A Cubic Mile of Oil

Ripudaman Malhotra, Ph.D.SRI InternationalMenlo Park, CA 94025

Junior Statesman Symposium on Energy

August 5, 2009

Ripudaman Malhotra, Ph.D.SRI InternationalMenlo Park, CA 94025

Junior Statesman Symposium on Energy

August 5, 2009

Realities and Options for Averting the Global Energy Crisis

OutlineMeeting global energy demand requires innovation

• Importance of energy in our lives

• A framework to discuss our energy

problem – a cubic mile of oil (CMO)

– Current status

– Future projections

• Options for increasing energy supply

or decreasing demand

• Bridging the gap through cycles of

innovation

A huge problem but an equally huge opportunityA huge problem but an equally huge opportunity

Energy: Essential for Our LivingWanted: cheap, clean, and plentiful energy

• We use it for:

– Growing our food

– Building comfortable homes

– Transportation

– Communication

– Entertainment

• Adequate energy required to:

– Remove the scourge of poverty

– Provide clean water, food, clothing, shelter

– Reduce and prevent diseases

– Protect the environment

– Mitigate global warming and climate change

– Reduce the threat of terrorism

A new framework

A Cubic Mile of Oil (CMO)

A Veritable Tower of BabelMust make discussion of energy accessible and understandable

• Different units for different sources

– Gallons or barrels for oil

– Tons or BTUs for coal

– SCFs for natural gas

– kWh for electrical energy

• Lack of uniform units

– Presents a serious impediment to meaningful discussion

– Creates confusion: millions, billions, trillions, quadrillions!!!

A Cubic Mile of Oil - CMOUnderstandable unit: mental image

CMO is a unit of energy coined by SRI’s Hew Crane while waiting in the 1970s gas lines. His realization: annual global oil consumption was then approaching one cubic mile!

6

mile

mile

Statue of Liberty

Visualizing a Cubic Mile

1 cubic mile = 1,000 sports arenas

• 1 CMO � 1.1 trillion gallons of oil26 Billion (109) bbl oil

• 1 CMO � current annual worldwide oil consumption

• 1 CMO is equivalent to:

–153 Quadrillion (1015) Btu (Quads)

–6.4 Billion (109) tons of hard coal

–15.3 Trillion (1012) kWh electricity

(At 10,000 Btu/kWh; not 3412 Btu/kWh)

8 hours of cardio ���� 1kWh ���� 0.1 gal of oil

1 Btu ����the energy from a

burning match

CMO: Cubic Mile of Oil EquivalentUnit appropriate for global energy flows

Inherited

Annual Global Energy Consumption We are living off our inheritance – how long will it last?

*2006 Data

Income

Total 3.0 CMO/yr

Total 3.0 CMO/yr

Regional Energy ConsumptionAffluence, not population per se, drives energy use

Additional 1.48 CMO

North America

Central/South

America

Europe

Russian Group

Asia/Pacific

Mid-East/North Africa

Sub-Saharan Africa

North America

Central/South

America

Europe

Russian Group

Asia/Pacific

Mid-East/North Africa

Sub-Saharan Africa

Additional 0.68 CMO

Projected Energy Demand by 2050We will need several additional CMOs/yr

Recent energy growth rate: 2.5%/yr

Annual GDP growth rate:

World: 5.5%

China: 11%

India: 9%

Recent energy growth rate: 2.5%/yr

Annual GDP growth rate:

World: 5.5%

China: 11%

India: 9%

2.6%

1.8%

0.8%

270 CMO

214 CMO

163 CMO

179 CMO

Σ

From 3.0 CMO/yr we are moving to 9.0 CMO/yrFrom 3.0 CMO/yr we are moving to 9.0 CMO/yr

Variable profile, IPCCVariable profile, IPCC

Don’t oil reserves run out in 40 years?

Our Inheritance

Reserves Depend on Technology and PriceAdditional resources become viable at higher prices

13

1 CMO = 1 nuclear power plant a week for 50 years1 CMO = 1 nuclear power plant a week for 50 years

Nuclear PowerAn option we cannot ignore

• Opportunity

– Established scalable technology

– Low footprint

– Ample reserves

• Risks

– Fears

• Radiation Exposure

• Explosions

– Political Challenges

• Nuclear proliferation

• Terrorism

– Technical

• Long-term storage

– Cost (in part fed by fears)

• Nuclear fusion, if realized, would ameliorate these risks

Our Income Options

The Sun Offers 23,000 CMO/yrAnd we are looking for just a few CMO per year, but…

Questions to Consider

• Does the source have CMO-scale potential to supply energy?

