A Practical Exercise Suggestion for Peak Oil Sceptics

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2018-10-10

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(Translated from Spanish by Amelia Burke, originally published in two parts.)

When someone calls into question the existance of a peak in the production (extraction) of a non-renewable resource, which oil is, you should invite them to study carefully the curves of the Energy Export Databrowser. This Databrowser is formed using data from British Petroleum’s annual energy statistics. If necessary, round off with the data from the Hallock et al. document ”Forecasting the limits to the availability and diversity of global conventional oil supply: Validation” (Energy 64, 2014, 130-153). Then ask them to explain why —if everything depends on our human ingenuity and anything is possible given the amount money which is put into it, and given the God of Technology— there are already 50 oil producing countries that have exceeded their peak of production and are carrying on downhill. That is, except (temporarily) the U.S.A., specialists in rooting around in the filth of shale, with lots of technology and fabricated money.

And for those in our still relatively comfortable country who begin to worry that there might be actually be a peak and wonder what it could mean and when we think it might happen, I would confront them with a vision which is not quite so eurocentric as the one we are used to. I would invite them, with those calculations at hand, to do a little adding up in order to try and clarify it for themselves, based on counting the number of post-peak producer countries. Let them try by themselves to sketch out a possible date for the peak, or a slightly undulating plateau perhaps. I would tell them that more than 50 oil producing countries are already in decline, visible decline or terminal oil-bearing decline. In other words, the when, is something now in the past for no less than 50 countries. It would help them to remember that Romania was, in its time, the main European producing and exporting country. That Albania managed to achieve self-sufficiency and even some exports. Let them ask themselves why there are producer/exporter countries who have turned into importers, such as the United Kingdom, Argentina or Indonesia, for example, if it is only a question of money and technology in order for them to set themselves up again.

I would suggest that they analyse why conventional oil (the higher quality oil and the one which is eaiser to extract) is falling irremediably. Perhaps they might start to calculate when the net oil peak will arrive, and finally, that of all liquid fuels.

I would also suggest that they analyse how much oil is still available for export from the countries which are still producers/exporters. Those figures are in the Energy Export Databrowser and you can find them in the BP graphs of the difference between production and domestic consumption.

Hallock-et-al-Forecasting-the-limits-fig1-f-300ppp-937x607

Fig. 1, ‘f’ scenario, taken from referred document by Hallock, et al.

Referred to above Perhaps they will begin to realise at some point, that there is now less than half of the amount of extracted oil available for export. I would suggest, having reached this conclusion, that they look at the annual or daily oil imports of —let’s say— only the most powerful nations like the U.S.A., the European Union (assuming it doesn’t desintegrate, although this is highly probable), China, India, Pakistan or Japan. Let them add up all those imports with the available figures. Just for a moment forget about the rest of the world. Forget the almost 4,000 million remaining beings, not because they do not consume oil at this time, but because they do not have the nuclear arsenals which would make it difficult to tell them at some point “there’s no oil for you”. Having arrived at the total import of all the nuclear giants, let them imagine a couple of simple scenarios: one of zero growth of consumption (stationary scenario) and one of a 2% annual increase in imported oil consumption by these giants (Business As Usual scenario). And finally, let them look at the available exports, analyse how many exporting producing countries are in decline and how many on the rise, and calculate the net exports available. When both lines cross, see at which point in time those who have nuclear arms will have to sort out (amongst themselves and ignoring the rest of the non nuclearized world) how to fix up a lower consumption for every year beyond where the lines of their consumption cross with the falling available exports.

In reference to Peak Exports, you can see it from the available figures. Look year by year since figures of the extraction and consumption of the producers became available (1965 to 2017) and then add up what remains for export. You can do it and compare them, for example, with the growth in extraction to see if this is growing more than export. Or if export has remained level or has even declined in recent years.

