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Hubbert peak theory

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The Hubbert Peak theory, also known as Peak Oil, is an influential theory concerning the long-term rate of conventional oil production and depletion. Geophysicist M. King Hubbert created the theory as a mathematical model for use in predicting the rate of future oil production and subsquent depletion for an individual oil well, as well as the combined production of multiple oil fields of entire regions or nations. Before Hubbert's model no one had created a model that accurately predicted the rate of future oil production applicable beyond a single oil well.

Given past oil production data the model predicts the date of maximum oil production output for an individual oil well, multiple oil fields or an entire region. This maximum output point is refered to as the peak. The period after the peak is refered to as depletion. The graph of the rate of oil production for an individual oil well over time follows a bell shaped curve: first a slow steady increase of production, then a sharp increase, then a plateau (the "peak"), then a slow decline, and finally a steep decline. In 1956 Hubbert accurately predicted the peak of oil production would take place in the early 1970s for the continental United States. In 1971 he predicted, using high and low estimates of global oil reserve data available to him at the time, that global oil production would peak between 1995 and 2000. Due to complex political, economic, wildly varying demand factors, and some newly discovered sources, oil production on a global scale does not closely resemble a Hubbert curve and is generally asymetrical. The Hubbert model most closely resembles the rate of fastest possible oil extraction, if demand is less than expected or supply is curtailed then actual production rates would not match the Hubbert peak model.

The Hubbert peak theory is most often applied to oil but is applicable to other fossil fuels such as natural gas, coal and non conventional oil. Conventional oil is oil extracted using the traditional drilling an oil well method. Non conventional oil sources require more complex and inefficient extraction technology and currently account for just a small fraction of global oil production.

The concept of Hubbert peak or peak oil is widely accepted, though there is wide disagreement on the date of the peak. Much of this disparity is due to disagrements over the validity, and competing sources of past oil production data. Recent Hubbert model results indicate a peak in global oil production anywhere between 2004 and 2015. Natural gas is expected to peak anywhere from 2010 to 2020. As would be expected by any theory that predicts future fuel shortages, the Hubbert model has significant political and economic foreign policy ramifications.

The Hubbert curve, devised by M. King Hubbert, predicts future oil availability.

The theory

In 1956, Hubbert created a mathematical model of petroleum extraction which predicted that the total amount of oil extracted over time would follow a logistic curve. The predicted rate of oil extraction at any given time would then be given by the rate of change of the logistic curve, which follows a bell-shaped curve now known as the Hubbert curve.

The general trend of oil availability both for a single oil field or entire region barring extraneous factors such as lack of demand follows the Hubbert curve. When an oil reserve is discovered, production is initially small because all the required infrastructure has not been installed. Step by step, more wells are drilled and better facilities are installed in order to produce an increasing amount of oil. At some point, a peak output is reached that can not be exceeded even with improved technology or additional drilling. After the peak, oil production slowly but increasingly tapers off. After the peak but before an oil field is empty another significant point is reached when it takes more energy to recover, transport and process one barrel of oil than the amount of energy contained in that one barrel of oil. At that point oil is not worthwhile to extract and that oil field is abandoned. This is true regardless of the price of oil.

When people use the term "the end of cheap" oil, they are referring to two things: price increases due to scarcity, and, the increasing inefficiency of oil production (cheap from both a monetary and energy efficiency perspective). When oil production first began in the early 20th century at the largest oil fields 50 barrels of oil was recovered for every barrel of oil used in the extraction, transportion and refining processes. This ratio becomes increasingly inefficient over time; currently 1-5 barrels of oil are recovered for every barrel used in the various recovery processes. When this ratio reaches the point where it takes 1 barrel to recover 1 barrel, then oil becomes useless as energy. At that point all energy used to extract oil would result in a net energy loss; society would be more efficient and better off using that remaining energy elsewhere.

