8. EAGE STUDENT LECTURE TOUR 2009 - 2010
What energy future after world oil
production peak ?
3@ - 4727
9. What energy future after world oil production peak?
1 A reminder of oil fundamentals: a few key points
2 Production constraints: oil and gas peaks
3 Climate constraints: some key data
4 Oil prices: yesterday, today, and tomorrow
5 What future for energy: the oil industry in a new world
9
10. Key considerations about energy fundamentals
Energy and life: from sun to food
Energy and our way of life : from Paleolithic to the industrial revolution
And for the last 50 years :
Oil has been the dominant source of primary commercial energy (40% of world total)
Oil has been the economic regulator of all energy prices
Oil has been the physical regulator of the world energy system
OPEC has been the regulator of world oil system
Saudi Arabia has been the regulator of OPEC
10
11. Key considerations about energy fundamentals
90
12 000
11 000 80
10 000 Mtoe Gboe
70
9 000
8 000 Nuclear & 60
Hydro
7 000 50
6 000 Gas
40
5 000
4 000 30
Oil
3 000
20
2 000
10
1 000 Coal
0 0
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
Since 2003 coal has become
the “physical regulator”
of the World Energy system
11
12. GDP and demand for oil annual growth rate (%, worldwide)
World Energy in the past was simple: oil was the “physical regulator”
10 %
8%
6% Since 2004 this is no more true
4% In 2004
2/3 of GDP
2% Increase
coming from
0% China
-2 %
-4 %
-6 %
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
GDP OIL demand
12
13. Oil growth is coming exclusively from the OPEC
Annual changes in oil production (Mb/d)
Others outside OPEC OPEC
OECD Former USSR (Brazil, Angola*, Chad, etc.) (“Swing producer”)
2,5 2,5 2,5 2,5
Mb/d 2 2 2 2
1,5 1,5 1,5 1,5
1 1 1 1
0,5 0,5 0,5 0,5
0 0 0 0
-0,5 -0,5 -0,5 -0,5
-1 -1 -1 -1
-1,5 -1,5 -1,5 -1,5
2004
1990
1992
1994
1996
1998
2000
2002
2006
1990
1992
2006
1994
1996
1998
2000
2002
2004
1992
1994
1996
1990
1998
2000
2002
2004
2006
1990
1992
1994
1996
1998
2000
2002
2004
2006
Since 1975 OPEC has become the regulator of the World Oil system.
*Angola left outside the OPEC for consistency purpose
13
14. Crude oil production - production almost equal to demand
4 000 OPEC 30
Mt/y Former Soviet Union
Gb/y
Others NON OPEC
3 500 Demand 25
3 000
20
2 500
2 000 15
1 500
10
1 000
5
500
0 0
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
14
15. Upstream: E&P represent 80% of the
global oil industry investment
400 G$
350 Others : transport, marketing (estimates)
Petrochemical
Refining
300
Exploration/Production
250
200
150
100
50
0
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Including China and Russia since 2002
15
16. History of investment in exploration-production
350 G$ $/b 70
300 60
Invest. out of North
250 Invest. in North Am 50
200 Crude oil 40
price
150 30
100 20
50 10
0 0
79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
16
17. The key paradoxes of the oil industry
At 100 $/b crude oil, the
upstream worldwide average
technical costs represent
15% , while 10% are for the
producing companies and
around 75% for the
producing countries «
government take ».
These 100 $/b « crude oil
cost » represent an average
30% of the pumps prices in
the E.U. The other 70%
consist of 60% for the
consuming countries «
government take », and 10%
for downstream costs
(refining and marketing).
17
18. What energy future after world oil production peak?
1 A reminder of oil fundamentals : a few key points
2 Production constraints: oil and gas peaks
3 Climate constraints: some key data
4 Oil prices: yesterday, today, and tomorrow
5 What future for energy: the oil industry in a new world
18
19. History of oil discoveries (proved and probable)
and production
19
20. History of recent hydrocarbon discoveries (proved and
probable) and production
Hydrocarbons (Liquids & Gas)
Gboe Hydrocarbons (Liquids & Gas)
Source : IHS et BP Stat. Revue Gtoe
• World demand reaches 50Gboe per year 200
Production 25
• World discoveries flat since 1996 at 20Gboe
150 New reserves 20
per year (excluding the nugget effect).