If they so wish —if the horse still refuses to drink— they could analyse how much of the available oil exports pass through the Straits of Hormuz. It is close to 40% of the world total, a key choke point for oil exports. Let them do an exercise to see who will fall first and in what calamitous manner, in the case of the Straits of Hormuz being closed due to some warlike activity, the possibility of which is often talked about these days. And what if it occurs to one of the contestants to think “in for a penny, in for a pound” and they start to sink the great oil tankers which navegate around the Gulf like dizzy ducks, all within very easy reach. And what if the closure of the Strait and the current normal oil flow (that is, the 20 million barrels which pass daily through this point) lasts longer (or much longer, or infinitely longer) than the strategically reserved stocks of each country or region, which amounts to between 90 and 120 days of normal consumption.

Perhaps they will have time to appreciate how some producer/exporter countries, at some point in time, might think about internal development. They might begin to increase their internal consumption for development projects. Look at the Venezuela de Chávez, now in a terminal situation and about to grab the Orinoco, the greatest but muddiest and hardest to extract oil resources in the world. Look at Gadafi’s Lybia or Hafed Al Assad’s Syria or Sadam Hussein’s Iraq. If they bother to think for a moment, they will see how those countries were increasing their internal consumption and reducing their exports, until some decided that it would be better to return to the Stone Age with an internal consumption as close to zero as possible. In other countries, such as Equatorial Guinea, Nigeria or Angola, it had been no trouble keeping them in the Stone Age.

Perhaps they might study the impact, which has implied for many countries already that they have reached a limit, by observing the pitiful state of Venezuela, of Lybia, Iraq and Syria… also the gradual degradation of Colombia, the ambush on Equador, Argentina’s fall into the IMF (International Monetary Fund) pit or Mexico’s decrepitude and the complete desintegration of Nigeria, or the partition of the Sudan and the terrible war in Yemen. Not even Saudi Arabia is free from the suffering. Nor Qatar. What could happen, has happened already and you can analyse it. It is here and observable for those who have eyes to see and a little intelligence to deduce that the global problem may not be the Iranian ayatollahs.

Perhaps we might be able to recognise that it is not only us and our country which could suffer the hardships of the scarcity of resources.

Casdeiro, after Robin Higgins & GDJ.

Practical Exercise for Peak Oil Sceptics: Part 2 (Suggestions for a Solution)

Dear readers: In the publication of my article “A Practical Exercise Suggestion for Peak Oil Sceptics” in the 15/15\15 magazine, I invited readers to carry out several exercises using information about the production and consumption of the different energy sources in the world. This information, which is freely available, official and which is published annualy, coincides essentially with data from the International Energy Agency (IEA) and other specialised energy agencies, like the Energy Information Administration in the U.S.A.

Le poster des moutons (The poster of the sheep)

Illustration by François de Kersz (1974), commonly known as ‘Le poster des moutons’. The text from the black sheep reads: ‘Excusez moi… excusez moi…’ (‘Excuse me… excuse me…’).

Through that article I wanted to encourage the audience to study the situation of so many of the producer countries, oil producers in particular, which have already begun a clear decline in production. I wanted to encourage them to dare to make a projection on the future tendancies throughout the world, our world.

All well and good, but at that time, due to work overload and other commitments, I could not take the exercise any further. I was left with a sense of guilt about asking others to do their homework when I myself had not managed to finish the job.

Not wanting people to think I had done it out of idle pleasure, I am presenting here an initial anaylsis which I want to put up for consideration by all those of us who are the black sheep. Those who can see where their companions are heading, and in some cases blindly running, towards a precipice. Those sheep who at least have the merit of carefully peering over the edge to see how deep it is and to see if there may be any way to avoid it, and not in the same style that Thelma and Louise solved the problem.

So far so good. Here we have the next solution to the exercise.