• What infrastructure is required for large-scale CMO use?

– Is it plug-and-play?

– New pipelines and transmission structure?

• What is its environmental footprint?

– Energy return on fossil energy invested?

– Competing land use issues?

– Biodiversity, habitat destruction?

• Can it compete with oil at $50/bbl, the cost of producing deep oil?

– If not today, in the foreseeable future?

17

Competition for green energy comes from cheap fossil sources, not other green sources

Competition for green energy comes from cheap fossil sources, not other green sources

Direct SolarStorage systems are needed

• Cost

– PV about 35 cents/kWh

– Concentrating Solar Power competitively priced

• Intermittency

– Reduces availability to 20%

– Need > 4 times the installed capacity

• Location

– Solar homes and offices (PV): close to use, but not enough

– Utility scale systems: remote from population centers

– Electricity transmission limited to < 1000 km

1 CMO = 250,000 roof-top systems a day for 50 years1 CMO = 250,000 roof-top systems a day for 50 years

BiomassThe only renewable that produces storable fuel

• Lots of hope and hype

• Global potential: 0.5 to 2 CMO

• May not reduce greenhouse gases

– Some options release more greenhouse gases than direct use of fossil fuels

• Can disrupt food supply and result in

undesirable land-use practices

1 CMO = 85 times current world production of soybeans1 CMO = 85 times current world production of soybeans

Wind PowerRuns up against NIMBY

• Pluses

– Huge potential: several CMO per year

– Relatively low cost

• Minuses

– Intermittent: 25-30% availability; needs gas backup and/or storage

– Dilute: 8-10 MW/sq. mile

– Whose land? Habitat?

– Often remote from energy consuming centers

1 CMO = 1200 turbines a week for 50 years1 CMO = 1200 turbines a week for 50 years

Producing 1 CMO/year from Various SourcesEnormous task requiring trillions of dollars

Current solutions are inadequate and pushing them could do more harmCurrent solutions are inadequate and pushing them could do more harm

• Hydro– 18 GW with 50% availability– 200 dams – 1 every quarter for 50 years

• Nuclear– 900 MW with 90% av.– 2500 plants -- 1 a week for 50 years

• Solar CSP– 900 MW with 25% av.– 7,700 solar parks – 3 a week for 50 years

• Windmills– 1.65 MW with 35% av.– 3 million – 1200 a week for 50 years

• Solar Roofs– 2.1 kW with 20% av.– 4.2 Billion – 250,000 roofs a day for 50 years

Managing Demand

Efficiency and ConservationLow-hanging fruit

• Efficiency: Using less energy to do what we do

– Easiest and most economical path

– Does not go all the way

– Historically, we end up increasing total consumption!

• Conservation: Avoid what we need not do

– Tough to change lifestyles

– Switch to high-density urban living and mass transit anyone? Vegetarian diet?

– Can have a substantial impact

1 CMO ���� 100 billion CFLs!1 CMO ���� 100 billion CFLs!

Changes in Global Energy Mix Have Occurred BeforeTransitions take scores of years

Why So Long to Get to Scale?Many roadblocks along the way

• Expansion slowed by

– Inertia of the incumbent system (sheer size)

– Market acceptability (cost)

– Resource limitation

– Infrastructure requirement

– Lack of trained personnel

– NIMBY, BANANA, and NOPE

• More rapid penetration possible

when aided by

– Strategic importance to military

– High-value products for niche markets

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ConclusionInnovation is the only way to solve our future energy needs

• Our planning cycle needs to

– Last for 40 years not four

– Transcend the prevailing price of oil

– Reducing demand from 9 to 6 CMO will be a major international effort requiring new technologies

• We need a family of innovations

– Short term: efficiency, conservation, CSP, nuclear, public education

– Intermediate term: Unconventional hydrocarbons, new engines, biofuels, electrify transportation

– Long term: Thin-film PV, nuclear fusion,???

• “AND” is the operative conjunction

– To make an impact, we need all technology options and more

– Nuclear AND solar AND wind AND… 26

Plant a TreeUrgent because we are late

The great French marshal Lyautey once asked his gardener to plant a tree. The gardener objected that the tree was slow growing and would not reach maturity for 100 years. The marshal replied, “In that case, there is no time to lose; plant it this afternoon!”

