Peak oil

"Peak oil" refers to the future decline in world Production of crude oil and to the accompanying potentially calamitous effects. The majority of the literature on peak oil is non-economic and ignores price effects even when analyzing policies. Unfortunately, most economic models of depletable resources do not generate production peaks. I present four models which generate production peaks in equilibrium. Production increases in the models are driven by: demand increases, cost reductions through advancing technology, cost reductions through reserve additions, and production capacity increases through site development. Production decreases are driven by scarcity. The models do not rely on market failures and indicate that a peak in production may arise from efficient intertemporal optimization. The models show that prices are a better indicator of impending scarcity than peaking is and that peak production can occur when any percentage from 0-100% of the original deposit remains.

Published in: Energy Journal, Volume 29, Issue 2, 2008, Pages 61-79
Available from: The Energy Journal

The well known "Hubbert curve" assumes that the production curve of a crude oil in a free market economy is "bell shaped" and symmetric. The model was first applied in the 1950s as a way of forecasting the production of crude oil in the US lower 48 states. Today, variants of the model are often used for describing the worldwide production of crude oil, which is supposed to reach a global production peak ("peak oil") and to decline afterwards. The model has also been shown to be generally valid for mineral resources other than crude oil and also for slowly renewable biological resources such as whales. Despite its widespread use, Hubbert's modelis sometimes criticized for being arbitrary and its underlying assumptions are rarely examined. In the present work, we use a simple model to generate the bell shaped curve curve using the smallest possible number of assumptions, taking also into account the "Energy Return to Energy Invested" (EROI or EROEI) parameter. We show that this model can reproduce several historical cases, even for resources other than crude oil, and provide a useful tool for understanding the general mechanisms of resource exploitation and the future of energy production in the world's economy.

Published in: Energies, Volume 2, Issue 3, September 2009, Pages 646-661
Available from: Energies

Humanity's dependence upon a reliable and easily obtainable supply of oil places the modern lifestyle in a precarious position. Will this source of energy always be readily available? At what point will global production of this resource peak and then thereafter begin an irreversible decline? What would be the consequences of a peak in global oil production? With the demand for oil continuing to rise over time, how will modern societies adapt if supply is unable to meet increasing demand? What policies will governments implement in an attempt to address these issues? This research project seeks to address these questions. A significant portion of this analysis is dedicated to assessing the merit of claims made regarding the existence of peak oil and the varying estimates as to its likely occurrence. Peak oil's potential effects on financial markets, modern transport, food prices, and international affairs are also explored, including a discussion of the ways to mitigate against these effects. The primary findings of this analysis are that peak oil is a real phenomenon, that it will likely occur in the not-too-distant future (if it has not already occurred), and that governments and communities should be implementing proactive policies to address peak oil otherwise it could result in severe ramifications for modern society.

Peak oil is a phenomenon that has received little mainstream attention even though the potential consequences of its untimely arrival could be considerable. Since peak oil challenges the status quo, peak oil's proponents have been subjected to an unfortunate backlash by established interests. It is hoped that this analysis will assist in bringing more attention and clarity to the issue. The better understanding that individuals and policymakers have of peak oil, the more likely it is that appropriate decisions will be made in preparation for the eventual end of the oil age.

This research project was defended on July 31, 2008, at Washington University in St. Louis.

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Denmark possesses only a small share of the exploitation rights to North Sea oil and is a minor producer when compared to Norway and the UK. However, Denmark is still an oil exporter and a very important supplier of oil for certain countries, in particular Sweden.
A field-by-field analysis of the Danish oil and gas fields, combined with estimated production contribution from new field developments, enhanced oil recovery and undiscovered fields, provides a future production outlook. The conclusion from this analysis is that by 2030 Denmark will no longer be an oil or gas exporter at all. Our results are also in agreement with the Danish Energy Authority’s own forecast, and may be seen as an independent confirmation of their general statements.
Decreasing Danish oil production, coupled with a rapid decline in Norway’s oil output, will force Sweden to import oil from more distant markets in the future, dramatically reducing Swedish energy security. If no new gas suppliers are introduced to the Swedish grid, then Swedish gas consumption is clearly predestined to crumble alongside declining Danish production. Future hydrocarbon production from Denmark displays a clear link to Sweden’s future energy security.

