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Hubbert peak theory

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The Hubbert peak theory, also known as peak oil, is an influential theory concerning the long-term rate of conventional oil production and depletion. Geophysicist M. King Hubbert created the theory as a mathematical model for use in predicting the rate of future oil production and subsequent depletion for an oilfield, as well as the combined production of multiple oil fields of entire regions or nations. Before Hubbert's model no one had created a model that accurately predicted the rate of future oil production applicable beyond a single oil well.

Given past oil production data the model predicts the date of maximum oil production output for an oilfield, multiple oil fields or an entire region. This maximum output point is referred to as the peak. The period after the peak is referred to as depletion. The graph of the rate of oil production for an individual oil field over time follows a bell shaped curve: first a slow steady increase of production, then a sharp increase, then a plateau (the "peak"), then a slow decline, and finally a steep decline. In 1956 Hubbert accurately predicted the peak of oil production would take place in the early 1970s for the continental United States. In 1971 he predicted, using high and low estimates of global oil reserve data available to him at the time, that global oil production would peak between 1995 and 2000. This peak has not occurred, and the implications for the model are controversial with some petroleum economists, such as Michael Lynch, arguing that the Hubbert model is unapplicable globally. [1] On the other side are those such as Colin Campbell who argue that the Hubbert model is fundamentally correct and that the world faces the start of oil depletion between 2004 and 2015 potentially leading to a major global crisis in the early 21st century.

One piece of data in this argument is the World Petroleum Assessment issued by the United States Geological Survey [[2]]. Its estimates based on current recovery rates is that there are enough petroleum reserves to continue current production rates for at least 50 to 100 years. Reactions to this estimate vary with Campbell arguing that the USGS estimates are methodologically flawed and that there will be a peak in global oil production anywhere between 2004 and 2015. Natural gas is expected to peak anywhere from 2010 to 2020. By contrast, Lynch argues that the USGS estimates are too pessimistic citing the fact that previous estimates by the USGS have consistently underestimated oil reserves available. As would be expected by any theory that predicts future fuel shortages, the Hubbert model has significant political and economic foreign policy ramifications.

The Hubbert peak theory is most often applied to oil but is applicable to other fossil fuels such as natural gas, coal and non-conventional oil. Conventional oil is oil extracted using the traditional drilling an oil well method. Non-conventional oil sources require more complex and inefficient extraction technology and currently account for just a small fraction of global oil production.

The Hubbert curve, devised by M. King Hubbert, predicts future oil availability.

The theory

In 1956, Hubbert created a mathematical model of petroleum extraction which predicted that the total amount of oil extracted over time would follow a logistic curve. The predicted rate of oil extraction at any given time would then be given by the rate of change of the logistic curve, which follows a bell-shaped curve now known as the Hubbert curve.

The general trend of oil availability both for a single oil field or entire region barring extraneous factors such as lack of demand follows the Hubbert curve. When an oil reserve is discovered, production is initially small because all the required infrastructure has not been installed. Step by step, more wells are drilled and better facilities are installed in order to produce an increasing amount of oil. At some point, a peak output is reached that can not be exceeded even with improved technology or additional drilling. After the peak, oil production slowly but increasingly tapers off. After the peak but before an oil field is empty another significant point is reached when it takes more energy to recover, transport and process one barrel of oil than the amount of energy contained in that one barrel of oil. At that point oil is not worthwhile to extract and that oil field is abandoned. Hubbert peak theory proponents claim this is true regardless of the price of oil.

When people use the term "the end of cheap" oil, they are referring to two things: price increases due to scarcity, and, the increasing inefficiency of oil production (cheap from both a monetary and energy efficiency perspective). When oil production first began in the early 20th century at the largest oil fields 50 barrels of oil was recovered for every barrel of oil used in the extraction, transportion and refining processes. This ratio becomes increasingly inefficient over time; currently 1-5 barrels of oil are recovered for every barrel used in the various recovery processes. When this ratio reaches the point where it takes 1 barrel to recover 1 barrel, then oil becomes useless as energy. At that point all energy used to extract oil would result in a net energy loss; society would be more efficient and better off using that remaining energy elsewhere.

The law of conservation of energy states that energy can not be created, only converted. Despite appearances, even oil adheres to this law of nature. Oil is just a quirk of geologic history when a finite amount of organic matter decayed underground millions of years ago. Except for geothermal power, tidal power and nuclear power all available energy flows and energy reserves (including oil) on earth are or were ultimately provided by the sun.

