Peak Oil and Energy Resources


An outline of the main features of the politics of Energy Resources with a focus on the important issue of Peak Oil.

Energy Resources

1. Introduction

Today's talk is about Energy Resources and seeing that I have only 10 minutes or so, I will try to outline the main features of Energy Resources and attempt to focus on the important issue of Peak Oil which most people are now becoming more aware of. I will leave any of the details to the Question and Answer session that follows.

2. Background to Energy

When discussing energy, one must be aware of some key terms and ideas. Heat engines like the combustion engine or the burning of fuel to create electricity are all subject to the 2nd Law of Thermodynamics which basically says the maximum efficiency of a heat engine is 66%. The conversion of electrical energy to mechanical energy however is not under this constraint. This will help us understand that in fact we waste most of our primary energy. For example most coal power stations produce electricity at anywhere from 32% to about 38%, nuclear about the same, because they use the heat to heat steam and use the pressure of the steam to turn the turbines.

Gas power stations, often referred to as combined cycle gas turbine (CCGT) tend to be higher efficiency reaching to the mid 50s, because they use the heat from the gases to directly turn the turbine and exhaust heat for generation of steam. Sometimes they are also referred to as combined heat and power which means the low grade heat is used in nearby buildings. Efficiency figures are often quoted as high as 70% and these are estimated on the basis that they are making use of say 70% of the energy which is not quite the same thing. It is obvious then why in the last decade most new power stations in the USA and Europe have been gas power stations. It is worth noting that while it is great to have high efficiency plants, it also means that to get any more improvements they are going to be both relatively small and difficult to achieve.

Anyway you can see just at power generation we lose about half. Then there are transmission losses, but these would only be about 7%, although you do see wild figures much higher, but I don't think they are correct. Now that you have the electricity depending on what you do with it there will be other losses. For example an electrical car will not make 100% usage of the electrical energy.

Besides charging batteries is in itself a user of electricity, and typically batteries achieve 50% to 60% efficiency, while sealed Lead-Acid batteries can be as high as 95%. But high power battery is generally lower. This means that your typical electric car battery is probably somewhere in between and would be one of the biggest losses in efficiency there.

The typical car is reckoned to only be around 15% to 20% efficient at converting the energy in the fuel into mechanical motion. Its obviously worse for SUVs or other vehicles that get from around 12 or less miles to the gallon. Note there are around 130 million cars and 80 million SUVs and light trucks in the USA. And while on the subject of fuel usage for the USA, the US military uses a bit less than 1% of all the oil used in the USA. I have given that because I came across the figure recently and previous figures that I have seen have quoted grossly inaccurate figures. And for reference, globally there are about 700+ million vehicles. It is obvious that car ownership in China is never going to reach the ownership levels of Europe or the USA.

So in summary we find that in fact we simply waste the vast majority of our energy before we get our usage out of it. And for all we know, you might be just making some toast.

The main sources of energy used in society are: coal, oil, natural gas, hydro, nuclear, and some renewables like wind, solar and geothermal and biomass. By far the most important are the first three sources as they supply as with most of our energy. Until the oil crisis in the 1970s and early 1980s, oil was quite important for generating electricity, but now it has shifted to about 40% reliant on gas, with about another 35 to 40% on coal and the rest on nuclear and hydro. It of course varies from country to country.

3. Background to Peak Oil

Oil is by far the main source of energy for transport. Without it the modern car society and the sub-urban environment which is structured so that you must drive, would not exist. In the graph being passed around is a plot of past and future global oil production. Today, 2006, global production is around 85 million barrels a day, which x365 is approximately 30 Gb a year. The biggest single user is the USA at around 22 mbd, with other big blocks of users being the EU, Japan and China.

An oilfield is NOT some underground cavern of oil. It is more like a layer of sand soaked in oil and you have to draw the oil out, although in the beginning the pressure can be so high it squeezes itself out. Not all the oil can be extracted from an oil well and it ranges from mid 30% to around 50% ultimate recovery. After that you would have to use more energy to get it out. In the past 25 years, the technique of injecting water at the edges to basically create a wall of water that pushes to oil out in front of it has been used. What has been found and is important, is that the quicker you extract the oil, the lower the ultimate recovery. That way you can damage fields.

Past and Future Global Oil Production

So oilfields don't just gush from day to the last day. What happens is production gradually rises in something resembling a bell curve, reaches a peak and then falls. This is what Peak Oil is about, because collectively for all fields the total global production rises, peaks and then falls. This is well proved.