  • If it put before you for your consideration, with the following suppositions: I have taken the Excel page, provided by British Petroleum (BP), on the oil production and consumption of all the producers this multinational has taken into consideration, and the history of their development between the years 2000 and 2017. There are 28 countries which produce and still export, and 21 countries which produce but still have to import oil. It includes a list of producer countries of minor importance, which are all importers, and which BP classifies simply as ‘other’ within the five continents.
  • From this I have worked out the consumption of each country using their own production to find out the net oil capacity they have to export.
  • Then I have separated the producer countries into those who were still oil producers/exporters in 2017, being 28, and the producer countries which import oil, that being 21 countries. Analysing their trajectories, many of them in clear decline, I have supposed that those countries will not now turn back into exporters during the future period under consideration, which is between 2018 and 2030. (Not exporters in net quantity, because there are always exchanges between neighbouring countries which sometimes show a crude export and import of refined products or vice versa)
  • Next, I made some suppositions, which I explain in the MS-Excel page attached, projecting what might be the situation for each producer/exporter country in the period 2018-2030. I set the following general premises (the details are available in the calculation page; they are subjective and subject to improvement and critisizm), in order to find out what might be the evolution of their actual net exports until the year 2030:
  • I took the evolution of oil production based on the most recent document made public by Jean Laherrere (co-founder of The Association for the Study of Peak Oil and Gas (ASPO) and former vice-president of Total exploration). It shows the peak date for many of those countries (but not all), especially if they have already had the foresight to take into account the so-called Oil Depletion. (OD: decline in oil with respect to the types of oilfields and their extraction history). You can use this document to project the foreseeable declines in production. In the cases where the countries continue to grow in production (extraction), it has also been supposed that production will increase until the end of the period, except where Laherrere confirms that the peak would fall within the period. This peak, and its subsequent decline, is also considered in this case.
  • With respect to these countries’ oil consumption I have based my ideas on references to past economic evolution and also on my personal vision, subjective and fallible, but in my case conservative (that is, I have moderated what has been their usual growth). The few countries which still produce and can export more than they consume have the priviledge of aquiring foreign currencies for the sale of a product which is increasingly valueable. In general I have considered that they will maintain a growth in their economy while they continue to export, (and therefore a growth in their internal oil consumption, both of which are closely connected). In the case that the producer would predictably stop exporting during the 2018-2030 period, as is the case with Mexico (as much for the development of this country as for the indications of its current President of the Republic), I have considered that the country will stop economic growth and internal consumption growth, as others have done in recent years.
  • Of course, I have not considered any case of significant armed conflict, not because it is unlikely, but because it would make the mentioned exercise pointless due to the chaos that may result. In the case of Venezuela, due to its critical situation and the sudden fall in its economy for whatever reasons, I have assumed that its economy could not now significantly slow down any further during the period.
  • All of the above provides me with the evolution of all the worldwide net exports of available oil between 2018 and 2030, and the situation is dramatic.
  • I have made one last check of all the calculations. I have analysed the evolution of the main importer countries’ net oil and their foreseeable growth in imports up until 2030. I have only selected the countries which have wide and growing import demands and which have the so-called capacity for nuclear disuasion (nuclear deterrence). They are marked in the Excel page attached with a red circle, eg. :
    • Russia: as the first net export country, we can expect that it will continue to be so during the entire period in consideration 2018-2030. This despite the forceful declarations by its energy minister, declaring that his country’s peak in oil production would be in 2 or 3 years, with a considerable fall in production afterwards until 2030. Russia is the only country with nuclear power which is not an importer.
    • The United States of America: in their case I have followed the guidance of trusted experts. They are in no doubt about the fiasco and swindle represented by the spectacular increase in production during the last 10 years through shale oil. Shale oil will not hold out much longer and already shows clear signs of exhaustion and decline, given the experience of the pronounced decline rate of the shale oilfields and oilwells. Despite all this, they could continue to increase their production a litte more.
    • China is a country in clear oil production decline and whose demand increases in a worrying and frenetic manner. I have supposed that their economic growth and oil consumption will be greatly moderated in the future, because the extrapolation of the consumption growth figures of previous years could give far worse figures.
    • India is a country, now having a very small consumption per person, which is going to see a growth in demand due to its population pressure. It also has nuclear weapons.
    • Pakistan is in a similar situation to India: very low real consumption, but with huge population pressures and it is presumed that it will continue to grow. It also has nuclear power and just like its closest enemy, India, is constantly involved in border conflicts.
    • With the European Union, I wasn’t sure whether to consider just the heavy nuclear countries (EU 17) as one simple political, economic and military unit or all the actual countries (EU 28). However, given that the United Kingdom is about to leave the EU with the Brexit and has always been an unusual member of the Union, I have considered it as an independent country of nuclear disuasion. That is, a country which would not bring out its nuclear weapons in order to save smaller countries of the actual Union. I have done the same with France, which also has its nuclear force de frappe. It is doubtful that it would come to defend the Union collective, in the case of serious conflict over extremely scarce vital resources, rather than exclusively defending its own national interests. An EU with energy and economic growth problems, would be a fiction in my opinion, that would last less time than a sweety at the school gates.
    • Later I thought about two more countries on the list of indispensable and important oil importers. Although they don’t have any official nuclear weaponry, I fear that in the case of serious conflict that they already have all the necessary nuclear vectors (rocketry, plutonium skills and material, plus sophisticated electronics). They could become a nuclear armed country within a very short period of time, perhaps a year. They could therefore be considered quasi-nuclear countries, and I could mark them with the symbol? .
      • They are: Japan: despite the fact that its disciplined citizens have been considerably reducing their oil consumption since 2000, and might make you think that they would use more oil, they have gone for natural gas. This including after the Fukushima tragedy which forced the closure of nearly all of its nuclear centres. It is supposed that Japan will have a moderate growth in oil consumption in the future, during the period of 2018-2030.
      • South Korea: a country which is carrying the burden of producing a large part of the lastest generation electrical goods increasingly indispensable to the West. It has, by itself, enough technology to harbour nuclear weaponry if it sees its survival threatened. Not to mention the possible ease with which it could ally itself, in the case of extreme necessity and imminent danger to its survival, with its Northern neighbours (and brothers when all is said and done) who do have nuclear weapons.
  • In general I have felt obliged to asume growths in economies, even though it might happen in a very moderate way, at least for those powerful developed countries. (Hence, growth in the oil consumption in our society, which we already know does not dematerialise globally). I made these asumptions because if there was not this growth in economy (and in energy consumption), the capitalist system would fail, with consequences which are outside my calculations in this more linear supposition.