• 10 Gb oil and 10 Gboe gas 100 15
• 8 Gboe discovered by NOC 10
50
5
• 10 Gboe discovered by IOC 0 0
• 2 Gboe discovered by others
1930
1950
1970
1990
2000
1920
1940
1960
1980
MMboe taille m oye nne de l'e ns e m ble
Mboe Average size of discoveries
de s dé couve r te s de l'Indus trie
Gboe Industrie : Réserves desdiscoveries découvertes
Gboe
Gboe Industrie : Réserves des nouvelles
Reserves added by new nouvelles découvertes
70
70
350 Source: IHS-Edin (avril 2009)
Source: IHS-Edin (avril 2009)
60
60 57.3
57.3
Kashagan (Liquids & & Gas)
(Liquids Gas)
300 57.3
Turkmenistan
49.0
49.0
250 50
50 Brasil 49.0
44.0
44.0
44.0
200 40
40
150
30
30 26.3
26.3 25.6
25.6
26.3 24.3
24.3 25.6
100 21.6
21.6
23.6
23.6
23.6 21.7
21.7 24.3 21.4
21.4
20.2
20.2 21.6 21.7 21.4
20.2 18.1
18.1 17.4
17.4
20
20 18.1 17.4
50
1971-75
1976-80
1986-90
1991-95
2001-05
2006-07
1961-65
1966-70
1981-85
1996-00
0 10
10
0
0
‘96 ‘97 ‘98 ’99 ‘00 ‘01 ‘02
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
‘03 ‘04 ‘05 ‘06 ‘07 ‘08
• size of average discovery : constant since 1980
20
21. From discoveries to oil resources
New discoveries
Conventional Non Conventional
Resources Resources
Extra Heavy Oil
Cumulative Proved & & Tar Sands
production Probable
1000 Gb reserves Yet to find
~ 600 Gb
Recovery Ratio Increase
1000 Gb 200-350 Gb
*32%
IOR / EOR
300 Gb
**37%
Recovery
Ratio
Unrecovered Oil
4 000 Gb
2 800 – 3600 Gb
In place
100%
* Actual Average Ratio
** Possible Average Ratio (around 2020)
« The stone age did not end by lack of stones » Sheik Mohamed Yaki Yamani
21 Source GSR Total
25. Depletion rate versus recovery factors
for various type of oil fields
10%
9%
8%
7%
Depletion rate % OIIP/Year
6%
5%
Rate -
4%
3%
2%
1%
0%
0% 10% 20% 30% 40% 50% 60% 70%
Recup- % OIIP
North Sea 1 Middle East 1 Far East 1
North Sea 2 Middle East 2 Far East 2
North Sea 3 Middle East 3 Central America
25 Source GSR Total P.Carpentier et al
26. Foreseeable drop in productions
Daily production Daily production
Mb Mb
2000 70% of ultimate resources
1984 1988 1995 59% of ultimate resources
60% of ultimate resources
History
Consultant
Alternative
Prognosis
Cumulated productions Cumulated productions
Gb Gb
From:P.Carpentier et al Total
UK Russia
26
27. The 2009 « TOTAL view » of future
world petroleum production
Mb/d
110
Biofuels
100
Other
90 Condensate and LPG
80
70
Crude oil
60
50
40
2005 2010 2015 2020 2025 2030
27
28. The irreversible decline of oil production in the USA
Peak oil is not a theory: it’s an historical fact…
(*) Discoveries are registered as per their initially declared sizes and their timing is « forwarded » by 33 years
Source : King Hubbert 1956 - Updated by Jean Laherrere
28
30. The exploration production capacity challenge
World oil production
Mb/d = Million barrels per day
120
Mb/d
Estimated demand growth (~1%
100 to 1.5%/year)
80 Required capacity
increase
60
40
Producing fields decline
(~5% to 6%/year)
20
0
1995 2000 2005 2010 2015
Increasing demand and natural decline of producing fields require
42 to 52 Mb/d of production between 2005 and 2015 coming from new fields
30
31. Summary of opinions about "peak oil"
Since June 2006 it can be considered that views about Peak Oil in France
have become reasonnably similar :
TOTAL : Thierry Desmarest – around 2020 / around 100 Mb/d
ASPO France : J. Laherrère – around 2015 / less than 100 Mb/d
P.R. Bauquis – around 2020 / around 100 Mb/d
IFP : Y. Mathieu – ondulated plateau 2015/2030 – less than 100 Mb/d
This point of view is widely different from those among the "optimists" who
believe that Peak Oil is not "reserves related" but a political problem :
insufficient investments and restrictive policies about investments by
OPEC countries, Russia and Mexico :
Exxon Mobil – June 2006 – "no sign of peak oil"
Aramco – June 2006 -"no reserve problem"
ENI (Maugeri – Early 2006 - "no foreseeable oil peak"
BP : John Browne – May 2006 - "There is no reserves problem"
Mike Lynch (ex MIT) – "similar and above 120 Mb/d"
CERA (Cambridge Energy Research Associates) – 2007 study "Denying peak-oil"
USGS, DOE, EIA, IEA…
IEA started changing their views in 2006 and accentuated this change in
2007 :
they now seem to realize that peak oil is not only a political or "above
ground" problem but also a geological one.
