Category Archives: Peak Oil

Isis has made huge profits from captured oilfields (Image: Getty)

Electric Cars Could Cause Big Oil This Much Damage

The growth of battery-powered cars could be as disruptive to the oil market as the OPEC market-share war that triggered the price crash of 2014, potentially wiping hundreds of billions of dollars off the value from fossil fuel producers in the next decade.

About 2 million barrels a day of oil demand could be displaced by electric vehicles by 2025, equivalent in size to the oversupply that triggered the biggest oil industry downturn in a generation over the past three years, according to research from Imperial College London and the Carbon Tracker Initiative, a think tank, published Thursday. A similar 10 percent loss of market share caused the collapse of the U.S. coal mining industry and wiped more than a 100 billion euros ($108 billion) off the value of European utilities from 2008 to 2013, the report said.

(Image: Razzouk/Shutterstock)
(Image: Razzouk/Shutterstock)

Major oil companies are waking up to the potential disruption plug-in vehicles could have on their industry. BP Plc says electric vehicles, or EVs, could erase as much as 5 million barrels a day in the next 20 years, while analysts at Wood Mackenzie say they could erode as much as 10 percent of global gasoline demand over that time. Global oil demand could peak in as little as five years, according to Royal Dutch Shell Plc Chief Financial Officer Simon Henry.

By 2040 16 million barrels a day of oil demand could be displaced, rising to 25 million by 2050, a

“stark contrast to the continuous growth in oil demand expected by industry,”

according to the report. The impact on the oil industry could exceed price slump of 2014 to 2016 that “wiped hundreds of billions off capex,” Stefano Ambrogi, a spokesman for the Carbon Tracker Institute, said by e-mail.

The cost of EVs is already falling faster than previous forecasts and they could reach parity with conventional internal combustion vehicles by 2020, eventually saturating the passenger vehicle market by 2050, the report said.

EVs may take 19 to 21 percent of the road transport market by 2035, according to the researchers. That’s three times BP’s projection of 6 percent market share in 2035. By 2050, EVs would comprise 69 percent of the road-transport market, with oil-powered cars accounting for about 13 percent.

Source: Bloomberg

Oil Decline (in million barrels of crude oil per day)

How EVs are Driving the Next Oil Crisis

When Bloomberg published a story under a version of the above headline at around this time last year, it was based on data predicting that by 2040, 35 per cent of new cars worldwide “would have a plug.”

Last week, a new graph based on new data by Bloomberg New Energy Finance has updated the details on how such a global shift electric vehilces might play out for the oil sector.

Oil Decline (in million barrels of crude oil per day)
Oil Decline (in million barrels of crude oil per day)

According to the graph, featured below, some 13 million barrels of oil per day will be displaced by electric vehicles by the year 2040 – an amount, BNEF says, that is equivalent to 14 per cent of the Energy Information Agency’s estimated global crude oil demand in 2016.

On the same trajectory, BNEF says, electric vehicles will displace 1.1 million barrels per day by 2025. For the record, that’s slightly down on what BNEF forecast last year: that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023. But we will leave you with Tom Randall’s closing comments on the February 2016 BNEF analysis:

“One thing is certain: Whenever the oil crash comes, it will be only the beginning. Every year that follows will bring more electric cars to the road, and less demand for oil. Someone will be left holding the barrel.”

Source: Renew Economy

Oil Discoveries at 70-Year Low Signal Supply Shortfall Ahead

  • New finds at lowest since 1947 and headed even lower: WoodMac
  • Explorers replacing just 6% of resources they drill: Rystad

Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand.

1x-1_oil_discoveries_bloomberg

With oil prices down by more than half since the price collapse two years ago, drillers have cut their exploration budgets to the bone. The result: Just 2.7 billion barrels of new supply was discovered in 2015, the smallest amount since 1947, according to figures from Edinburgh-based consulting firm Wood Mackenzie Ltd. This year, drillers found just 736 million barrels of conventional crude as of the end of last month.

That’s a concern for the industry at a time when the U.S. Energy Information Administration estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026. While the U.S. shale boom could potentially make up the difference, prices locked in below $50 a barrel have undercut any substantial growth there.

New discoveries from conventional drilling, meanwhile, are “at rock bottom,” said Nils-Henrik Bjurstroem, a senior project manager at Oslo-based consultants Rystad Energy AS.

“There will definitely be a strong impact on oil and gas supply, and especially oil.”

Read more: Bloomberg

Peak Oil Could be in 15-20 Years (Image: Bernstein Research)

Big Oil Is Terminal

“Peak oil demand” is the new “peak oil supply” because of climate change and plummeting costs for electric car batteries.

It’s increasingly clear that we’re not going to move off of oil because we run out of supply. Rather, we’re going to move off of oil because it is both the economic and moral thing to do.

