SPE Distinguished Lecturer Program• HDI is a function of life expectancy, literacy, and GDP •So,...
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SPE Distinguished Lecturer Program The SPE Distinguished Lecturer Program is funded principally through a grant from the SPE Foundation. The society gratefully acknowledges the companies that support this program by allowing their professionals to participate as lecturers. Special thanks to the American Institute of Mining, Metallurgical, and Petroleum Engineers (AIME) for its contribution to the program. Society of Petroleum Engineers Distinguished Lecturer Program www.spe.org/dl
SPE Distinguished Lecturer Program• HDI is a function of life expectancy, literacy, and GDP •So, Energy Advantage refers to the quality of life benefits people derive from access
The SPE Distinguished Lecturer Program is funded principally through a grant from the SPE Foundation.
The society gratefully acknowledges the companies that support this program by allowing their professionals to participate as lecturers.
Special thanks to the American Institute of Mining, Metallurgical, and Petroleum Engineers (AIME) for its contribution to the program.
Society of Petroleum Engineers Distinguished Lecturer Programwww.spe.org/dl
Presenter
Presentation Notes
I am pleased and honored to be a part of SPE’s Distinguished Lecturer program and want to thank you for having me come to speak to you.
Preserving and Extendingthe Energy Advantage
Ben W. EbenhackUniversity of Rochester and AHEAD Energy Corp (501c3)
Society of Petroleum Engineers Distinguished Lecturer Programwww.spe.org/dl
Presenter
Presentation Notes
One of the great challenges of our time is going to be global energy transitions. We are inevitably approaching a peak in global petroleum production, while some 3 billion people in the developing world have not yet achieved transitions to modern energy. We need to understand the benefits that modern energy provides if we are to plan for providing those benefits to more of our world’s people, as well as for future generations. What do I mean by this?
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What Is the Energy Advantage?
• Energy is critical for survival needs
• Modern energy is the basis for all development
• UN’s Human Development Index (HDI) helps show the relationship between energy and development
• HDI is a function of life expectancy, literacy, and GDP
• So, Energy Advantage refers to the quality of life benefits people derive from access to energy
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The Energy PoorMore than half the world’s population (3.5 billion people) currently depend on biomass fuels. The numbers will likely increase unless there is major investment in modern energy services
− Source: World Resources Institute and International Energy Agency
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The Energy Poor are those lacking in Energy Advantage. This gentleman is posing for scale beside a fuelwood market in Ouagadougou, the capital of Burkina Faso. Many people think of fuelwood dependence as a rural phenomenon, but it is not exclusively Fuelwood demand in urban centers drives deforestation in some regions. In a panel discussion on energy in Accra, Ghana, the recently retired dean of the university there, rose from the crowd to state, “When I was a child, you could not see for the forests, now you can see as far as you want.” He attributed much of this to fuelwood dependence.
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Evaluating the Energy Advantage
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The UN’s Human Development Index is a quality of life indicator, based on life expectancy, literacy, and GDP. It can be seen to have a general correlation with Per Capita Energy Consumption.
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Heavy Energy ExportersOPECFSUOmanGabon Trinidad and Tobago
Two Distinct Trends
Presenter
Presentation Notes
The nations whose economies depend significantly on energy exports show a separate, but parallel trend to the rest of the world. The energy export dependent nations seem to plateau at a lower level. This is an interesting phenomenon to study, but not central to this talk. What is central is the reality that, when the different performance of the Heavy Energy Exporters is separated from the rest of the world, a clearer, more striking trend emerges.
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Three Regions of Energy Advantage
Presenter
Presentation Notes
There are 3 distinct regions of development vs. energy consumption. For the Energy Poor, a very small increase in energy consumption corresponds to a very large gain in Quality of Life. Once populations reach HDI of .7, much larger increases in energy consumption are required to increase HDI. Beyond a value of .9, more energy makes little or no difference. There is some good news here. It would seem that much of the energy consumption in places like the US is not necessary to achieve a high quality of life. Several questions are begged that merit further study: What is climate’s role? Does level of industrial production significantly affect the level of energy need? Nevertheless, it seems clear that increased energy can provide for great improvements for the world’s poorest and that there is room for conservation amongst many of the world’s most affluent people.
