John Utting.
… But the head of the IEA, Nobuo Tanaka, warned just last month that many questions remained over clean coal technologies, known technically as “carbon capture and storage” or CCS technology. The process is designed to capture carbon dioxide from coal-fired electricity plants and store it in secure underground beds. Only four full-scale clean coal projects exist in the world, and none successfully captures carbon dioxide from a fully-operating coal-fired plant.
(13 November 2008)
International Energy Agency raises alarm on oil, climate
EurActiv
In this year’s World Energy Outlook, the International Energy Agency (IEA) breaks with its tradition of allaying concerns about the availability of oil. Instead, it calls for an urgent transition to a more sustainable global energy system to avert a potential climate catastrophe.
… The report is expected to stir up the peak oil debate, which is often embroiled in the distinction between access to oil and actual levels of remaining reserves of crude.
Irrespective of how much oil actually remains available on the planet, major structural changes are taking place in the global energy system, whereby oil reserves are increasingly under the control of non-OECD countries, the IEA points out in the report. Oil companies say this change restricts not only their access to fields but also their ability to act based on market principles, whereby supply and demand levels, profits, and access remain stable. National governments, meanwhile, have little incentive to verify real reserve levels and to report on those levels in a transparent manner.
BP Chief Economist Christoph Rühl, who has “no reason to accept [peak oil] as a valid statement either on theoretical, scientific or ideological grounds,” told EurActiv that “there is no resource constraint at the moment for oil” (EurActiv 01/10/08).
But Rühl admits that surging demand in developing countries and global fossil fuel supply constraints are creating volatility in energy markets and will keep prices up over the long term.
(13 November 2008)
