2012, Fossil Fuel Reserves and Climate Change

Dec. 10, 2010. Updated Jan. 31, 2011, data revised Feb. 6, 2012, Notes added Dec. 29, 2013

Introduction

There is a community who believe that December 21, 2012 is a major and possibly catastrophic date because it is said to be the end of the Mayan Long Count calendar. The Mayans believed that one creation would end and another would begin. There is an entirely different community of oil industry experts and others who point at certain data and say that the fossil fuel reserves on which our civilization massively depends will soon be depleted. The Brazilian national oil CEO has suggested that production could peak in 2010 and fall short of demand in 2012. Then there is another group of media pundits and others who accept that fossil fuels are a finite resource but insist that we have plenty of time before they start to run out. There is even a few extreme optimists who think oil can never be depleted. Then there is a vast number of people who really don't want to hear that all the comforts and conveniences of our modern earth could ever decrease and readers who fall in this category are advised to leave this page now.

As a scientist interested in the future of my species, I felt obligated to look at these various opinions but none of the many web pages that touch on this topic had the full picture and thus could not provide a basis for a conclusion. I have therefore extracted all the relevant data in the Table and Notes below as provided by the US Government and various industry entities. The data is as reliable as it is possible to get. Many people have expressed the opinion that the stated reserves may be exaggerated since both countries and corporations can have strong inducements to overstate their reserves. Readers may well be familiar with instances supporting this idea, so I will not elaborate. However, one is still dependent on the data that is available.

Even though this is arguably the most sensitive subject such that most people would prefer not to even consider what the facts are, it has never been wise to bury one's head in the sand. Without good intelligence any cause will surely be lost and if we are to plan as individuals and nations we need an acute understanding of what we face.

Method

Reserve data is 'proven' reserves, that is reserves that have been proven to be economical to extract. Thus new reserves can always be found or proved or known reserves can be reclassified as proven or unproven due to a change of market circumstances. The method adopted is to establish the average rate of growth of consumption over the last decade, the average rate of increase of proven reserves (additions) and the current total reserves. From this a business-as-usual model can be used to compute how long these reserves will last. That is, for all years until the reserve level is zero, estimated consumption is subtracted and estimated additions are added giving the reserve level for each year.

How realistic is this approach? Will consumption continue at the present rate of growth? After studying the figures, most people would doubtless wish it would not. However, I'm sure there are many in China and other nations enjoying strong growth who will do their utmost to see that it does. It may be interesting to consider the harvesting of certain species that we like to eat. For example, the cod from the Grand Banks, the herring from the North Sea or the wonderful North American Passenger pigeon. In each of these cases, when the population numbers started to collapse, harvesting became even more intensive leading to a sudden catastrophic collapse. After all, people wanted the food and as numbers dropped, prices rose making it more attractive to hunt them. Of course, these are flock animals who were easily culled as they continued to flock to the end. However, some reserves will exhibit a similar behaviour as technology is used to keep up production. The Saudis pump water into their desert oil fields to keep them producing. Sadad al-Husseini, the former head of exploration and production at Saudi Aramco, is reported as saying that global production has reached its maximum sustainable plateau and that output will start to fall within 15 years, by which time the world’s oil resources will be “very severely depleted” (ref, ref). Man has a poor track record of easing off from some profitable harvest just because the resource was faltering. The harvesting will only slow if the remaining reserves are expensive to recover and the last few per cent of any reserve will likely never be recovered by commercial mining.

Another argument in favour of using a 'business-as-usual' model is that the publicly stated view of world politicians and the majority of economists and media pundits is that we can continue with business as usual for the foreseeable future. If they thought that fossil fuel supplies could not meet demand, they would have to give up any talk of future economic growth, given that growth has been shown to closely linearly correlated with increasing energy inputs and energy efficiency (e.g. Ayres, Structural Change and Economic Dynamics, 2004 and Stern, 2003).

The two main issues with the depletion estimates given below are a) how far will the actual run-down deviate from the business-as-usual curve and b) how overestimated are the remaining reserves when the increasing energy cost of extraction is factored in?