31
32. Summary of opinions about "peak oil"
Oil and gas will still be produced beyond the end of the 21st century
However the oil production peak (between 2015 and 2025, most probably)
and gas production peak will trigger radical changes
Paradoxically, it will be the oil and gas industries golden age (high prices,
little political interference in those prices).
After the oil peak, oil and gas prices will see a change of logic: they will
become related to those of their substitutes (reversal from the past).
As soon as world oil production starts declining, OPEC will lose its price-
policing role but could keep other roles.
32
33. What energy future after world oil production peak?
1 A reminder of oil fundamentals : a few key points
2 Production constraints: oil and gas peaks
3 Climate constraints: some key data
4 Oil prices: yesterday, today, and tomorrow
5 What future for energy: the oil industry in a new world
33
34. Climate change: the earth’s evolving temperature
Variation in global temperatures over 1000 years (in °C)
The zero reference is the period 1961-1990
NORTHERN HEMISPHERE
0.5
0.0
-0.5
- 1.0
Données provenant de thermomètres (en rouge), de cercles
de croissance des arbres, de coraux, de carottes
glaciaires et d’enregistrements historiques (en bleu)
1 000 1 200 1 400 1 600 1 800 2 000
34
35. Atmospheric contributions to greenhouse effect
Halocarb,
12%
Water vapor
Stratosph. Ozone
55% 13%
Other green- N2O
5%
house gases CO2
Clouds 53% CH4
30%
15% 17%
Natural Anthropic
(155 Watts/m2) (2.8 Watts/m2)
35
37. Projections are heavily scenario-dependant
T°
10 billion
humans raise
their average
emissions to
those of the
year 2000
World emissions
remain constant
37
39. Climate change: what can an oil company do about it ?
Promote a better understanding of climate change mechanisms and use it’s
industrial competences to develop potential solutions
Better control greenhouse gas emissions from it’s own facilities
Help its clients to manage their greenhouse gas emissions
Promote alternatives: renewable energies non CO2 or low CO2 emitting and
nuclear energy
Imagine and validate efficient and reliable solutions to capture and store CO2
(Lacq Pilot scheme and others)
… while continuing to meet the world’s energy demand
(deep offshore, unconventional oil, mature fields, LNG…)
39
40. Capture and Storage of CO2
Dedicated CCS (Carbon Capture & Storage) program and
partnership since 2001
Capture technology development:
IPCC – 20-40% of world CO2 emissions by 2050
CO2 injection and storage
Storage integrity
Well integrity
Long term
fate of CO2
P&R,
monitoring
Total Lacq
project
40
41. What energy future after world oil production peak?
1 A reminder of oil fundamentals : a few key points
2 Production constraints: oil and gas peaks
3 Climate constraints: some key data
4 Oil prices: yesterday, today, and tomorrow
5 What future for energy: the oil industry in a new world
41
44. What is driving oil prices ?
It depends upon which newspaper you read…
Financial press: stocks, stocks market anticipations…
Economic press: investment, economic growth,….
Green/red press: speculation, speculation, greed….
All these explanations are partially relevant:
world unused surplus capacity is the key factor
44
45. The price impact of OPEC surplus production capacity
Surplus OPEC capacity (right scale)
IPE Brent prices (left scale)
Price ($/b)
M b/d
45
46. Oil prices 2005 – 2050 (Arabian light in US $ 2000/bbl)
$/b
250
200
150
Oil Prices
100
50
0
2005 2011 2017 2023 2029 2035 2041 2047 2053
A dream view presented in Cambridge by P.R. Bauquis on 15/03/06
46
47. Production costs are increasing…
… necessitating a relatively high oil price
$/bbl
Oil
shales
100
Extra
80 Extra
Heavy
Ultra Heavy
deep oil
oil
water Arctic
60 Deep
water
40 Other
Conventional Enhanced
Recovery
20
OPEC
Middle East
Billions of barrels
1000 2000 3000
47
48. Key considerations about future oil and energy prices
High oil prices are a favourable factor:
To ensure stability and economic growth of oil producers
To ensure energy conservation of oil importers
To ensure development of energy substitutes (Renewable and Nuclear)
To ensure development of “High Tech.” costly oil.