The first law of thermodynamics states that energy can not be created, only converted. Despite appearances, even oil adheres to this law of nature. Oil is just a quirk of geologic history when a finite amount of organic matter decayed underground millions of years ago. Except for geothermal power and tidal power all available energy flows and energy reserves (including oil) on earth are or were ultimately provided by the sun.

Oil prices in 2003 and 2004
Oil prices in 2003 and 2004

Wider applications

Hubbert, in 1956, accurately predicted oil production in the lower-48 United States would peak in the early 1970s. U.S. oil production did indeed peak in 1970, and has been decreasing since then. According to Hubbert's model, U.S. oil reserves will be exhausted before the end of the 21st century.

Based on the Hubbert peak model global oil production is expected to peak at the earliest in 2004, or at the latest 2015. Recent studies indicate the peak will take place before 2008. Determining when oil production has peaked is difficult and not apparent until after current and potential future production is determined to be less than in the past. North Sea production peaked in 2002.

Exacerbating the problem is the increasing global demand for oil combined with limited production capacity. Population growth and increased global economic prosperity all affect global oil demand. In a recent year 25 billion barrels of oil were consumed world-wide, while only 8 billion barrels of new oil reserves were discovered. In 2004, world consumption of crude oil is on track to surpass 82 million barrels per day, 30 billion barrels per year. This puts consumption equal to production, leaving no surplus capacity. Even if there are temporarily sufficient oil reserves that could be used to meet rising global demand, there is an unknown limit on the increase of oil production capacity absent additional investment in oil production, transportation and refining facilities.

Effects of a world peak

Economic growth and prosperity over the 20th century has been due to the use of oil as a fuel and fertilizer; in the absence of a suitable replacement the world would suffer recessions and food shortages with increasing severity. Cheap fossil fuel has been the foundation on which the population explosion over the last century has been based. Any prolonged fossil fuel shortage, if not properly substituted, will likely lead to major population changes. See renewable energy in the next section as a possible way of mitigating the effects of a world peak and subsequent depletion of fossil fuel based energy production.

Catastrophe

Some believe that the peak of oil production portends drastic impacts for human culture and modern technological society, which is currently heavily dependent on oil as a fuel and chemical feedstock. Over 90% of transportation in the United States relies on oil. Some envisage a Malthusian catastrophe occurring as oil becomes increasingly inefficient to produce. No other known energy source is as cheap (to extract), as easy to transport and contains as much energy as oil.

Market solution

A market solution is the belief that the rise of oil prices due to scarcity would stimulate investment in oil replacement technologies and/or more efficient oil extraction technologies. One challenge with both non fossil fuel based energy production and non conventional oil extraction is the fact that these alternative energy sources rely on the very conventional fossil fuels they are intended to replace for their construction, were conventional oil and natural gas to become more expensive because of scarcity, alternative energy production costs would grow more expensive in kind. Presumably, as the rising energy costs exceed the labor costs of construction, and as long-term interest rates drop to match the falling productivity of an energy-starved economy, other sources of energy would become increasingly more attractive.

Increased fuel efficiency

Any non severe oil shortage could spark an increase in fuel efficiency. This would lessen the impact of and spread oil shortages out over a longer period of time (making the rate of decline in oil production after the peak less steep and less severe). Some governments currently mandate a minimum fuel efficiency standard for automobiles. Consumers are increasingly purchasing fuel efficient vehicles because of the cost savings of using less gasoline over time and the desire to reduce pollution.

Political implications

As of 2004, the United States economy is the world's largest user of oil, with a historical reliance on what have been, and still are, some of the world's lowest oil prices. Its position as the global hyperpower rests on its economic supremacy, which in turn depends heavily on oil. At the same time, the world's largest oil reserves are held by Saudi Arabia, followed by those of Iraq, the United Arab Emirates, Iran and Russia. If a Hubbert Peak were to occur, and oil were to become a progressively more scarce commodity, it would be reasonable to expect massive political and economic tension between its principal consumers and producers.