With regards to a) The main engine of economic growth in the world at the turn of 2011 is China. As can be seen from the Table, China has been increasing its fuel consumption rapidly. In particular, coal consumption has been increasing at double digits for at least a decade. However, the Chinese have just announced a 5-year plan which pegs domestic coal production at around current consumption levels. The plan, as reported, gave no indication of freezing consumption and that means that the incredible rising demand has to be supported from imports but it is highly unlikely that world exporters can ramp up to fully satisfy this demand as business-as-usual requires. This puts China on course for a growth correction in the near future that likely will leave the world economy flat.

Regarding b) the computation of depletion time assumes that the oil remaining is as valuable in energy-efficiency terms as the oil recently extracted. On the contrary, it is well-established that as production progresses, especially as one passes the half-way point of production, the energy cost of extraction rises sharply. The large and easy on-shore fields are found and exploited first and the very expensive deep water and unconventional sources last. Such production can stall well before the resource is fully extracted due to economic, political and climate phenomena reasons. In addition, most experts believe that the reserve estimates, especially of OPEC, are unreliable and overstated. All of this suggests that even if consumption falls well short of the business-as-usual model, these other factors may still make the depletion dates computed reasonable estimates. Of course, we won't run out, rather a trickle of supply (by current standards) will continue for many years supplying some high priority uses.

Are the estimates of the additions sensible? Looking at the oil data for the last 10 years, most regions show little change but Iran revised their reserves upward by a very large amount as did Venezuela. Inclusion of these one-off changes seemed unsuitable for a representative annual average so the additions were based on data from PetroBras (see Notes below) though these revisions are included in the proven reserves.

Results

The table and figures show that reserves of all the principal non-renewable reserves are running down and may be exhausted in the lifetime of many of the current population. If there is a shortfall of supply in 2012 as suggested by Petrobras data, then there will be another sharp increase in the oil price and financial shock. If economic activity drops sufficiently, supply and demand will come into balance and prices will moderate. This painful cycle will likely repeat, each time resulting in a reduction in global economic activity. While this will moderate demand it will also reduce funds for resource development as seen in the last two years. Thus, the pace of decline may not moderate substantially unless a clear strategy of rationing coupled with investment is adopted. Any conflicts over resources or any other matter, especially in the Middle East, could be very detrimental but are a serious possibility.

It is noteworthy that the US has shown no significant growth in its energy consumption over recent years. This is only party due to using 2009 data, which did show some declines in consumption and will slightly understate the size of the problem. Despite this, the increases for China are more than spectacular. Anyone can see that a long-term view suggests that zero growth is highly desirable, while understanding those in China and other industrializing countries wanting their moment of affluence. Unfortunately, at the current rates of growth, that moment can only be short.

After this is a short note about about climate change and why we should or, perhaps, should not worry about it. After all, as we see in Cancun currently, the nations will not firmly commit to moderate their emissions, but the run down of resources will enforce this anyway. Finally, the postscript at the end gives a positive view of the future giving the youth something great to aspire for.

World Oil Reserves World Gas Reserves
Oil (bbl) Reserves 2000 Reserves 2009 Consumption 2000 Consumption 2010 Average Annual Growth Year Depleted By (1) Year Depleted By (2) 
USA 22.05 20.68 7.2 7.00 0% 2013  
China 24 16 1.75 3.43 6.3% 2014  
World 1017.05 1341.57 28.02 31.33 1% 2045 2046
               
Dry Natural Gas (tcf)   2009        
USA 177.43 272.51 23.33 24.09 0.3% 2021  
China 48.3 80 .90 3.77 13.9% 2020  
World 5159.59 6289.15 83.33 115.45 3.0% 2042 2069
               
Coal (b sh. tons)   2008          
USA 260.55 1.08 1.05 0% 2249
China   126.22 1.24 3.70 10.4% 2025  
World   948.00 5.04 8.00 4.3% 2052  
Uranium (Ktonnes)   2010          
USA   207          
China   171          
World   5404   66.5   2092  

Table Notes and References

All figures for reserves and consumption, except for Uranium, come from the EIA, the US Energy Information Administration. Reserves are proven reserves (BP has higher values for US oil reserves). Blank cells are due to the information not being available except in the final column where computing this value for individual countries does not make sense due to the level of imports and the reliance on discoveries globally. Coal and Uranium additions are not computed in because these deposits are well known and the amount assessed as 'proven' fluctuates with the price as proven reserves are those that are economically recoverable. It should be noted that even if the price of coal rose, if the price of oil also rose, recovery costs could rise preventing a large increase in proven reserves. For coal, the BP Statistical Report for 2006 shows 909 b tonnes and, for 2009, 826 b tonnes so proven reserves are currently declining. A recent study from the California Institute of Technology that employs an S-curve fit to the production history states "The curve fits also indicate that 90% of the total production will have taken place by 2070."