High oil prices means around 100 $/bbl in constant US$ referenced year 2000
(order of magnitude)
However before prices could stabilize in this price range a new oil shock with
temporary very high prices (200 to 400 $ / bbl) is a likely scenario
48
49. What energy future after world oil production peak?
1 A reminder of oil fundamentals : a few key points
2 Production constraints: oil and gas peaks
3 Climate constraints: some key data
4 Oil prices: yesterday, today, and tomorrow
5 What future for energy: the oil industry in a new world
49
50. The 4 main drivers for oil industry structural changes
Geopolitics
Peak oil and Peak gas
Carbon emission costs (climate issue)
The financial/economic crisis
50
51. World Oil Players
ARAMCO 7.5
7
International companies
National companies 6.5
6
5.5
5
Oil production 4.5
NIOC
Mb/d
(Iran) 4
4
PEMEX Mb/d
3.5
PDV (Venezuela)
3
ExxonMobil INOC (Irak)
2.5 Shell PetroChina
KPC (Kuwaït)
2 BP ChevronTexaco
Sonatrach
TOTAL
1.5 Libya NOC ADNOC
(UAE)
1
ENI
0.5
Repsol-YPF
0
0 10 20 30 40 50 60 70 80 90 100 110 120 260
Oil reserves in Gb
…technical, environmental and societal acceptability
51 Source : Oil and Gas Journal, AIE
52. The oil industry structure in the past and today
80%
Crude suppliers 60%
40%
20%
0%
Majors National Others
companies* Companies
80%
Refining 60% 1973
1973
capacities 2005
2000
1999
40%
*State ownership > 50%
20%
0%
Majors National Others
companies* Companies
52
54. Liquid hydrocarbons: an energy compactness that no
other sources can match, neither today nor in the future
10
kWh / kg
9
8
7 liquid
Hydrocarbons
6
5
4
3 Compressed
Natural gas
2
Hydrides
1 Hydrogen
Batteries
kWh / l
0
0 1 2 3 4 5 6 7 8 9 10
Compressed natural gas : steel or composite tanks
Hydrogen : liquid or compressed from 5000 to 10000 PSI in composite tanks
54
56. Which energy for road transports
Back to fully proved locomotion systems ….
56
57. Gas demand mainly driven by power generation
160
2002
2030
-
growth: +3,2%
pa Electricity
120 GHGenergy :
growth +1,7%
pa Electricity
emission :
growth +1,7%
pa
Fossil = 80% energy
fuels of
primary growth
IEA primary energy 80
consumption by segment
40 Heating Industry
Heating Industry
Transportation
Transportation
0
1970 1980 1990 2000 2010 2020 2030
132
12% Renewables (+5.6%)
Annual growth rate Mboe/day 112
3% 17% Hydroelectricity (+2.0%)
89
2005-2030 3%
16%
22% Nuclear (+0.7%)
17%
22%
21% Oil (- 0.7%)
45% 39% Natural gas (+2.5%)
46%
2005 2015 2030
57 Coal (+2.1%)
58. Gas reserves and resources
Proved reserves of Gas
6,340
Gas Resources
TCF Europe FSU
North America
2,000 2,000 ~2,000
Middle Asia
East Pacific
Latin Africa
America
Proved Reserve Yet-to-find Estimated
reserves growth reserves resources
Conventional gas Non Conventional Sources : O&G Journal, USGS, IEA, HIS, Cedigaz
Proved conventional gas reserves equivalent to 65 years of today’s
demand
Gas availability controlled by transportation : pipelines and LNG
terminals
Gas prices controlled by long term contracts
58
59. World energy outlook (IAE)
Gboe
40
Oil
35 Coal
30
25 Gas
20
15
Bioenergy
10
Nuclear energy
5
Solar/Wind/Geothermal
0 Water power
Still 80% of the energy mix still derived from fossil fuels in 2030
From L. Bolkow, 2009
59
60. Coal resources
Coal resources
From F.W. WELLMER
Capture and sequestration of CO2 is not an option, it is a necessity
60
61. Renewable energies will grow but not enough
Annual growth
2005 - 2030
Mboe/d 58
.
Estimates ar Solar, wind, etc
/ye + 8.3 %
.6%
9
2
+
41 10 Hydroelectric power + 2.5 %
3
3
31 7
1
2
24 5 Biofuels (incl BtL) + 7.6 %
4
36
28
24
19 Biomass (incl. forest use
in developing countries) + 1.7 %
1990 2005 2015 2030
Source: IEA World Energy Outlook , Alternative Policy Scenario
61
62. Conclusion: future of oil industry
It should be bright for all players: IOC’s, NOC’s, independants,
but also contractors, major Service Cies, specialized Service
Cies…not forgetting R & D Institutes and Training Specialists!