The research firm Bernstein notes that two “existential threats to the oil industry” exist — “climate change” and “advances in battery technology and computing power, which have resulted in a surge in interest in electric vehicles and autonomous driving.” They project the peak in oil demand could come as soon as 2030–2035:

Peak Oil Could be in 15-20 Years (Image: Bernstein Research)
Peak Oil Could be in 15-20 Years (Image: Bernstein Research)

Read more: Think Progress

(Image: Bloomberg New Energy Finance)

The World Nears Peak Fossil Fuels for Electricity

Coal and gas will begin their terminal decline in less than a decade, according to a new BNEF analysis.

The way we get electricity is about to change dramatically, as the era of ever-expanding demand for fossil fuels comes to an end—in less than a decade. That’s according to a new forecast by Bloomberg New Energy Finance that plots out global power markets for the next 25 years.

Call it peak fossil fuels, a turnabout that’s happening not because we’re running out of coal and gas, but because we’re finding cheaper alternatives. Demand is peaking ahead of schedule because electric cars and affordable battery storage for renewable power are arriving faster than expected, as are changes in China’s energy mix.

(Image: Bloomberg New Energy Finance)
(Image: Bloomberg New Energy Finance)

Here are eight massive shifts coming soon to power markets.

1. There Will Be No Golden Age of Gas

Since 2008, the single most important force in U.S. power markets has been the abundance of cheap natural gas brought about by fracking. Cheap gas has ravaged the U.S. coal industry and inspired talk of a “bridge fuel” that moves the world from coal to renewable energy. It doesn’t look like that’s going to happen.

The costs of wind and solar power are falling too quickly for gas ever to dominate on a global scale, according to BNEF. The analysts reduced their long-term forecasts for coal and natural gas prices by a third for this year’s report, but even rock-bottom prices won’t be enough to derail a rapid global transition toward renewable energy.

“You can’t fight the future,” said Seb Henbest, the report’s lead author. “The economics are increasingly locked in.”

The peak year for coal, gas, and oil: 2025.

Read more: Bloomberg

Why Billions in Proven Shale Oil Reserves Suddenly Became Unproven

  • U.S. companies erased more than 20 percent of inventories
  • Regulator examined estimates as wells lingered on books

Ultra Petroleum Corp. was a shale success story. A former penny stock that made the big leagues, it was worth almost $15 billion at its 2012 peak.

Oilwell_CROPPEDPD_20160509105710476_MT

Then came the bust. Almost half of Ultra’s reserves were erased from its books this year. The company filed for bankruptcy on April 29 owing $3.9 billion.

Ultra’s rise and fall isn’t unique. Proven reserves — gas and oil resources that are among the best measures of a company’s ability to reward its shareholders and repay its debts — are disappearing across the shale patch. This year, 59 U.S. oil and gas companies deleted the equivalent of 9.2 billion barrels, more than 20 percent of their inventories, according to data compiled by Bloomberg. It’s by far the largest amount since 2009, when the Securities and Exchange Commission tweaked a rule to make it easier for producers to claim wells that wouldn’t be drilled for years.

Wider Effort

The SEC routinely questions companies about their reserves. Now, agency investigators are also on the hunt for inflated reserves estimates, according to a person familiar with the matter.

“Reserves make up a large share of the value of these companies, so it really matters,” said David Woodcock, a partner at Jones Day in Dallas who served as the SEC regional director in Fort Worth, Texas, from 2011 to 2015.

“They’re looking even more closely at how companies are booking reserves, how they’re evaluating the quality of those reserves and what their intentions really are. They’re not accepting pat answers.”

Drillers face pressure to keep reserves growing. For many, the size of their credit line is tied to the measure. Investors want to see that a company can replace the oil and gas that’s been pumped from the ground and sold.

Read more: Bloomberg

Tesla Model 3 at launch (Image: K. Field/CC)

Your time is up, Stanford tech expert tells petroleum industry

ADDRESSING a high-profile audience of the Thai energy sector last week, Stanford University lecturer and Silicon Valley investor Tony Seba minced no words in warning them that petroleum, which had been a source of livelihood to many of them, would become obsolete by 2030 or sooner.

Tesla Model 3 at launch (Image: K. Field/CC)
Tesla Model 3 at launch (Image: K. Field/CC)

Citing four key technologies – energy storage, electric vehicles, self-driving cars, and solar – the author of the amazon.com best seller “Clean Disruption of Energy and Transportation” said the energy and transport industries were on the cusp of either being transformed or destroyed.

“The energy and transport industries will become high-tech industries” he told the Petroleum Institute of Thailand’s 30th anniversary event that was attended by energy and science ministers, privy councillor, director of the Crown Property Bureau Snoh Unakul, and other top energy officials and executives. Speaking at a press conference held at the conference, Seba said since consumers would switch “en masse” to electric vehicles by 2020, petroleum – 60 per cent of which is used for transport – was going to become obsolete.

The driving force will be the four key technologies that will improve exponentially, not because of climate change, he said.

Besides “exponential” technological development in key areas such as in lithium-on batteries, solar photovoltaic installations and generating costs, electric and autonomous cars, and LIDAR sensors, Seba pointed out business model innovations that could accelerate the changes such as storage-as-a-service, electric vehicles’ (EVs) free charging network, car-as-a-service, and “zero money down solar” leasing.