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What are the Baseline Energy Needs?
1000 kgoe(7 BOE)
2500 kgoe(18 BOE) Is there a
difference with type of energy used?
Presenter
Presentation Notes
It appears that energy consumption on the order of 1000Kgoe/cap/an provides for reasonable qualities of life, comparable to some of the progressive Latin American economies. Consumption must more than double to ~2500 Kgoe/cap/an in order to reach the levels of affluence seen in the affluent world. These ranges tell us something about target energy levels for a world transitioning to sustainable energy for all. But it begs a question about whether the type of energy makes a difference.
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What are the Baseline Energy Needs? Modern vs. Traditional
Mozambique: HDI 0.354; Per Capita Energy 422kgoe; Biomass 85%
Honduras: HDI 0.672; Per Capita Energy 489kgoe; Biomass 41%
For the Energy Poor Region, it will be as important to shift
to modern energy as to enhance consumption
Can we do this sustainably?
Presenter
Presentation Notes
Indeed, modern energy seems to provide much greater benefits than ‘traditional’ firewood and charcoal. Mozambique, with the lowest HDI for which all data are available consumes very nearly the same amount of energy as Honduras, which has twice the quality of life. One difference is that Mozambique is twice as dependent on fuelwood. There are a number of factors suggesting this makes sense: Difficulties in gathering/transporting firewood Health hazards from cooking over open fires (WHO estimates that smoke kills more people every year than malaria) Limitations on the energy product – not valuable for transportation, refrigeration, etc.
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Projected and Historical World Oil Production
1930 1950 1970 1990 2010 2030 2050 2070 2090
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Production Model
Extrapolation of Historic Trend
World Production Peak(~2030-2040)
Oil Embargo (1973)
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Iranian Crisis (1979)
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Assessing Energy Resource Values
Net Energy Resource Value
RESOURCE & TECHNICAL VIABILITY
• Abundance• Maturity of technology• Innovations required•Maintainability within society
SOCIAL ACCEPTABILITY
• Economics• Practicality• Versatility• Dependability• Mode of use
COSTS
• Direct (price)• Environmental• Depletion (of the resource and of other resources)
Presenter
Presentation Notes
Many people speak of energy alternatives (including some non-conventional fossil fuels) in a simplistic fashion that doesn’t account for inefficiencies in production economic value, versatility of the resource, consumer needs and preferences, etc. Thus, I propose that a new metric should be developed that takes all of these factors into account on a Life Cycle basis. Barrels of oil equivalent of oil shale do not compare to barrels of oil flowing from conventional petroleum reservoirs. Few of the popular alternatives have the flexibility or energy density that make petroleum such a desired commodity. Part of the obstacle for alternatives has been the historically low price of oil, but it has also been a failure to compete in consumer preference, reliabiilty, etc.
A Sweeping Transition is Coming –But It Won’t Be Easy for Alternatives
Presenter
Presentation Notes
It is the very magnitude of petroleum production – and the services it supports that create the greatest challenge. Consider the transition to petroleum from whale oil. Its production quickly dwarfed the whale oil with which it originally competed. The sum total of all of the ‘renewable’ alternatives, currently, after decades of development are dwarfed by petroleum. Nothing really stands ready to take over a significant market share from petroleum – except perhaps coal and nuclear, each of which have practical and social limitations.