Background

Hubbert, in 1956, accurately predicted oil production in the lower-48 United States would peak in the early 1970s. U.S. oil production did indeed peak in 1970, and has been decreasing since then. According to Hubbert's model, U.S. oil reserves will be exhausted before the end of the 21st century. Huge easily exploitable oil fields are likely to be a thing of the past. Hubbert peak theory while controversial, is increasingly influencing policy makers both within the oil industry and government, however significant criticisms exist. Proponents of peak oil theory point to the fact an increasing percentage of oil fields are either begining depletion or are already depleted. Critics argue technology advances and higher prices will allow for the recover of conventional resources previously thought unrecoverable and the exploration of new oil fields.

Exacerbating the potential oil depletion problem is the increasing global demand for oil due to Population growth and increased global economic prosperity. In a recent year 25 billion barrels of oil were consumed world-wide, while only 8 billion barrels of new oil reserves were discovered. In 2004, world consumption of crude oil is on track to surpass 82 million barrels per day, 30 billion barrels per year. This puts consumption equal to production, leaving no surplus capacity. Even if there are temporarily sufficient oil reserves that could be used to meet rising global demand, there is an unknown limit on the increase of oil production capacity absent additional investment in oil production, transportation and refining facilities.

Oil production outside OPEC and the Former Soviet Union states appears to be following a Hubbert Peak pattern

Implications of a world peak

The implications of a world peak or lack thereof are large. Economic growth and prosperity over the 20th century has been due to the use of oil as a fuel and fertilizer. A belief there will be a world peak in oil production followed by a sharp decline implies that much of the lifestyle and prosperity of the 20th century is unsustainable and resource limitations will force a drastic change in the way that people live. By constrast, the belief that the Hubbert model is fundamentally incorrect that humanity is no where near the fundamental limits of oil production implies that the prosperity and lifestyle that has occurred in the 20th century is not unsustainable, and that no drastic limits on resource consumption are required.

This argument also impacts development in the third world as it touches on the question of whether it is possible for the vast majority of humanity to live at standards of living currently found in the United States and Europe. Pessimists argue that resource limitations make this scenario impossible, while optimists strongly disagree.

Catastrophe

Some believe that the decreasing oil production portends drastic impacts for human culture and modern technological society, which is currently heavily dependent on oil as a fuel and chemical feedstock. Over 90% of transportation in the United States relies on oil. Some envisage a Malthusian catastrophe occurring as oil becomes increasingly inefficient to produce. No other known energy source is as cheap (to extract), as easy to transport and contains as much energy as oil.

Market solution

A market solution is the belief that the rise of oil prices due to scarcity would stimulate investment in oil replacement technologies and/or more efficient oil extraction technologies. One challenge with both non fossil fuel based energy production and non-conventional oil extraction is the fact that these alternative energy sources rely on the very conventional fossil fuels they are intended to replace for their construction, were conventional oil and natural gas to become more expensive because of scarcity, alternative energy production costs would grow more expensive in kind. Presumably, as the rising energy costs exceed the labor costs of construction, and as long-term interest rates drop to match the falling productivity of an energy-starved economy, other sources of energy would become increasingly more attractive. However, critics argue that market solution proponents mistakingly base everything in terms of money, i.e. they only consider the price of oil when in reality the important metric is energy efficiency which is the ratio of extracted energy over energy used by the extraction and refining processes.

In addition, some critics believe that a market solution is likely to result in profiteering by energy suppliers from the price shock due to the scarcity of oil and artifical scarcity of replacement sources of energy, rather than providing a smooth transition from oil to other fuels.

Increased fuel efficiency

Any moderate oil price increase is expected to stimulate an increase in transportation fuel efficiency. This would postpone and lessen the impact of severe oil shortages. In addition, some governments currently mandate a minimum fuel efficiency standard for automobiles.

Political implications

As of 2004, the United States economy is the world's largest user of oil, with a historical reliance on what have been, and still are, some of the world's lowest oil prices. Its position as the global hyperpower rests on its economic supremacy, which in turn depends heavily on oil. At the same time, the world's largest oil reserves are held by Saudi Arabia, followed by those of Iraq, the United Arab Emirates, Iran and Russia. If a Hubbert Peak were to occur, and oil were to become a progressively more scarce commodity, it would be reasonable to expect massive political and economic tension between its principal consumers and producers.

