Category Archives: Peak Oil

Biofuel, Geothermal, Peak Oil

What About ‘A Long Time’ Do We Not Understand?

Just because O‘ahu does not have a base power solution to
electricity, and needs to grow biofuel to generate electricity, that does not mean the Big Island – which has a vast geothermal resource – needs to grow expensive biofuels just to copy O‘ahu.

We need to treat each island as a bundle of resources, and solve each island’s problems according to the resources it has. We cannot afford a one-size-fits-all plan.

Farmers make these kinds of decisions all the time. You work
with the ground under your feet, not the ground that exists the next valley over.

The Age of Oil is now 150 years old and we are already talking about decline. But the “hot spot” under the Big Island will last 500,000 to 1 million years.

What is it about “a long time” that we don’t understand?

This video is by Jeff Rubin, former chief economist at CIBC World Markets, the investment banking arm of the Canadian Imperial Bank of Commerce.

In it, he gives a clear description of today’s oil situation and discusses why oil prices will be rising – and sooner than people think.

It’s because we simply are not finding as many new oil fields as we are using.  More and more, the evidence is growing and we need to come to grips with reality.

It does not have to be disastrous. But we do have to be smart and think like survivors.

Where do we want our future generations to be 150 years from now?

Peak Oil

Coming Up Next Month: Peak Oil Conference 2010

It’s Peak Oil Conference time again. I highly recommend this conference, especially for folks in decision-making positions here in Hawai‘i.

I have attended the Peak Oil conference twice before, in 2007 and again last year. Both times I paid my own way and was the single, solitary person to attend from the entire state of Hawai‘i. This time, I am going as a representative of the County of Hawai‘i.

Aspo_2k10_peak_oil_banner  

Here’s the conference information:

Join us in Washington, DC Oct 7-9 for our 6th annual dialogue with the experts on peak oil, energy and the economy.

ASPO-USA members and subscribers receive a $100 discount on all registration categories through Sept 14, 2010

Register Now

More Tangible Benefits Than Ever!

Sometimes change is glacial, sometimes swiftly chaotic. Get the latest data from the best sources with up-to-date numbers on both conventional and unconventional production, depletion, flows, costs, and the opportunities and challenges that come with them.

Keynote Speakers

Geopolitics: Dr. James Schlesinger will announce and explain, once and for all, with updated finality that “The Peak Oil Debate is Over”, for above-ground and below-ground reasons;

Global Trade: Jeff Rubin will present his views on the “End of Globalization” due to energy constraints and be available all week as part of our interactive discussions;

National Security: Admiral Lawrence Rice will explain the U.S. military’s peak oil warnings during our Saturday plenary on national security with Michael Klare, Lt. Colonel Danny Davis, and Tom Whipple;

Transportation:  Dr. Charles Schlumberger of the World Bank will discuss liquid fuel concerns in aviation while Dr. Roger Bezdek, Anthony Perl and others will focus their analysis on the future of transportation.

Investing: learn the personal and institutional upsides and downsides from the Dean of the Energy Analysts, Charlie Maxwell, and don’t miss our popular peak oil investing sessions with Dr. Schlumberger, Jim Hansen, Lily Donge, Gregor Macdonald and others.

See Full Agenda and Speakers

* It’s not just another great ASPO-USA Conference. It’s Conference+Plus. It’s the Year of Hydrocarbon Hell, and our peak oil message will not be ignored by the powers that be. Just to make sure, we are taking the message to the policymakers with a Senate Briefing, a House Briefing, a National Press Club news conference, and other targeted outreach efforts inside and outside the Beltway. Two highly-respected consulting firms are helping to organize ASPO’s first ever fire-hose-data-flow to lawmakers. First come, first served with strictly limited seating for these special events.

 * Sometimes wine and hors d’oevers are better than PowerPoints.  Imagine you’re at the opening reception having a drink with Art Berman, and you ask about his work on the 2010 National Petroleum Council Study. He shares with you the latest input from Jean LaHerrere. Or you overhear some information about the forensic investigation of the BP blowout preventer. This kind of information doesn’t come with the DVDs.