Some observers see the 2003 U.S. invasion of Iraq as the beginning of a geopolitical struggle driven by anticipated oil scarcity, whereby the U.S. will seek to establish a long-term military presence in the Middle East in order to be able to maintain oil supplies, by force if necessary. Others view this as a conspiracy theory with no basis in fact.

Alternatives to oil

Nuclear Power

Nuclear Power is the process of generating electricity from nuclear fission. The long term radioactive waste storage problems of nuclear power have not been solved, one proposal is to entomb it inside Yucca Mountain, Nevada. The U.S. would require at least an 11 fold increase in nuclear power production to replace both the current amount of electricity genrated from fossil fuels and gasoline usage. This likely would involve using hydrogen as an energy carrier (see below) which adds inefficiency, perhaps increasing this ratio. There may be a limited supply of Uranium and other minerals for use as the fuel for nuclear power.

Non conventional oil

Non-conventional oil is another source of oil separate from conventional or traditional oil. Non conventional sources include: tar sands, oil shale and bitumen. A potentially significant deposit of non-conventional oil is the Athabasca Tar Sands site in north-western Canada. It is estimated by oil companies that the Athabasca site has as much as 1/3rd of total global oil deposits but it is not yet considered a proven reserve of oil. Extracting a significant percentage of world oil production from tar sands may not be feasible. The extraction process takes a great deal of energy for heat and electrical power, presently coming from natural gas, itself in short supply. There are proposals to build a series of nuclear reactors to supply this energy. Non conventional oil production currently is less efficient and has a larger environmental impact relative to conventional oil production.

Renewable energy

Another possible solution to an energy shortage or predicted future shortage would be to use some of the world's remaining fossil fuel reserves as an investment in Renewable energy infrastructure such as wind power, solar power and hydropower which do not suffer from finite energy reserves. The construction of a sufficiently large renewable energy infrastructure might avoid the economic consequences of an extended period of dramatically shrinking energy use per capita.

The most cost-effective renewable energy source is hydropower. Dams produce electricity more cheaply than natural-gas turbines, and have reasonable capital costs. As a result, nearly every river in North America that can practically be dammed has been, and gigantic hydropower projects are have been built all around the world (see Itaipu and Three Gorges Dam). There is not enough hydropower.

The next most promising renewable energy source may be wind power (currently over 4 times as efficient as solar power). One factor potentially in renewable energy's favor is its much smaller environmental impact. Renewable energy sources may have a significantly smaller total "cost" compared with fossil fuel production after you factor in pollution, in other words, oil production is likely more expensive than the initial price seems to indicate and relative to renewable energy if you factor in the "cost" of pollution.

Hydrogen

There is a widely held misconception that hydrogen is an alternative to crude oil based liquid fuels. As there is no uncombined hydrogen reserves in nature, hydrogen is itself not a source of energy. Hydrogen based energy always involves conversion of an upstream energy source. Typically this energy source is natural gas, in the case of the steam reformed methane process, or electricity (generated by fossil fuels, nuclear, solar or wind), in the case of water electrolysis.

There is, however, a great deal of interest in using hydrogen rather than oil as a means of storage and transport of energy (see Hydrogen economy). The idea is currently impractical: hydrogen is inefficient to produce, and expensive to store, transport, and convert back to electricity. Research is underway to ameliorate these problems; the outcome is at best uncertain.

The Fischer-Tropsch process of creating liquid hydrocarbons is possibly an alternative solution to the liquid transport fuels dilemma, making much better use of the existing distribution and storage infrastructure than hydrogen.

Fischer-Tropsch Processes

The Fischer-Tropsch chemical process converts carbon dioxide, carbon monoxide and methane into liquid hydrocarbons of various forms. The carbon dioxide and carbon monoxide is generated by partial oxidation of coal and wood based fuels. This process was developed and used extensively in World War II by the Germans, who had limited access to crude oil supplies. There are several companies developing the process to enable practical exploitation of so-called stranded gas reserves, those reserves which are impractical to exploit with conventional gas pipelines and LNG technology.

Organizations

See also

Further reading

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