Uranium data is not given by the EIA but has been gleaned from Wikipedia and NuclearInfo. Estimates of uranium depletion are varied and can be very optimistic but the optimists are including all the uranium in sea water and fast breeder reactors, both of which require technologies that are not currently existing. In fact the world abandoned development of fast breeder reactors a fairly long time back for cost and nuclear proliferation reasons. The depletion figure given above is based on estimates from the European Commission and the Australian Uranium Association and assume no growth in Uranium usage.

Depleted By (1): This is the year when reserves are zero assuming no additions to the proven reserves and no change in the current growth pattern. This and (2) are computed using the figures in the graph and the process described in Method above. The figures for the USA and China are hypothetical projections based on the countries relying solely on their own resources.

Depleted By (2): This is the year when reserves are zero assuming additions to the proven reserves at the average rate of the last decade. For oil, this is 3.4 mbd/annum (ref) and is a 2005-2014 average from PetroBras (the large Brazilian national oil major). Petrobras are anticipating future additions will come in below this leading to a likely supply crunch in 2012. The largest untapped resource of oil is that under the Arctic Ocean. According to a recent article in Nature, there is an estimated 90bbl of oil reserves there. That represents less than three years at the current global consumption rate even if it could all be extracted.  Increases in world dry natural gas reserves of 205.50 tcf/annum are derived from EIA. Proven Shale gas reserves appear to be factored in. For example, China has found an estimated 30 tcf of shale gas reserves and the table shows the Chinese gas reserves have risen by almost 60 tcf since 2000.

Climate Change

Climate change is a major topic of debate. Before 2000, the main concern was the imminence of another ice age, which was considered to be due based on long term patterns of climate data. These patterns may result from the various components of the Earth's orbit around the Sun and its wobble which change the insolation (heat from the Sun) (e.g. ref). It is thought that this ice age could be triggered by the melting of the Greenland ice shelf due to global warming. Now, people don't talk about an ice age because many models show global warming should compensate for any new cooling. Instead, we worry about rising sea levels and more extreme climate events. Despite errors by some climate scientists, it is overwhelmingly accepted that the world is warming.

While extreme climate events are not desirable, if we have chosen to burn all the planet's accessible stored carbon in a few years during a warm inter-glacial, it would be very helpful if temperatures stayed warm on average and we were not plunged into a deep freeze. Of course, it might still turn very cold but there is a chance that if we do burn all this fuel, the climate could tip into a semi-permanent warm phase as it has done before (e.g. see here and here).

However, there are reasons to be very concerned about the present warming trend. At a certain point of warming, a feedback mechanism starts where vast deposits of frozen methane in the permafrost and at the bottom of the oceans are released. As methane is 20x stronger as a greenhouse gas than CO2, this causes a huge acceleration in the warming. If one looks at the past temperature record, there are two earlier occasions when run-away greenhouse warming caused average temperatures to rise 4-6°C as could happen this century. The more recent one was the Cretaceous-Tertiary when the dinosaurs died out. The earlier occasion was the Permian-Triassic, which was the largest mass extinction known when 95% of marine species and 70% of land species were killed off. This event was triggered by massive volcanic eruptions in Siberia, which caused a strong greenhouse effect triggering a methane release in the oceans rendering them toxic. (See also here)

This is the main reason governments are concerned about global warming as the best science indicates a possible warming in this range and the permafrost is already starting to melt. It should be noted that the IPCC estimate of warming during the 21st Century has changed from 0.6°C in 1990 to up to 6.4°C in 2007. Each IPCC report raised the figure based on the latest estimates of greenhouse gas emissions (see here for why the IPCC may be over-estimating emissions). Despite Kyoto, no clear sign of any moderation has emerged. Moderation means some large industries have to change their practices and they generally have too much influence with policy makers for such changes to be mandated. It is clear mankind cannot self-regulate in this manner so the imminent turn-down in fossil fuel consumption as supplies decline becomes the only real player in this game.