Come to the Conference on the Future of Energy

Register Today!

Call 877-363-ASPO (2776) or email webmaster@aspousa.org

Big Island, Biofuel, Geothermal, Peak Oil, Renewable Energy Sources

‘Aloha, Aloha, Call When You Find Land!’

I stayed at the Ala Moana Hotel last week while attending the Asia Pacific Clean Energy Summit, which had 1400 participants and was huge and exciting.

One evening, as I sat on the lanai of my hotel room looking toward Waikiki and all the lit-up hotel rooms and bright lights and the headlights and tail lights of cars, it came to me: Everything visible was dependent on oil.

The only thing I could see that was good was that the Macy’s sign is cheaper to power than the Liberty House sign it replaced. Shorter sign.

Sitting out there on the lanai, it became clear to me that if we follow HECO’s plan for using biofuels to generate electricity for the Big Island, we will soon have limited food resources and will be making plans to send people out to discover new lands.

Back in 2007, I spoke at the Hawaii Island Food Summit:

I told them I had a nightmare that there would be a big meeting down by the pier one day, where they announce that food supplies were short because the oil supply was short and so we
would have to send thousands of people out to discover new land.

I was afraid that they would send all the people with white hair out on the boats to find new land—all the Grandmas and Grandpas and me, though maybe not June.

Grandmas and Grandpas hobbled onto the boats with their canes and their wheelchairs, clutching all their medicines, and everybody gave all of us flower leis, and everyone was saying,
“Aloha, Aloha, call us when you find land! Aloha!”

If, instead, we on the Big Island follow our own plan of maximizing
our geothermal resource, and start to add others such as wind, solar and ocean resources as they scale up; and if we emphasize lots of small- to medium-sized diversified farms, we will not need to send out the canoes to look for new land.

The Big Island could help solve O‘ahu’s food and fuel issues, too, so it wouldn’t be necessary for them to send their white-haired folks off, either.

The Asia Pacific Clean Energy Summit was exciting and I’ve spent all week trying to put all the goings-on into perspective. O‘ahu has a real serious electricity problem. It has no proven-technology base power alternative to fossil fuels. And it has limited opportunity to integrate solar and wind.

I can absolutely see why HECO was anxious to institute Smart Grid. It was an attempt to wring every bit of efficiency out of intermittent sources of power.

I can also see why HECO made the decision that biofuels would have to be a solution for O‘ahu. The biorefinery is located on O‘ahu. I can even understand why they changed their minds and decided to bring on more PV solar. THEY do need everything!

What I just cannot understand is why HECO tried to force the Big Island to go that route.

We on the Big Island need a different strategy – one that focuses on the Big Island’s resources and environment.

Peak Oil

Energy Conservation & Regular Folk

I don’t talk about energy conservation much because the regular folks already have this figured out.

I would feel a lot better, though, if the regular folks had a greater say about our energy policy.

When the oil price spiked in the summer of ’08, Moms all over the island were following their kids around, turning off lights. By that summer, one could see lots of big pick-up trucks in used car lots. Many more were parked along the roadsides with “For Sale” signs on their windshield.

My nephew’s family had a car and a big-tired 4-wheel drive pickup truck for work transportation. One day, my nephew told me: “Uncle, I’m going to sell my truck and get a scooter to go to work.” A young guy, selling his big-tired pickup truck, the one he used to take his pitbull riding in the back, for a scooter? There is no question that the regular folks get it about high energy costs! That consciousness is working its way through our whole society.

No, I don’t worry about the regular, rubbah slippah folks. I worry more about the folks that have no “real world” life experiences and are making survival decisions for the rest of us.

Geothermal, Peak Oil, Renewable Energy Sources, Sustainability, Video

Video: Climbing Up The Bamboo Pole

Richard Ha writes:

Awhile back I spoke to the UH Hilo Student Association Senate leaders about geothermal energy. I warned them that exponential growth fueled by a finite resource – oil – was a serious problem for us here on the Big Island.