Some observers see the 2003 U.S. invasion of Iraq as the beginning of a geopolitical struggle driven by anticipated oil scarcity, whereby the U.S. will seek to establish a long-term military presence in the Middle East in order to be able to maintain oil supplies, by force if necessary. Others view this as a conspiracy theory with no basis in fact.

Alternatives to conventional oil

Nuclear power

Nuclear power is the process of generating electricity from nuclear fission. The long term radioactive waste storage problems of nuclear power have not been solved, one proposal is to entomb it inside Yucca Mountain, Nevada. The U.S. would require at least an 11 fold increase in nuclear power production to replace both the current amount of electricity generated from fossil fuels and gasoline usage. This likely would involve using hydrogen as an energy carrier (see below) which adds inefficiency, perhaps increasing this ratio. There may be a limited supply of Uranium and other minerals such as Thorium for use as the fuel for nuclear power.

Fast breeder reactors are another possibility. As opposed to current LWR (light water reactors) which burn the rare isotope of Uranium U-235, they produce Plutonium from U-238 and then fission that to produce electricity and thermal heat. It has been estimated that there is anywhere from ten thousand to 5 billion years' supply of U-238 for use in these power plants - and that they can return a high EROEI (energy returned on energy invested) and avoid some of the problems of current reactors by being automated, passively safe, and reach economies of scale via mass production. There are a few such research projects working on fast breeders - Lawrence Livermore National Laboratory being one, currently working on the small, sealed, transportable, autonomous reactor sstar.

Nuclear fusion using heavy isotopes of hydrogen which are abundant in seawater is a potential future energy source, but so far no commercially viable fusion reactor has been built. The project ITER (International Thermonuclear Experimental Reactor) is expected to demonstrate a technology which could create viable reactors, perhaps by 2020.

Non-conventional oil

Main article: Non-conventional oil

Non-conventional oil is another source of oil separate from conventional or traditional oil. Non-conventional sources include: tar sands, oil shale and bitumen. A potentially significant deposit of non-conventional oil is the Athabasca Tar Sands site in north-western Canada as well as the Venezuelan Orinoco tar sands. It is estimated by oil companies that the Athabasca and Orinoco sites (both of similar size) have as much as two-thirds of total global oil deposits but they are not yet considered proven reserves of oil. Extracting a significant percentage of world oil production from tar sands may not be feasible. The extraction process takes a great deal of energy for heat and electrical power, presently coming from natural gas, itself in short supply. There are proposals to build a series of nuclear reactors to supply this energy. Non-conventional oil production currently is less efficient and has a larger environmental impact relative to conventional oil production.

Other fossil fuels and the Fischer-Tropsch process

Many think that natural gas will peak at the same time as oil.

There are large but finite coal reserves. It will also peak, but probably somewhat later than for oil.

The Fischer-Tropsch chemical process converts carbon dioxide, carbon monoxide and methane into liquid hydrocarbons of various forms. The carbon dioxide and carbon monoxide is generated by partial oxidation of coal and wood-based fuels. This process was developed and used extensively in World War II by the Germans, who had limited access to crude oil supplies. It is today used in South Africa to produce most of the needed diesel from coal. Since there are large but finite coal reseves in the world, this technology could be used as an interim transportation fuel if conventional oil were to disappear. There are several companies developing the process to enable practical exploitation of so-called stranded gas reserves, those reserves which are impractical to exploit with conventional gas pipelines and LNG technology.

Renewable energy

Another possible solution to an energy shortage or predicted future shortage would be to use some of the world's remaining fossil fuel reserves as an investment in renewable energy infrastructure such as wind power, solar power, tidal power, geothermal power, hydropower, thermal depolymerization and biodiesel which do not suffer from a finite energy reserves but do have a finite energy flow. The construction of a sufficiently large renewable energy infrastructure might avoid the economic consequences of an extended period of dramatically shrinking energy use per capita.

One of the most promsing renewable energy sources is hydropower but there is increasingly little damable river left. Dams produce electricity more cheaply than natural-gas turbines, and have reasonable capital costs. As a result, nearly every river in North America that can be dammed has been. Gigantic hydropower projects have recently been built all around the world (see Itaipu and Three Gorges Dam). Another promising renewable energy source may be wind power (currently over 4 times as efficient as solar PV power systems).

Solar trough concentrating power systems are economic in arid and semiarid regions today. This is particularly true if these solar power plants are designed to take full advantage of the combined heat and power potential outputs. These solar facilities can produce not only electricity but also steam, hot water and chilled water or ice using absorption refigeration cycle equipment.