Twenty years down the road this industry will have been deeply
« redesigned » both because of the ressources/production
constraints and the climate change issues
Like always the most adaptable and the best will not only
survive: they will do fascinating jobs and make money…
Thank you for your attention
62
Editor's Notes
Echelle vertical variation par rapport à n-1 2004 début du boom de la chine pour les 2/3 de l’augmentation du gdp
Angola left outside the OPEC for consistency purpose
Explosion des investissements à partir de 2004
Usd courant 30% des investissements sur 4% des réserves On investit tout le cashflow (difference entre courbe prix et courbe investissement)
1991-1995 154.5 Gboe en 170 découvertes > 100 MMboe (moy= 908 MMboe/découverte) 1995-2000 125.7 Gboe en 246 découvertes > 100 MMboe (moy= 511 MMboe/découverte) 2001-2005 72.8 Gboe en 221 découvertes > 100 MMboe (moy= 330 MMboe/découverte) 2006- 7.8 Gboe en 33 découvertes > 100 MMboe (moy= 236 MMboe/découverte) (Mail H.Dewaele du 23/07/08) Découvertes importantes (> 2 Gboe) selon IHS : - Pour 1999-2000 : Azadegan, Shah Deniz, Tabrak (Iran), Niban (Ar S.), Kashagan, Jansz (Aust.) Sulige, Kamnomeskoye (Yamal) - Pour 2005-2006 : Kish (Iran), Tupi (Brésil), Umn Nigar (Koweit)
Most likely : 2P Le chiffre intègre les condensats
( Sand clastics are « water wet ») BSW : Baril Salted Water
( Carbonates are « oil wet » )
Il est utopique d’espérer produire au dela de 40% Comparaison des depletion rate (natural depletion) Normalisé en pourcentage, indépendant de la taille Alwyn North Forties Bekapai Brent ABK Yibal Ghaw ar Handil Cantarel déclin après 30% de récupération Le trend décroissant ne peut être enrayé Les OIP correspondants sont (en MMbbl) Handil 1 750 Bekapai 450 Forties 4 800 Brent 3 800 Alwyn North 367 ABK 1 195 Yibal (Oman) 3 950 Ghawar 215 000 Cantarell (Akal) 32 209
Others???XTL
En 2015 la “Required capacity increased” sera de 42 à 52 Mb/d, selon les hypothèses hautes ou basses.
Manque les origines des prédictions
Les IOC (nous) ne sont pas les grands méchants loups, les NOC controlent les ressources, ont les moyens financiers, il nous reste le high tech
As for oil, the real challenge for gas is not the amount of reserves, which are abundant, but growing demand. If gas demand continued to grow by 2.3% a year, peak gas could occur shortly after 2035. However if growth were reduced to 1.8% a year, peak gas would not occur until around 2040-2045. ************************************************************************************** Back up 1/ Proven Reserves PN CDEP 10/02/06 : 5 660 Tcf reserves en 2100 Sources e xternes : 6 340 Tcf Ultimate = chiffres de BP Stat. fin 2004 (les nouveaux chiffres ne sont pas encore publiés) 2/ Reserve Growth PN CDEP 10/02/06 : 1 320 Tcf reserves en 2100 Sources externes : 2 000 Tcf Evaluation IHS (juin 2005) : 900 Tcf (high scenario) 3/ Undiscovered PN CDEP 10/02/06 : 880 Tcf reserves en 2100 Sources externes : chiffres BP Stat . fin 2004 : 4 000 Tcf (les nouveaux chiffres ne sont pas encore publiés) Evaluation IHS juin 2005 = 4100 Tcf (high scenario) Ces chiffres semblent exagérément optimistes, il est proposé de les réduire ) 2 000 Tcf. 4/ Ressources non conventionnelles PN CDEP 10/02/06 : pas pris en compte sauf pour les US dans le prouvé et dans le growth Sources externes : 2 000 Tcf Ultimate Tight Gas : certains parlent de plus de 11 000 Tcf en place ; Ressources récupérables : 700 – 1600 Tcf Gas Shale : plus de 2500 Tcf en place ; Ressources récupérables : 200 – 500 Tcf CBM : plus de 3500 Tcf en place ; Ressources récupérables : 350 – 1000 Tcf Chiffre retenu = 2000 Tcf NB : Il est presque certain que ces ressources non conventionnelles sont prises en compte en partie dans les “Proven Reserves” et les « Undiscovered » de sources externes, notamment aux US. Il est malheureusement impossible de savoir de combien. D’autre part, ces ressources non conventionnelles ne seront mobilisées que très tardivement.