Along the very same lines, Lloyds of London just warned its business clients to prepare or it could be catastrophic. I wrote about Lloyds of London's warning here.

I told the student leaders that we need to know what we are going to do before a catastrophe happens. "White water coming, we need to climb up the bamboo pole and lift up our legs." 

This video sums up everything I talk about on this blog.

Richard Ha Video 

Peak Oil

Life of a Gas Well

Less than two years ago, people were claiming that the U.S. had 100 years of natural gas available, finally accessed by fracturing the rocks that held it trapped, using high water pressure. “Fracking,” they call it.

Shale gas made a significant impact. We stopped talking about importing natural gas.

So when I attended the Peak Oil Conference in Denver this past October, I took a special interest in a panel that included the CEO of a gas drilling company as well as Arthur Berman, a geologist who has been analyzing many gas wells.

What Berman found was that 70 percent of the production of a well was realized in its first year. The gas company executive was trying to say that the life of a gas well was 22 years, but I had the impression  he was being overenthusiastic about how much was left to exploit. I believed Arthur Berman.

Everyone was trying to get into the act by rushing to drill more gas wells, and the number of gas rigs increased so rapidly that the price dropped to nearly $3 per thousand cubic feet. They lost so much money that they had to drastically cut the numbers of gas rigs in operation.

Months went by, and to everyone’s shock there was a drop in production and the price shot up. What happened was just what Arthur Berman had predicted—70 percent of the average gas well had been extracted in the first year. So when they took out so many rigs a year ago, the result was a sudden drop in production volume within the year.

In this interview with Art Berman, he is not optimistic about the U.S. having a 100-year natural gas supply. Neither am I.

Peak Oil

‘A Global Economy is An Oily Way to do Business’

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Jeff Rubin says oil prices will rise but that we can cope if we do the right things. I too, believe that we can adapt.

Rubin was the chief economist at CIBC World Markets for almost twenty years. He was one of the first economists to accurately predict soaring oil prices back in 2000, and now he is now a sought-after energy expert.

I like what Jeff Rubin has to say:

“If we continue to commute 60 miles each way in SUVs, we’re going to get screwed. All of a sudden, peak oil will equal peak GDP; that’s not just an economic recession for a couple of quarters, that’s a world of no economic growth. The point of my book is that, while we can’t do anything about triple-digit oil prices, there’s a whole lot we can do to make sure that when we encounter triple-digit oil prices, they don’t have to be so devastating as in the past.

“We have to reduce, in effect, oil per unit of GDP, and the way we do that is to go from a global economy back to a local economy because a global economy is an extremely oily way of doing business. And that switch isn’t something that the Federal Reserve Board or US Treasury or the Bank of Canada or the European Central Bank is going to put in place; that is going to be the aggregate result of all the micro decisions that consumers make about what we eat, where we live and how we get around.

“I think triple-digit oil prices will lead us to make the right decisions on those fronts, and the result will be a very different economy than the economy we know.”

Aquaponics, Peak Oil, Renewable Energy Sources

Lloyds of London says ‘Expect $200/Barrel Oil by 2013’

Lloyds of London just issued a  White Paper on Sustainable Energy Security. It is a paper addressed to businesses and it says everything I’ve been saying for the last couple of years.When I attended those two Peak Oil conferences, it was because I wanted to learn how to position my business for the future. And I did.

Here is a formal road map that other businesses can follow. Modify the information to allow for Hawaiian conditions.  

Strategic risks and opportunities for business
Executive summary
 
1. BUSINESSES WHICH PREPARE FOR AND TAKE ADVANTAGE OF THE NEW ENERGY REALITY WILL PROSPER – FAILURE TO DO SO COULD BE CATASTROPHIC
Energy security and climate change concerns are unleashing a wave of policy initiatives and investments around the world that will fundamentally alter the way that we manage and use energy. Companies which are able to plan for and take advantage of this new energy reality will increase both their resilience and competitiveness. Failure to do so could lead to expensive and potentially catastrophic consequences.

