Fossil Energy Primer

A view of the Himalayas from Lhasa

Tad Patzek, Petroleum & Geosystems Engineering, UT Austin10/7/2010, 10:00-12:00 am, SVC 203/202, Capitol Visitor Center, Washington D.C.

U.S. Energy IndependenceFossil fuels run 85 percent of U.S.economy directly, and the remainderhas a variable but non-negligiblefossil fuel content

Electricity is produced almost entirelyfrom domestic energy sources

Natural gas is the swing fuel forelectricity generation

Natural gas could aid in theelectrification of railroads

Natural gas could supplementpetroleum as an automotive fuel

– p.1/24

Summary of Conclusions. . .The global rate of production of oil is peaking now,coal will peak in 2-5 years, and natural gas in 20-50years

There is PLENTY of fossil fuels (“resources”) left allover the Earth

The resource size (current balance of a bankingaccount) is mistakenly equated with the speed ofdrawing it down (ATM withdrawals)

Few understand the ever more stringent dailywithdrawal limits imposed by nature on our ATMcards (oil & gas wells and coal mines)

Even fewer understand the high minimum balances(resource left behind) imposed on all oil, coal andgas recovery deposits

– p.2/24

Summary of Conclusions. . .Economists, business people, and policy makersgenerally have poor understanding of banking

They know what the rate of withdrawals (energydemand) should be, but have little idea about thewithdrawal limits (energy supply)

Offshore and unconventional fields will be producingan increasing portion of global oil supply

Solar energy flow-based solutions (wind turbines,photovoltaics, and biofuels) will require most radicalchanges of our lifestyles

Thermodynamically, industrial-scale biofuels are notsustainable, and will damage the Earth’s most vitalecosystems

– p.3/24

Oil Resides in Deep Subsurface

Zagros Mountains by J. T. Daniels (NASA), pore scale by Maša Prodanovic

– p.4/24

Accumulation vs. Production

Unrecoverable Oil, ∼2/3

Recoverable Oil, ∼1/3

Oil rate outVaries a lot

Accumulation = Piggy Bank, Coin Slot = Oil Wells, Injection Wells, and Surface Facilities

– p.5/24

Mean Ultimate Recoveries

0 5 10 15 20 25 30 35 40

Middle East

FSU

Latin America

Europe

Africa

U.S.A.

Far East

Mean Ultimate Recovery, % Oil−in−Place

Sources: Laherrere, 2002, other sources– p.6/24

Electricity generation

1998 2000 2002 2004 2006 20080

50

100

150

200

250

300

350D

ays

on E

lect

ricity

/yea

r

Coal

Natural Gas & Other

Nuclear

Hydroelectric

Rest

176

79

72

23

37% of U.S. primary energy use. Source: DOE EIA, accessed 03/28/2010– p.7/24

Electricity generation – Rest

1998 2000 2002 2004 2006 20080

2

4

6

8

10

12

14

16

18

20

22D

ays

on E

lect

ricity

/yea

r

Petroleum

Wood & Other Biomass

Wind

Geothermal

4

5

5

1

Solar thermal and PV = 1 hour of U.S. electricity. Source: DOE EIA, accessed 03/28/2010– p.8/24

Transportation Fuels

1950 1960 1970 1980 1990 20000

50

100

150

200

250

300

350D

ays

on F

uel/y

ear

Motor Gasoline

Distillate Oil

Aviation Fuels

Residual Oil

Ethanol

202

99

38

188

31% of U.S. primary energy use. Source: DOE EIA, accessed 03/28/2010 – p.9/24

Predicting the Future. . .

1970 1975 1980 1985 1990 1995 2000 20050

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Mill

ion

BO

PD

Production histories of 65 oilfields in the North Sea. Sources: Norwegian Government

(2009), Patzek & Croft (2010). The thick lines are Ekofisk and Ekofisk West – p.10/24

. . . Emergent Behavior. . .