And finally, what I did was cross the curves of the available global net oil exports in the period 2000-2017 and the projections for 2018-2030 with the oil import needs of the countries which have nuclear deterrent. Countries to which no other country could easily say “since there is not enough oil for everyone, there is none for you”.

Please note one important point, for its self-interested reductionism: I have ignored what could happen to the rest of the importer countries in the world (the immense majority, close to 4,000 million human beings). They do not have nuclear weapons and I have considered, in a very simplistic way, that they would have no other capacity to react when facing the increasing lack of supply of this vital fuel, but to adapt to whatever they could lay their hands on until they could get none at all. And I have only concerned myself, in a slightly cynical way and to highlight the drama of a situation we are ignoring, with seeing when the exports will not even stretch to the 3,700 million souls who live in countries with nuclear weapons. Obviously, it may not be so simple, considering how difficult it would be to deny bread and butter to countries like Brazil, Germany (also with short-term nuclear potential), Mexico, Iran or Saudi Arabia.

And so the ominous crossing of the lines (which would define the probable time of serious conflict between the nuclear powers, whilest ignoring the 4,000 millions without nuclear weapons) would take place…. In 2023!!!

The author admits that in this initial excercise there could be some data missing. He could have made a mistake, made unreal suppositions. He has discounted the dicovery of gigantic oil finds which have been overlooked up till now, seeing as they have not been discovered in the last decade with all the modern exploration technology available. He could have underestimated that the change to a 100% renewable world is going to appear with stratospheric velocity, with electric scooters, bikes and cars for hire, with the unprecedented advance in carsharing or carpooling or carkfaking and other possible nonsense.

For all of this, I offer you the page of calculations which have led me to arrive at these conclusions. They are freely accessable to the public reader, so that if they wish, they might improve, correct, estimate in a different way, add in the data they deem reasonable, justified or opportune, and send it back to us. So that they might perhaps arrive at projections of a different orientation.

Net oil exports trends.

Oil Imports up until 2017 by countries with nuclear deterrence and predicted oil imports from 2018 until 2030. Source: Pedro A. Prieto from the references and considerations noted above.

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