What if the EPA declares CO2 a dangerous gas? What is plan B? C?

 2. MARKET DYNAMICS AND ENVIRONMENTAL FACTORS MEAN BUSINESS CAN NO LONGER RELY ON LOW COST TRADITIONAL ENERGY SOURCES
Modern society has been built on the back of access to relatively cheap, combustible, carbon-based energy sources. Three factors render that model outdated: surging energy consumption in emerging economies, multiple constraints on conventional fuel production and international recognition that continuing to release carbon dioxide into the atmosphere will cause climate chaos.

This means that people will need to bite the bullet and accept the high cost of renewable fuels. But what if we have the opportunity for cheap renewable electricity? And what if this means that we can elevate the living standards of the host Hawaiian culture? Should we turn it down, or should we fight for it?

Geothermal is cheap and renewable and, compared to fossil fuels, bio fuels and bio mass alternatives, it is environmentally friendly. Of course we should fight for it!

3. CHINA AND GROWING ASIAN ECONOMIES WILL PLAY AN INCREASINGLY IMPORTANT ROLE IN GLOBAL ENERGY SECURITYChina and emerging Asian economies have already demonstrated their weight in the energy markets. Their importance in global energy security will grow. First, their economic development is the engine of demand growth for energy. Second, their production of coal and strategic supplies of oil and gas will be increasingly powerful factors affecting the international market. Third, their energy security policies are driving investment in clean energy technologies on an unprecedented scale.
 
China in particular is also a source country for some of the critical components in these technologies. Fourth, as ‘factories of the world’, the energy situation in Asian countries will impact on supply chains around the world.
 
4. WE ARE HEADING TOWARDS A GLOBAL OIL SUPPLY CRUNCH AND PRICE SPIKE
Energy markets will continue to be volatile as traditional mechanisms for balancing supply and price lose their power. International oil prices are likely to rise in the short to mid-term due to the costs of producing additional barrels from difficult environments, such as deep offshore fields and tar sands. An oil supply crunch in the medium term is likely to be due to a combination of insufficient investment in upstream oil and efficiency over the last two decades and rebounding demand following the global recession. This would create a price spike prompting drastic national measures to cut oil dependency.

With every year that goes by, the world’s oil fields are aging at the rate of 4 million barrels per day. Saudi Arabia produces only 10 million barrels per day. This means that every 2½ years we need to have found the equivalent of a Saudi Arabia. Are we doing this? NO! We have not found giant oil fields like Saudi Arabia since the 1970s. We have not found enough to make up the natural aging of oil fields.
 
It is estimated that we will only be able to produce half of the 4 million barrel decline. This means that in less than two years, once our extra capacity runs out, we will be short two million barrels per day.

Supply constraints will drive up the price of oil.

“A supply crunch appears likely around 2013…given recent price experience, a spike in excess of $200 per barrel is not infeasible.” Professor Paul Stevens, Chatham House.

5. ENERGY INFRASTRUCTURE WILL BECOME INCREASINGLY VULNERABLE AS A RESULT OF CLIMATE CHANGE AND OPERATIONS IN HARSHER ENVIRONMENTS

Much of the world’s energy infrastructure lies in areas that will be increasingly subject to severe weather events caused by climate change. On top of this, extraction is increasingly taking place in more severe environments such as the Arctic and ultra-deep water. For energy investors this means long-term planning based on a changing – rather than a stable climate. For energy users, it means greater likelihood of loss of power for industry and fuel supply disruptions.
 
6. LACK OF GLOBAL REGULATION ON CLIMATE CHANGE IS CREATING AN ENVIRONMENT OF UNCERTAINTY FOR BUSINESS, WHICH IS DAMAGING INVESTMENT PLANS
Without an international agreement on the way forward on climate change mitigation, energy transitions will take place at different rates in different regions. Those who succeed in implementing the most efficient, low-carbon, cost-effective energy systems are likely to influence others and export their skills and technology. However, the lack of binding policy commitments inhibits investor confidence. Governments will play a crucial role in setting policy and incentives that will create the right investment conditions, and businesses can encourage and work with governments to do this.
 