While running out of oil will be very difficult and the population may drop significantly, if it prevents a catastrophic die-off of all larger animals, such as ourselves, our descendants will be very grateful. It would perhaps be much smarter to burn the oil slowly and do with much less than we have today for many more generations, but we are not that smart. Our main problem is the short human life span. We talk about the problems we are creating for our grandchildren but we do not change course. We think 'let us enjoy now, somehow they will solve it'. If we lived for a thousand years like the Biblical patriarchs are said to have done in Genesis, likely we would behave much more conservatively. Alternatively, if the concept of reincarnation became popular, then that would give a longer term perspective to human thinking. Can it really be true that what happens after our death is of absolutely no importance to us? It seems absurd apart from being intensively selfish. I observe that the average better-off citizen would accept a more moderate lifestyle if the facts were clearly explained to her or him, but there are many vested interests that will block more than token leadership in this area, at least for now.

Postscript

There are a number of interesting coincidences associated with peaks in fossil fuel consumption. After the firewood ran out at the end of the 1500s, mankind turned to coal which was less evenly distributed. Britain had a large amount that was easy to mine and was first in the serious coal mining business. The British Empire peaked in the early 20th Century, as the British coal production peaked (1913). Both declined thereafter.

The US took over helped by being the dominant oil producer for a while. The peak of production was around 1970 coincident with, arguably, the US's greatest achievement, putting a man on the Moon. The oil peak of the USSR coincided with their most famous achievement, the Mir space station, and now the global oil peak has coincided with the completion of the International Space Station.

This suggests that it will be difficult to mount a mission to Mars. The US President has already ruled out a return to the Moon. On the other hand, when outer technology peaks, the pendulum has always swung back to the study of our own extraordinary capabilities. It is a well accepted notion that we use only a small proportion of our mental potential and, though modern scientists have difficulty with the concept, our mystical traditions have often demonstrated capabilities which are very hard to explain by Newtonian Physics. One of our problems in physics is that the quantum world is so inconceivable to the Newtonian world-view that even the most brilliant physicists struggle to relate to it. That is why, perhaps, many of our greatest scientists have taken a deep interest in the mystical and even some textbooks start their chapters with quotes from the Vedic texts (such as Misner, Thorne and Wheeler's extraordinary tome Gravitation).

Thus, I predict that there will be a swing towards physical and mental health, both of which are arguably declining right now. There is already a rising tide of interest in people growing their own food. This will certainly help us get fit and eat in a healthy way. As large-scale agriculture falters with reduced energy inputs, home and small-scale production will accelerate. Faced with many difficulties, people will inevitably become more interested in religion and spirituality. Almost all religions prescribe practices, which some evidence suggests sharpens mental and sensory acuity. Thus, we will come to see a better world if we can avoid mutual annihilation. Some clues for the future are given here.

[Notes 29/12/2013: There is currently a boom in a relatively new source of oil and gas, that from shales. This has boosted US oil production almost back to the 1970s peak. As a result, the media pundits are talking as if the issue of declining oil and gas reserves has disappeared. Executives of the companies seeking funds for exploiting these and other hitherto unexploited sources of fossil fuel energy make claims that we can support our civilisation for 100s of years on the new sources of production. On the other hand experts on shale have taken to the Journal Nature (ref) and elsewhere to point out that shale wells produce abundantly in the first year or two and then decline dramatically and are generally played out in 5-10 years. The US official estimates are that US oil production will start declining again as soon as 2020. A few days ago the UK Telegraph newspaper had two articles about the proposal to mine coal reserves deep under the North Sea by converting it into natural gas in situ. One article stated that this could support UK's energy needs for maybe 200 years. However it was also stated that the total recoverable energy was equivalent to 2 billion barrels of oil (ref). In 2008 the UK's energy consumption was 1.7 billion barrels of oil equivalent (ref) and is similar today. thus these new projects will help but it is hard to see how they will significantly change the overall situation. World oil and gas consumption is so large that adding these new sources makes little difference, which is why oil prices have not come down much in the USA despite the boom. US gas prices have dropped but this is mainly because gas was not being exported and the current range of users is limited.]