So the vast majority of predictions for the date of Peak Oil, range from late last year (2005) out to about 2010 or so. Only the extreme optimists talk of anything later, and they have been fairly quite lately.

4. Peak Gas

I don't have much time to discuss this, but individual gas field production is different. Production rises very rapidly to a plateau and basically continues like this and then suddenly falls, usually with little warning. It turns out though that collectively production behaves like Peak Oil and Peak Gas is projected to occur around 2010 to 2020. The picture is not as clear here. Gas is much harder to transport and people prefer pipelines. Most of the significant supplies of gas now remaining untapped are Siberia and the Middle East. Production has already peaked in the North Sea with the UK importing gas for the first time last year and production has peaked in all of North America, leaving them the task of rapidly building up a LNG tanker fleet and port facilities. Except 40% of electrical power in the USA is produced with gas. Not good.

5. More about Oil Fields and Reserves

Despite all the new technology the peak of the discovery of oil fields was in the 1960s and nobody disputes the hard data on this. Basically this is what happened. People tripped over the early oil (gushers), then found it useful (1920s to 1930s), the motorcar kicked in and GM ripped up tramlines everywhere. Oil production and usage began to soar and an concerted effort was made to find more of the stuff. As each geological basin was explored, relatively simple techniques were good enough to find the biggest fields. On average, a study was done of this, the 2nd field found in any oil producing region has nearly all turned out to be the largest field in that area. Then the remaining smaller and trickier fields were found, and deeper ones too. Please see the 2nd graph circulating.

The Peak of Discovery

Another interesting thing, (see graph) is that of the 14 biggest fields in the world, they alone produce 20% of the total daily global production. Think about that. The next 12 in size add another 6%, the next 29 fields add 9% and the next 61 add 12%. So just this top bunch are producing at least 35%. You will see the next 4,000 fields produce the rest. Now if you were in the oil business, it is clear you would find in cheaper, more profitable and of course cheaper to be sipping just one big field than messing around with a few hundred small fields.

The Dominance of Big Fields in Production

But as noted, very few of these big fields have been found recently and any that have were generally of the small end of the big field end. So it should be clear then what is meant by the end of Cheap Oil. And there is another thing, the best oil, that is the cleanest and most easily accessible and refineable has been in the big fields. Conventional oil is increasingly sour and heavy where sour means it contains sulphur and other stuff. Getting deep sea oil is much more hassle and extracting oil from Tar Sands is bordering on insanity.

6. Who has peaked?

Of the largest 21 fields, about 9 are already in decline. Large questions hang off the biggest field of all, Ghwar and it is allegedly nearing its end as most of these giant fields have been producing for periods ranging from 20 years to 50 years.

Well the USA was one of the first to peak and that was back in 1971. Other countries that have peaked are the UK & Norway (both down 20%+), China, Mexico, Venezuela, Indonesia, Russia*, Syria, Libya, Nigeria, Qatar, Columbia (possibly Kuwait -recent report -Burgan field) and many others.

7. The Legacy of Oil

The history of industrial revolution and it's aftermath has been burning most of the European forests for smelting Iron, finding Coal just in time and then discovering Oil and building the suburbs and driving to the shops.

A quick note about coal. There is still a lot left. We burned most of the good stuff. But if we burn what's left it will be more a case of Global Baking than Global Warming.

What has not been realized but is beginning to dawn, is the Cheap Oil has in fact subsidised all other forms of power, whether than be coal, gas, electricity, nuclear, hydro and especially renewable and made them cheaper than they really are. Same goes for modern agriculture and our "cheap" food. Because oil is used in all facets of these in terms of driving the workers and equipment, supporting the entire transport infrastructure and its operation, these have all been hidden subsidies. Besides, if you price oil cheaply, you can't exactly charge 30 times the rate for the equivalent amount of power from other sources. When oil gets more expensive, so will all these energy sources. They already are. Look at natural gas prices. And that in turn has already driven up electricity prices.

There is an enormous religious like faith in the idea of "progress". The only way is up! People confuse and interchange the words technology and energy. They are not the same thing. Something will have to replace oil and gas. There isn't anything like enough Uranium to go nuclear fission all the way even if we want to. The progress flock see their saviour in renewables. What is usually missing from the argument is scale.