7. TO MANAGE INCREASING ENERGY COSTS AND CARBON EXPOSURE BUSINESSES MUST REDUCE FOSSIL FUEL CONSUMPTION
The introduction of carbon pricing and cap and trade schemes will make the unit costs of energy more expensive. The most cost-effective mitigation strategy is to reduce fossil fuel energy consumption. The carbon portfolio and exposure of companies and governments will also come under increasing scrutiny. Higher emissions standards are anticipated across many sectors with the potential for widespread carbon labelling. In many cases, an early capacity to calculate and reduce embedded carbon and life-cycle emissions in operations and products will increase competitiveness.
 
8. BUSINESS MUST ADDRESS ENERGY-RELATED RISKS TO SUPPLY CHAINS AND THE INCREASING VULNERABILITY OF ‘JUST-IN-TIME’ MODELS
Businesses must address the impact of energy and carbon constraints holistically, and throughout their supply chains. Tight profit margins on food products, for example, will make some current sources unprofitable as the price of fuel rises and local suppliers become more competitive. Retail industries will need to either re-evaluate the ‘just-in-time’ business model which assumes a ready supply of energy throughout the supply chain or increase the resilience of their logistics against supply disruptions and higher prices. Failure to do so will increase a business’s vulnerability to reputational damage and potential profit losses resulting from the inability to deliver products and services in the event of an energy crisis. 

We have changed our business model to give our customers the opportunity to shorten their supply chain. And we have included many small farmers in order to make ourselves more resilient, which benefits our customers (the retailers).
 
With our hydroelectric plant, we will immunize ourselves from the increasingly risky and unstable fossil fuel infrastructure.
 
HECO should go to geothermal faster, rather than slower, in order to accomplish the same thing.

9. INVESTMENT IN RENEWABLE ENERGY AND ‘INTELLIGENT’
INFRASTRUCTURE IS BOOMING. THIS REVOLUTION PRESENTS HUGE OPPORTUNITIES FOR NEW business PARTNERSHIPS
The last few years have witnessed unprecedented investment in renewable energy and many countries are planning or piloting ‘smart grids’. This revolution presents huge opportunities for new partnerships between energy suppliers, manufacturers and users. New risks will also have to be managed. These include the scarcity of several essential components of clean energy technologies, incompatible infrastructures and the vulnerability of a system that is increasingly dependent on IT.

Many opportunities will come up. Will we recognize them? If we expect this to happen, we can.

“Peak oil presents the world with a risk management problem of tremendous complexity.” US Department of Energy 2007.  A vast array of studies have attempted to predict the time at which global oil production will reach a maximum level, from which point it will go into irrevocable decline. Some suggest that this ‘peak’ has already occurred, while others maintain it is either impossible to predict or shows no sign of appearing. Looking further than a decade into the future presents many uncertainties, including: the availability and cost of extraction technologies; substitute technologies; pricing systems in major economies; and carbon legislation. A comprehensive two-year study by the UK Energy Research Centre completed in August 2009 found that a peak in conventional oil production before 2030 appears likely, and there is a significant risk of a peak before 2020. With average rates of decline from current fields, the report says that just to maintain current production levels would require the equivalent of a new Saudi Arabia coming on-stream every three years. What’s more, giant fields pass peak production levels and there is a shift to smaller, more difficult to produce fields that have faster depletion rates meaning the rate of decline will accelerate.

Better to be safe than sorry. Plan on oil spikes in two years.