Thermal depolymerization and biodiesel are interesting since they provide energy in a form that can be easily be stored and used as transportation fuel.

One factor potentially in renewable energy's favor is its much smaller environmental impact. Renewable energy sources may have a significantly smaller total "cost" compared with fossil fuel production after factoring in pollution, in other words, oil production is likely more expensive than the initial price seems to indicate and relative to renewable energy if you factor in the "cost" of pollution.

Lifestyle choices

Much of today's resource use is based upon lifestyle choices rather than unalterable human needs. The voluntary simplicity movement advocates a shift from consumerism to reduced use of goods and services; by extension, the need to sell one's time for money can be greatly decreased. The decreased use of materials will decrease energy demands. Further, with more spare time, environmentally-friendly, low-energy replacements for many current activities become feasible. For instance, one would have time for increased use of bicycles and mass transit as well as time for home-cooked meals instead of highly-packaged convenience foods from restaurants and grocery stores. Also, lower demands for work may give people the flexibility and bargaining power to find jobs that make use of telecommuting or that are nearer to home (and requiring shorter commuting times).

Indeed, some critics of consumerism argue that our current economy has addictive elements exacerbated by advertising and overuse of credit; this addiction has been dubbed affluenza. If so, any future decline in energy supplies may force people to break out of their current consumer lifestyle and begin to reevaluate their values. Such a reevaluation may induce a tipping point to further accelerate people away from a high-energy lifestyle. Other processional effects may include healthier lifestyles (reducing demands for medical resources) and improved communities and family relationships (reducing demands for government resources for social problems).

Changes in lifestyle choices have other important practical advantages. First, under extreme conditions, social change can proceed much more rapidly than large-scale infrastructure change. Second, the other alternatives assume the results are technologically feasible whereas voluntary simplicity relies upon simple common sense. Finally, living simply can reduce one's reliance on the well-being of the global economy. Even so, a serious shift from a high-energy lifestyle could destroy many jobs and bankrupt many businesses.

Others also think that lifestyle changes may reduce energy demand, but that this may not be good and may be forced by higher energy prices. Airplanes and cars may be replaced by railroads, ships and mass transport. People may travel much less, for example staying at home during holidays. Foods like meat, chocolate, coffee, tea, fish, milk may be be replaced by locally produced cereals and vegetables. Air conditioning may disappear. People may move to smaller houses that cost less to build and heat. In general, there will be less consumption since everything will cost more since power cost affects all stages of production and transportation. In extreme cases there will be rationing of electricity and heating. People may not work less, but may actually be forced to work more to somewhat compensate for the reduced work done by machines.

Hydrogen

There is a widely held misconception that hydrogen is an alternative to crude oil based liquid fuels. As there are no uncombined hydrogen reserves in nature, hydrogen is itself not a source of chemical energy. Hydrogen based energy always involves conversion of an upstream energy source. Typically this energy source is natural gas, in the case of the steam reformed methane process, or electricity (generated by fossil fuels, nuclear, solar or wind), in the case of water electrolysis. Genetically modified organisms have also been proposed as a way to generate hydrogen.

Many of the potential power sources sometimes produce no power and cannot increase production when demanded. For example solar power produce no power during the night and during the winter when demand is greater. The role of such power sources will be greatly limited unless there is way to store large amounts of energy. It is as a mean of storage and transportation of energy that hydrogen may play a very important role. (see Hydrogen economy). However, the idea is currently impractical: hydrogen is inefficient to produce, and expensive to store, transport, and convert back to electricity. Research is underway to ameliorate these problems; the outcome is at best uncertain.

Another potential role for hydrogen is as a transportable source of energy for vehicles, taking the place of gasoline. However, diesel from the Fischer-Tropsch process and biodiesel have the advantage of already existing technology for diesel engines and in place distribution infrastructure.

Other

Methane clathrate, solar power satellite, abiogenic petroleum origin, helium on the moon have been proposed as very speculatve solutions to an energy peak. They are for various reasons probably not feasible today. This could change with new technology, for example a working space elevator which would dramatically reduce costs for space technologies.

More long-term, proposed future technologies like hydrocarbons on other planets and Dyson sphere indicate that humanity is not now reaching some unavoidable theoretical limit to energy supply.

Organizations

See also

Further reading

[Dwindling Supply vs. Abundant Oil: A Timely Debate - General Session of the Society of Petroleum Engineers 2004]

Hubbert was right

Hubbert was wrong

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