EVs will hit the low-end automobile segments by 2020 when their prices drop to $20,000 (Bt700,000) and will put an end to internal combustion engine cars when EV prices fall to $5,000 in 2030, he predicted. Tesla recently introduced its Model 3 at an unsubsidised retail price tag of $35,000. Within 24 hours, it received 180,000 bookings – a record for the car industry.

Read more: Nation Multimedia

Energy use per person was on track to rise sixfold by 2050 across the world, according to researchers from Queensland and Griffith universities (Image: K. Frayer/Getty Images)

Parliamentary group warns that global fossil fuels could peak in less than 10 years

British MPs launch landmark report on impending environmental ‘limits’ to economic growth

Energy use per person was on track to rise sixfold by 2050 across the world, according to researchers from Queensland and Griffith universities (Image: K. Frayer/Getty Images)

A report commissioned on behalf of a cross-party group of British MPs authored by a former UK government advisor, the first of its kind, says that industrial civilisation is currently on track to experience “an eventual collapse of production and living standards” in the next few decades if business-as-usual continues.

The report published by the new All-Party Parliamentary Group (APPG) on Limits to Growth, which launched in the House of Commons on Tuesday evening, reviews the scientific merits of a controversial 1972 model by a team of MIT scientists, which forecasted a possible collapse of civilisation due to resource depletion.

The report launch at the House of Commons was addressed by Anders Wijkman, co-chair of the Club of Rome, which originally commissioned the MIT study.

At the time, the MIT team’s findings had been widely criticised in the media for being alarmist. To this day, it is often believed that the ‘limits to growth’ forecasts were dramatically wrong.

But the new report by the APPG on Limits to Growth, whose members consist of Conservative, Labour, Green and Scottish National Party members of parliament, reviews the scientific literature and finds that the original model remains surprisingly robust.

Authored by Professor Tim Jackson of the University of Surrey, who was Economics Commissioner on the UK government’s Sustainable Development Commission, and former Carbon Brief policy analyst Robin Webster, the report concludes that:

“There is unsettling evidence that society is tracking the ‘standard run’ of the original study — which leads ultimately to collapse. Detailed and recent analyses suggest that production peaks for some key resources may only be decades away.”

Read more: Medium

Isis has made huge profits from captured oilfields (Image: Getty)

US shale oil peak in 2015

I’m including this as a follow-on to my blog post of last summer: It’s time to call Peak Oil.

The recent EIA drilling productivity reports show a peaking of shale oil production in the main production regions. https://www.eia.gov/petroleum/drilling/

Fig 1: Bakken production change from old/new wells (Image: EIA)
Fig 1: Bakken production change from old/new wells (Image: EIA)

The 1st panel shows that the number of drilling rigs has dropped sharply but the initial well production per rig has increased from 450 b/d to 750 b/d. The 2nd panel depicts the monthly production decline in old wells, which has stabilized at around 60 kb/d. This is the volume needed to keep production flat but the 3rd panel shows that new wells offset only about half of the decline. That is why in panel 4 overall production declines.

We see that in 2015 production from new wells declined abruptly. The intersection point with old wells corresponds to the peak in production. The old wells decline has moderated suggesting that more and more old wells have entered their phase of final, flat production at very low levels.

We see that forecasts by the EIA have been revised downwards since mid of last year. Production at the end of 2017 is expected to increase modestly as a result of rising oil prices.

Conclusion:

The so-called US shale oil revolution got stuck in 2015. The longer oil prices remain low, the more the 2015 peak will establish itself. There are no free-bees here. Pay less for oil and you will get less oil.

Source: Crude Oil Peak

Car exhaust pollution (Image: Wikipedia)

Dutch government wants to ban petrol and diesel cars

Dutch Labour party wants to halt the sales of petrol and diesel cars by 2025; is this the beginning of the end for the mass-produced combustion engine?

Dutch Labour party PvdA is pressing for the banning of sales of all petrol and diesel cars in the Netherlands from 2025.

The proposal has been met with support from the country’s lower houses of Parliament and could mean that only alternatively fuelled vehicles – such as electric cars – could be sold in the market nine years from now.

European leaders have been talking about such a ban for many years – insiders have suggested Paris will be the first to implement a zero-emissions-vehicle-only zone within its boundaries – but if it were introduced, the Dutch policy would come as the first complete ban on combustion-engined vehicles.

The proposal arrives a year after the Netherlands joined the International Zero-Emission Vehicle (ZEV) Alliance, which aims to make all new vehicles use electric power by the year 2050. The country is already one of the fastest growing markets for alternatively fuelled cars, with nearly one in 10 cars bought last year using electric power.

The UK has seen similarly rapid levels of growth, although the overall number of sales for alternatively fuelled vehicles is comparably small. The latest figures from March reveal that sales of alternative-fuel vehicles grew by 21% year on year, compared with sales growths of 4.8% and 4.7% for diesel and petrol cars respectively.

Read more: Autocar