BITRE Report 117: Transport energy futures: long-term oil supply trends and projections
Foreword
In 2007 the Bureau of Infrastructure, Transport and Regional Economics (BITRE) commenced a project to look in a strategic way at possible alternative transport energy futures.
This was driven by a perceived need to address two key challenges to ‘business-as-usual’ for Australian and world transport: oil depletion and global warming.
To examine the oil depletion issue, it was necessary to assemble large amounts of data over long periods of time (centuries in a large number of cases). BITRE has had long experience with assembling lengthy datasets from multiple and sometimes conflicting data sources, and then analysing their dynamics. This is what has been done here, to examine the oil production prospects of over 40 countries/regions around the world, as a preliminary to delineating the scope of the oil depletion challenge.
Recognising that the issue of the timing of oil depletion is a highly controversial area, where information can be contested and where there is a range of views and
positions, comments are expressly invited on this report.
Future reports will examine 1) world oil demand/price relationships and 2) the kinds of responses to the twin challenges of oil depletion and global warming that may be possible in terms of alternative fuels and propulsion technologies.
This report has been compiled by Dr David Gargett.
Phil Potterton
Executive Director
Bureau of Infrastructure Transport, and Regional Economics
March 2009
Acknowledgements
This report would not have been possible without huge amounts of data published in graphical form by Colin Campbell and Jean Laherrere.
In addition, production data from the Energy Information Administration of the US Department of Energy has been utilised extensively.
Many other authors have provided specific items of data and are listed in the Data Sources section at the end of the report.
At a glance
The trends in discovery of oil can be used to project similar trends in the subsequent production of oil. Using a method developed here, forecasts of future oil/liquids production for 40 countries/regions around the world have been produced.
The oil production prospects of different countries and regions vary immensely. However, on balance, when an aggregation is done across the globe, it is predicted that world production of conventional oil is currently just past its highest point (conventional oil is oil pumped from wells on land or in water less than 500 metres deep). A predicted shallow decline in the short run should give way to a steeper decline after 2016.
However, deep water and non-conventional oil production are growing strongly, turning a slight decline into a plateau for total crude oil (non-conventional oil is heavy and viscose or indeed tar-like oil). Given the growth in deep and non-conventional balancing the shallow decline in conventional production, it is predicted that we have entered about 2006 onto a slightly upward slanting plateau in potential oil production that will last only to about 2016—eight years from now (2008). For the next eight years it is likely that world crude oil production will plateau in the face of continuing economic growth. After that, the modelling is forecasting what can be termed ‘the 2017 drop-off’. The outlook under a base case scenario is for a long decline in oil production to begin in 2017, which will stretch to the end of the century and beyond. Projected increases in deep water and non-conventional oil, which are ‘rate-constrained’ in ways that conventional oil is not, will not change this pattern.
Importantly, these forecasts assume that world oil production is not constrained in the near term by reduced demand arising from lower world economic growth. Depending on the length of time before a return to more normal levels of world economic growth and resulting higher demand for oil, the dropoff is likely to be delayed.
The outlook is not really changed much if a scenario of increased Middle East oil production is played out. The result of that scenario is that oil production continues its growth for longer and then falls far more precipitously. Arguably, this could be a worse scenario, as far as the world being able to cope comfortably with the transition. The possible effect of higher prices in bringing forward production would have a similar effect. Higher prices might also stimulate exploration but are no guarantee of significant further discovery.
Thus at some point beyond 2017 we must begin to cope with the longer-term task of replacing oil as a source of energy. Given the inertias inherent in energy systems and vehicle fleets, the transition will be necessarily challenging to most economies around the world.
Coping with the supply reductions will be compounded by the fact that shrinking oil supply will interact with measures to reduce greenhouse gas emissions in order to address climate change. While there are opportunities for joint solutions, there will also be conflicting demands. For example, two of the more obvious sources of alternative motive energy are coal-to-liquids and gas-to-liquids. Both of these would involve increased emissions.
[The complete Energy Bulletin summary is at the link.]
[The complete report is available online as a 474-page PDF.]
© Commonwealth of Australia, 2009
ISSN 1440-9569
ISBN 978–1–921260–31–5
March 2009/INFRASTRUCTURE 08294
This publication is available in hard copy or PDF format from the Bureau of Infrastructure, Transport and Regional Economics website at www.bitre.gov.au — if you require part or all of this publication in a different format, please contact BITRE.
An appropriate citation for this report is:
Bureau of Infrastructure, Transport and Regional Economics (BITRE), 2009, Transport energy futures: long-term oil supply trends and projections, Report 117, Canberra ACT.
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