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Value Added Comparisons:Petroleum, Wind, and Demand
Continued upward pressure on demand
Gap between oil Production and Demand – to be met by alternatives
Presenter
Presentation Notes
Consider, initially, the example of petroleum and wind. For the sake of this example, petroleum’s ‘Value Added’ is reduced by overall system efficiency losses (in drilling, production, transport, refining) and carbon emissions (using the relative value of carbon permit trading as an indicator). The value added remains very large. If we take the energy produced by wind, extrapolate its recent record growth and ignore any negative externalities, it still shows a very small contribution compared to the potential gap between growth in demand for petroleum’s value and the beginning decline of petroleum. The value added of wind remains small in comparison to the overall value of petroleum production after the peak. Of course, once we determine a good means to account for the negative externalities of wind, they should be subtracted from the Net Resource Value Added, bringing its contribution even somewhat lower. We should conduct such analyses, in detail, for every prospective energy source and develop plausible projections of expected Value Added for each resource over time. We are likely to see that some of the energy systems with potentially huge production are unlikely to enter the picture in time to help offset problems of peak oil: nuclear fusion experts are predicting 20-40 years before commercialization if all goes well. Even well-proven nuclear fission power plants take some 10 years to build – and in how many countries can they even be considered?
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Implications
• For the entire world to reach US levels would require an implausible expansion of energy consumption.
• Bringing the developing world to the levels of Spain or Italy would require the US and Canada to reduce consumption by 60%, while global energy production increases by 50%.
• Modern energy expands the benefits.
Presenter
Presentation Notes
The challenge is monumental. First, we must understand the centrality of energy to human welfare and the pressure which that applies to long-term global demand for modern energy. Bringing the world to the levels of American consumption would require more than doubling current global energy production – without considering any growth in population. (if it takes 50 years to bring modern energy to the rest of the world, global population will have nearly doubled – raising the bar to a factor of 8 increase in commercial energy. Even bringing the developing world up to the levels of Spain or Italy (comparable qualities of life to the US, with much lower energy consumption) would require a 50% increase in global energy, paired with a reduction of 60% in American energy consumption. A realistic balance between energy consumption for the developed and developing worlds needs to be carefully evaluated. I don’t claim to have the answer, but it will be critical to global (or even national or corporate) energy planning. To the extent that modern energy is developed, rather than expanding traditional biomass energy, the benefits to Human Development are realized more readily. This could reduce the absolute numbers of energy requirement, but that further underscores the burden for oil and gas.
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What Is Petroleum’s Role?• Modern energy is essential to the transition
• No single alternative can fill the gap left by depleting petroleum
• The versatility and energy density of petroleum remain important for some applications
• Oil and gas can play important roles in supporting the development and deployment of alternative energy systems.
• Can small-scale, localized development of oil and gas support development initiatives?
Presenter
Presentation Notes
The transition toward greater sustainability must recognize the need for modern energy, both for the affluent world that currently depends on it – and for the developing world to – develop. The services necessary for modern population densities clearly demand modern fuels. Even environmental considerations depend on modern energy: to protect forests from the wood-seller’s axe and to protect the air from the pollution of extensive wood fires. Even the fastest-growing of the alternative energy systems is not coming close to taking a noticeable market share relative to petroleum. We will need the alternatives – as much contribution from as many as really work. But we will need petroleum to sustain its production at the highest levels possible for as long as possible. It is simply critical to meeting global needs. High energy density liquid fuels are critical to transportation and account for more than half of US petroleum usage. One of many problems with ethanol is a substantially lower energy density, reducing vehicular cruising range for comparable fuel tank sizes. This also provides a serious challenge for hydrogen fuel cells. Current proposals that include transporting and storing hydrogen at pressures greater than 1000 atmospheres raise some serious safety questions. (While it is true that a composite storage tank for vehicular hydrogen has been tested to withstand being struck with a bullet without catastrophic failure, I would question how representative that is of the wide variety of failure opportunities that can exist in a real vehicle. Similarly, fueling and handling such high pressures raises questions.) Oil and gas may be called on to provide the baseline modern energy for developing nations. The versatility and energy densities, proven applications, and cost-effectiveness are all highly desirable for developing nations. Also, natural gas and kerosene provide for modern cooking that is reliable and the most similar in character and flavor to traditional cooking. Stripper scale production may offer an interesting example of how to use local oil and gas resources for local development.