Thank you!

Additional slides

29

We Must Balance the Three E’sImperative to balance conflicting requirements

30

Visualizing a Cubic Mile

1 cubic mile = Manhattan under 150 feet of oil

Production and Consumption of Energy by RegionAsia Pacific and North America produce more energy than

the Middle East Region

1 CMO = 2 coal-fired power plants a week for 50 years1 CMO = 2 coal-fired power plants a week for 50 years

400400

Global Fossil Reserves and Resources in CMOWe have plenty of fossil fuels if…

Tar sands, oil shales

94Additional

Resource

94Additional

Resource

4646

5,0005,000

66Additional

Resource

66Additional

Resource

4242

120Reserves

120Reserves

Oil Gas Coal

Unconventional Unconventional 1500Additional

ResourceGas hydrates

Reserves

Even with Exponential Growth…

• Current combined green energy is about 0.005 CMO

• To get to 5 CMO, we require a 1000-fold increase

• That’s about ten doublings

• With a doubling time of 4 years (or 18%/yr), sustained growth of over forty years is needed

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It takes decades to effect significant changeIt takes decades to effect significant change

Projected Energy Demand by 2050Need additional energy on the order of several CMO/yr

We need global understanding, participation, and financing to meet our energy demands

We need global understanding, participation, and financing to meet our energy demands

Hydro plus nuclear today

Pickens’ Plan: Let’s Take a Closer LookNot so easy

• Aims to reduce US oil imports: $700B

• By installing enough wind power to displace gas-generated electricity, which is 20% of US electricity

• The mismatch– Electricity from natural gas: 0.053 CMO

– Net petroleum imports: 0.17 CMO

• Requires 117,000 3-MW turbines over ca. 30,000 square miles

At best, a part of the solution with huge costsAt best, a part of the solution with huge costs

• Gas needed for backup turbines cuts into savings

• Reduction of petroleum imports require using the “freed” gas for transportation: 100 million Honda GX NGV

25 X 25 AlliancesFocusing on what can be done

US Annual Energy

Requirements in 2025

Gap Analysis

Electricity 48 Trillion kWh

Current Renewables 3.5 Trillion kWh

Renewables needed for 25% 21.5 Trillion kWh

(0.13 CMO in 15 years)

Liquid Fuels 7.3 billion barrels

Current Renewables 0.15 billion barrels

Renewable liquid fuels

needed

1.7 billion barrels

(0.06 CMO in 15years)

37

Energy and Economic GrowthCorrelation but not a destiny

38

A bubble behind increased efficiency?

39

Residential and Commercial BuildingsLow-cost options abound

• Consumes about 51% of primary energy

– 39% in operations: HVAC, lighting, appliances– 12% in materials: steel, concrete, glass, sheetrock

• Energy saving practices can pay off

– Better insulation, efficient lighting, efficient heating• Smart grid

– Allows for added savings and increased use of wind and solar sources• Green construction materials

40

Commercial Residential

The Cost ChallengeMeeting the Chindia Price

• Opportunity in developed countries

– Over $500 billion in renovations in the US

– Impact of adopting green practices is ~0.1 CMO/yr

• Bigger opportunity in developing nations

– New construction equivalent to the entire US is projected for China/India over the next 10 years

– Several trillion dollars

• Potential impact of adopting green practices

– Ca. 2 CMO/yr

– Cost of using green materials in construction is prohibitive

41

CHINDIA

Major innovations needed to produce cost effective solutionsMajor innovations needed to produce cost effective solutions

• Focus on customer need

• Clear and compelling value proposition

• Beach-head product

• Iterate

Cycles of Innovation

Projected Energy Demand by 2050We will need several additional CMOs/yr

Recent energy growth rate:

2.5%/yr

Annual GDP growth rate:

World: 5.5%

China: 11%

India: 9%

Recent energy growth rate:

2.5%/yr

Annual GDP growth rate:

World: 5.5%

China: 11%

India: 9%

2.6%

1.8%

0.8%

270 CMO

214 CMO

163 CMO

179 CMO

Σ

From 3.0 CMO/yr we are moving to 9.0 CMO/yrFrom 3.0 CMO/yr we are moving to 9.0 CMO/yr

Variable profile, IPCCVariable profile, IPCC