Rare earth metals (REMs) are a group of 17 elements whose unique properties make them indispensable in a wide variety of advanced technologies. They are an important example of material scarcity in the ‘third energy revolution’, because they are indispensable for so many of the advanced technologies that will allow us to achieve critical national objectives. As such, disruption to their global supply is a new energy security concern. Their production, alongside the metals and magnets that derive from them, is dominated by one country, China. At present, China produces 97% of the world’s rare earth metals supply, almost 100% of the associated metal production, and 80% of the rare earth magnets. REMs such as neodymium are the world’s strongest magnets and are key components for more efficient wind turbines, each of which requires about two tonnes. They are also important in enabling the miniaturising of electronic equipment; consequently demand grew between 15% to 25% per year from 2003 to 2008. 

We need to know where they occur so we can avoid bottlenecks. In many cases in the future, simplicity will be a virtue.

Peak Oil

Staying Current On Peak Oil

1 Comment

By now, most people realize that oil prices are going to
keep rising due to declining world oil supplies.

Information confirming what I’ve been saying here all
these months is starting to come in so fast and furious that I’m having trouble keeping up with it anymore.

So I’ve decided to provide links to the energy articles and blogs I find most useful in keeping track of these topics. They’ll also be posted soon on the sidebar on this blog.

• Gail Tverberg is one of the editors of The Oil Drum, and I find her to be one of the most credible writers on energy. When The Kohala Center brought her to the Big Island to be the featured speaker in an energy forum, I took her to give a talk to the Kanaka Council. She was extremely well received by them.

• Robert Rapier cuts through the spin and hype relating to biofuels. His responses to comments are very informative.

• Subscribe to daily Peak Oil news to stay current on energy
topics. Soon you will be as current on energy news as anybody.

• This Chris Martenson video on Peak Oil explains
what’s going on very clearly. I strongly recommend you look at the rest of the “chapters,” too.

• I recommend this Jeff Rubin YouTube video. Rubin is a Canadian economist and author, and a former chief economist at CIBC World Markets. From the video:

“How much longer can the world pretend that it won’t soon
be facing another energy shock, one every bit as challenging as the one it faced two years ago? Whether we are talking about supply or demand, there is nothing on the horizon to prevent the imminent return of the very same oil prices that put us into the deepest postwar recession yet in the first place.”

• Subscribe to The Energy Bulletin. This is an excellent Energy Bulletin article by Chris Nelder: “Officials wake up to peak oil, part 2:”

“…Estimates on the timing of the peak have narrowed
dramatically, and now center on the 2012-2015 time frame. The range of estimates on the peak rate of production remain a bit broader and shrouded in caveats, but they are rapidly drawing closer to 90 mbpd. And the globally
averaged, post-peak annual decline rates are settling in around 2%.

In other words, industry and governments appear to be
coming around to what my call has been all along — 2012, at 90 mbpd or less, then declining at about 2.5% per year.

Now we know that the oil and gas industry, and the world’s
governments, are not only aware of the peak oil threat but they are deeply worried about it. Worried enough to huddle behind closed doors, away from the press. Worried enough to formulate plans to control price volatility. Worried enough to agitate for more transparent data. Worried enough to begin planning for a future of relentlessly declining energy.

But not worried enough to tell the American people the
truth—not just yet.”

Geothermal, Peak Oil

Richard on ‘Geothermal & Peak Oil’ Today

Richard will be speaking at a Sierra Club meeting today.

From Big Island Chronicle:

Richard Ha will speak about “Geothermal and Peak Oil” at a Sierra Club meeting Wednesday, April 28, 2010, at the Ola’a Community Center in Kea’au (across from McDonalds). A potluck at 5:30 p.m. will precede the meeting slated for 6 p.m. Ha had the large banana farm in the Kea’au area before becoming the Hamakua tomato farm producer he is today….(read more)

If you’ve read this blog before, you know that geothermal and peak oil are topics Richard feels strongly about and has been concerned about for a long time.

“I happen to believe  the world has changed and that we need to make the right energy choices for future generations,” he said. “Geothermal is proven technology, it does not depend on subsidies to make it work, it’s cheap, it doesn’t emit greenhouse gases and it is a resource for the people of Hawai‘i.”