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CONCLUSIONS
• Petroleum will continue to be a major energy source for the world long after its production peaks
• One of the great challenges for the affluent world lies in the magnitude of relatively cheap energy petroleum provides
•Conservation on the part of the most consumptive nations is essential – and need not reduce HDI
• The advantages of modern energy are critical for developing countries
• The combined challenge is large enough to be worthy of our industry’s combined efforts and commitment
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Geothermal .20 1,000,000 ~20% Toxic salt releases, if not fully recycled
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Biomass 1.24 300/a ? Pollutants, land use Mod
Oil Shale 0 ?? ?? CO2 , land use, tailings disposal,
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Rough Comparison of Energy Sources
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IModeling the Energy for Development Curve
Possible ParametersPrimary energy used (e.g. firewood vs. coal)
Years since sovereignty
Percent of resources exported
Necessary InformationHDI Present on backwards
PCEC Present on backwards
Significant World Eventssocial, technological and physical
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Peak Shape Analysis
Presenter
Presentation Notes
Because there is considerable upward pressure on global demand, the inflection point in global production capacity will constitute a shortage. This will represent a ‘market failure’ in which the demand cannot create new supply (promptly.) While most authors use a symmetrical production curve to illustrate the peak, there is no reason to expect it to be symmetrical – in fact, the likelihood of higher prices after the onset of a shortage will motivate more investments in EOR and aggressive exploration. There is a great deal of oil in the world that has been discovered, as sub-commercial. Higher prices will make revisiting previous exploration attractive. BUT all of this is likely to happen after the peak, slowing the decline, but not perpetuating exponential growth.
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Global Power Usage
BP, 2006
*Biomass represents 4% of all power usage but it is the dominant primary energy source used by half of humanity
Alternatives
Renewables
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Global Power Usage
BP, 2006
*Renewables, well under 2% total, need to come a long way
Renewables
Alternatives
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Energy and Gender Equity
Presenter
Presentation Notes
Biofuel dependence is especially hard on women and children because they are the ones that obtain the household’s fuel. Gathering firewood can lead them into remote areas where attacks are more likely. Time spent collecting firewood, upwards of 6 hours a day, limits the social and educational development of children, particularly girls, by keeping them out of school.�—Source: United Nations Development Program�
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Dubious Extrapolated Growth of Global Photovoltaic Capacity
from World Energy Forum, 5/30/2004; Source: Worldwatch Institute
GW
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Energy and Health
Stock.xchng image, used with permission
The pollution from cooking overopen wood fires causes 1.6 million deaths per year
Presenter
Presentation Notes
Cooking over open fires emits pollutants that cause 1.6 million deaths a year, half of them children. A shift from firewood to clean fuels can reduce indoor air pollution by 90% or more.� —Source: Bailis, Ezzati, and Kammen (Mortality and Greenhouse Gas Impacts of Biomass and Petroleum Energy Futures in Africa)�
The need for modern energy in the developing world will continue to provide upward pressure on global demand even after petroleum production peaks. The combined issues of providing modern energy for the 3.5 billion people lacking it and the impending global peak in petroleum production create an imperative to understand the phenomena and time frames. As a reductio ad absurdum, consider that even if all of the earth’s sedimentary basins were as oil rich as the Persian Gulf, a peak could be expected around 2100. (I don’t show that scenario as it would dwarf the more reasonable curves.) Using the high end estimate for ultimate global recovery of 6 trillion barrels, from GK Grossling (more than twice what most ‘peak oil analysts’ use), the peak is still likely before the middle of the current century. Careful viewing of the graphs also highlights the reality that a departure between the established exponential growth curve in demand and the productive capacity will occur at least a decade before the peak. The actual peak will likely be a longer, flatter plateau and the decline will likely be shallower than most peak predictions show. Petroleum will continue to be a major energy source for many decades after the peak. [Notes: - for lack of access to modern energy, see UNDP -typical ‘Peak Oil’ estimates, see Campbell, Colin, “The Coming Energy Crisis” http://www.oilcrisis.com/campbell/ - Ebenhack and Martínez, “Before the Peak: Impacts of Oil Shortages on the Developing World”, UNESCO, ISSJ 6/08
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