1960 1970 1980 1990 2000 2010 2020 2030 20400

0.5

1

1.5

2

2.5

3

3.5M

illio

n B

OP

D

A single Hubbert curve explains almost all of Norwegian production in the North Sea– p.11/24

A Future of Norwegian North Sea

1960 1970 1980 1990 2000 2010 2020 2030 20400

5

10

15

20

25

30B

illio

n B

arre

ls o

f Oil

Sources: Norwegian Government (2009), Patzek & Croft (2010)– p.12/24

North Sea: Ekofisk

1970 1975 1980 1985 1990 1995 2000 20050

5

10

15

20

25

30

35

40C

umul

ativ

e re

cove

ry, %

Oil−

in−

Pla

ce

Bub

ble

poin

t

Wat

erflo

od

Hor

izon

tal w

ells

Infill wells

OIP=6.4 billion bbl. Sources: Norwegian Government (2009), Patzek & Croft (2010) – p.13/24

Emergent Behavior in the Gulf. . .

1940 1960 1980 2000 2020 20400

0.5

1

1.5M

ilion

BO

PD Shallow water

Deep water Patzek’sProjection

IndustryProjection

Sources: U.S. DOE EIA, MMS, and Patzek’s calculations– p.14/24

A Future of Deep Gulf

1940 1960 1980 2000 2020 20400

1

2

3

4

5

6

7

8

9

Historic data

Industry Projection

Patzek’sProjection

Bill

ion

Bar

rels

of O

il

Sources: U.S. DOE EIA, MMS, and Patzek’s calculations – p.15/24

Total Gulf Oil/U.S. Oil Elsewhere

1940 1950 1960 1970 1980 1990 2000 20100

5

10

15

20

25

30

35

40

45G

OM

Oil

vs. R

est o

f U.S

. Oil,

%

Sources: U.S. DOE EIA, MMS, and Patzek’s calculations

Thunder Horse

– p.16/24

2006 Oil Data for GOM

1 10 100 10001

10

100

1000

Rank = Number of fields larger than a field

Mill

ion

barr

els

of o

il

Proven oil reservesCumulative oil produced

Source: MMS data, 2006Fractals everywhere! All that is relevant was discovered?

– p.17/24

Second and Third Hubbert Peak

1850 1900 1950 2000 2050 2100 21500

5

10

15

20

25

30M

arke

ted

NG

Pro

duct

ion,

EJ/

Yea

r

ProductionHubbert cyclesFuture UNG

Future Unconventional Natural Gas Cycle = 100 years of U.S. Supply– p.18/24

Unconventional Gas

1880 1900 1920 1940 1960 1980 2000 2020 2040 20600

200

400

600

800

1000

1200

1400

1600

1800

2000C

umul

ativ

e N

atur

al G

as P

rodu

ctio

n, E

J

Fundamental Hubbert peakAll peaks

Extra 1,200 Tcf = $4.3 trillion at $3.6 per mcf, mostly from unconventional gas– p.19/24

IEA Demand Growth Scenario. . .

OECD/EIA 2008 scenario of annual energy demand in the world

Source: www.iea.org/speech/2008/Tanaka/cop−

weosideeven.pdf– p.20/24

IEA and an Oil Production Peak?!

There is an oil peak and 64 millions barrels of oil per day will be missing by 2030

Source: www.iea.org/speech/2008/Tanaka/cop−

weosideeven.pdf

50 million bopd

– p.21/24

Oil Recovery Processes

Adapted by Larry Lake from the Oil & Gas Journal, Apr. 23, 1990– p.22/24

World EOR Projects: 2.5 MBOPD

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

USA

Mexico

Venezuela

Canada

Indonesia

China

Other

Major EOR Projects, Million BOPD

ThermalGas injection

Adapted from the Oil & Gas Journal, Thomas, 2007

– p.23/24

Power Density

0 200 400 600 800 1000 1200 1400 1600

Middle East

Europe

Africa

CIS

Latin America

Asia

Watts of electricity equivalents per square meter

Oil/gas fieldsWorld field averageSolar PV in U.S.Wind turbines

Adapted from Laherrere, 2003, Patzek, 2007

– p.24/24