Published in: Energy, article in press
Available from: ScienceDirect or Global Energy Systems

Over the past decade, a fierce debate has emerged amongst energy experts about whether global oil production was about to reach a peak, followed by an irreversible decline.

This event, commonly known as “Peak Oil” far outreaches the sole discipline of geology. From transportation to modern agriculture, petrochemicals and even the pharmaceutical industry all of them rely on one commodity: cheap and abundant oil. In order to sustain the needs of an ever globalized world, oil demand should double by 2050 [3].

Nonetheless, geological limitations will disrupt this improbable scenario. In fact, a growing proportion of energy experts argue that Peak Oil is impending and warn about the extraordinary scale of the crisis...

Published in: Seeking Alpha, 9 August 2009
Available from: Seeking Alpha

According to the long term scenarios of the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA), conventional oil production is expected to grow until at least 2030. EIA has published results from a resource constrained production model which ostensibly supports such a scenario. The model is here described and analyzed in detail. However, it is shown that the model, although sound in principle, has been misapplied due to a confusion of resource categories. A correction of this methodological error reveals that EIA’s scenario requires rather extreme and implausible assumptions regarding future global decline rates. This result puts into question the basis for the conclusion that global “peak oil” would not occur before 2030.

Published in: Energy Policy, article in press
Available from: ScienceDirect or Global Energy Systems

Continued reliance on oil is unsustainable and this has resulted in interest in alternative fuels. Coal-to-liquids (CTL) can supply liquid fuels and have been successfully used in several cases, particularly in South Africa. This article reviews CTL theory and technology. Understanding the fundamental aspects of coal liquefaction technologies is vital for planning and policy-making, as future CTL systems will be integrated in a much larger global energy and fuel utilization system.
Conversion ratios for CTL are generally estimated to be between 1 and 2 barrels/ton coal. This puts a strict limitation on future CTL capacity imposed by future coal production volumes, regardless of other factors such as economics, emissions or environmental concerns. Assuming that 10% of world coal production can be diverted to CTL, the contribution to liquid fuel supply will be limited to only a few mega barrels per day. This prevents CTL from becoming a viable mitigation plan for liquid fuel shortage on a global scale. However, it is still possible for individual nations to derive significant shares of their fuel supply from CTL, but those nations must also have access to equally significant coal production capacities. It is unrealistic to claim that CTL provides a feasible solution to liquid fuels shortages created by peak oil. For the most part, it can only be a minor contributor and must be combined with other strategies.

Published in: International Journal of Energy Research, article in press
Available from: Wiley Interscience or Global Energy Systems

The world petroleum complex has been on a treadmill, struggling to add increments of new production to keep pace with growing demand and depletion. If the oil price shock of 1979–1981 is considered an aberration due to panic inventory building, recent real oil prices are at levels not seen since the 19th century. The analysis in this review shows that geophysical models of peak oil predict a pre-mature peaking in world oil production and a decline rate more rapid than the average 3% annual rate of decline observed in countries past peak production. This review also finds that political decisions and events play an important role in determining world oil production and that reserve additions respond to expected prices and costs. The actions of the world oil cartel, the business cycle, and the delayed response of oil demand and supply to prices indicate that the peak of conventional oil production will only be known until well after it has occurred. Despite rapid advances in output from Brazil and West Africa, crude oil production outside OPEC and Russia appears to have peaked in 2002, at least for now. Another tangible indicator of a coming peak is the expansion of unconventional oil production, which is on a collision course with efforts to curb greenhouse gas emissions. A clear policy direction for carbon regulation that encourages technological innovation is imperative as peak oil approaches.

Published in: International Review of Environmental and Resource Economics, Volume 1, Issue 4, Pages 327-365
Available from: International Review of Environmental and Resource Economics

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Published in: Energy Exploration & Exploitation, Volume 21, Number 1, 1 February 2003, Pages 61-69
Available from: IngentaConnect

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Published in: Journal of Urban Technology, Volume 14, Number 2, August 2007, Pages 15-30
Available from: IngentaConnect