Of the renewable energy resources, wind power is by far the most advanced and is at least a factor of 10 or more ahead of solar. For example wind power has been growing massively for 15 years, yet the most optimistic wind industry forecasts see it producing only around 12% of global electricity in 2020. And that is assuming we don't all buy electric cars. An interesting thing that I discovered about wind power is that generally when you install a wind turbine, say a 1 MW (MegaWatt), you only get 1 MW of power when the wind blows the optimum, anything less and it produces less than 1 MW. And because the wind is not blowing all the time, the industry figure shows that the utilization rate is only about 23%. With offshore, which has more wind and consistent speeds, it is reckon utilization will only rise to 26% by 2010.

Extending this argument to solar photovoltaic cells, assuming on average 12 hr day and 12 hr night, you would think that you are getting 50% utilization -a lot higher and better. Well, no, because the first 2 hrs and last 2 hrs of the day probably aren't much good since the sun is at the wrong angle and incident solar radiation lower, which means we at best might only get 8hr/24hrs - or 33% utilization.

So you can see that economics or rather use of resources comes into the picture quite strongly. For all the faults of a coal, gas, oil or nuclear power station, their utilization rate is bound to be much higher. So for the equivalent amount of power to be produced, you may have to effectively build the equivalent of 2, maybe 3 times as much capacity of power generation from either solar or wind.

What most people who spend anytime studying or reading the whole Peak Oil issue is that our lifestyle, -i.e. the car is going to have to change.

8. What Happens Next?

Well what you think happens depends on whether you are an optimist, pessimist or a realist. Unfortunately the realists tend to be hanging around the pessimists camp. The time to start and prepare was at least 30 years ago, but whatever we did can still have an influence. It has probably not gone unnoticed that the USA has gone for the oil grab and might is right technique. The trouble is the other superpowers like Russia and China are none too pleased.

An interesting general overview to consider is this: If in the collection of countries throughout the world, you wanted to raise the overall efficiency in the use of energy, then surely the best thing would be to remove the most profligate user of it from the picture. That of course would be the USA. Oil is traded in dollars and acts as subsidy to them and make oil cheap for them. Everyone wants to move out of trading in dollars and it is beginning to happen. Russia has already started, Norway is thinking of it. Chavez is thinking of it and Iran is ready but does not seem to have the staff of trader experience. A collapse of the dollar would all be that is needed to cause a depression over there and therefore greatly reduce demand. It is obvious that in any system under stress clearly the most inefficient user is going to suffer most and probably be effectively eliminated very early.

So it is at this point that we can take off into the political consequences which are vast. Now some people might find this a waste of time, but I don't because the potential for widespread conflict and disruption is enormous and we have to be able to understand the situation in order to react to it. The history of the last century shows that the powers-that-be, capitalists, dictators, have proved to be extremely effective in herding their populations into war and getting them to fight them. We have to be in a position to say this is bogus and this is why and there are ways of solving these problems. If we don't understand the situation then we don't know what we are talking about and are voices will just get lost in all the chatter.

9. Question and Answer Time

and are voices will just get lost in all the chatter.

10. Resource Material -Updated daily, tonnes of really good material. -original call to action. -Contains the Newsletters from ASPO. -Wikipedia -its okay -started early and got lots of people interested and worried. -Article on the Natural Gas Crisis

And see this graph of gas production in North America showing the rapid decline in the size of fields in the article: Minnesota Energy Future: Part II-B: Energy + Resources at

Biofuels: 'Thermodynamics of the Corn-Ethanol Biofuel Cycle' by Tad W. Patzek at -See The Long Emergency -probably most realistic. -early material from 1982 by William Catton on overshooting the carrying capacity of the Earth

'Food and Energy in Japan: How will Japan Feed Itself in the 21st Century?' -This is an unique and very important study by Tony Boys in Japan. Can be found at:
The table of contents are at:

More work by Tony Boys, explaining the effects on the oil shortages there due to collapse of Soviet Union. The Limits of Energy-Based Agricultural Systems and the "North Korean Food Crisis"

Planet of Slums: -excellent article pointing out that billions already live in slums. So what's different for them? -European Wind Energy Association. Its publication section provides plenty of good facts and figures.

Finally, you should google The Hirsh Report which was commissioned by the US Dept. of Energy and they accept its finding at face value, which basically says preparation should have started at least 10 years ago, and there is a very strong possibility of a global economic depression.

This is the text of talk given to Jack White Branch on 23rd June 2006 by a guest speaker.