ENERGY MANAGEMENT

THE END OF CHEAP OIL

A Public Service Presentation

Date : March 2010

By
Harjono Zainal Abidin
Chairman
QUORUM Oil & Gas Sdn Bhd
Kuala Lumpur, Malaysia
E-mail: harjono@geocities.com

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INTRODUCTION
The world can now feed a daily oil
habit of nearly 80 million barrels.
In the U.S. about two-thirds of
the oil goes to make transport
fuels.
The synthetic fabrics in our
wardrobe and the plastics in just
about everything we touch
started out as oil too.
As Daniel Yergin writes in his oil
history The Prize, we live in "the
Age of Hydrocarbon Man."
Oil Trade

The quest for more cheap oil is a losing game:

Oil consumption imposes severe costs on the environment, health, and taxpayers.
The world's oil addiction is hastening a day of reckoning.
Oil Consumption

Oil is cheap.
In the United States, a gallon of petrol can be cheaper than a bottle of water.
It is too cheap for most people to bother conserving.
The U.S. remains the king of consumers, accounting for a quarter of the world's oil even though it has
just 5 percent of the population.
The End of Cheap Oil?

National Geographic
June 2004
The Earth holds a finite supply of oil.
The flood of crude oil from fields around
the world will ultimately top out, then
dwindle.
"In our lifetime," says economist Robert K.
Kaufmann of Boston University, who is 46,
"we will have to deal with a peak in the
supply of cheap oil."

NATIONAL GEOGRAPHIC June 2004

http://ngm.nationalgeographic.com/ngm/0406/feature5/
Sustainable alternatives now ….

 The peak marks the change from an increasing supply of

cheap oil to a dwindling supply of expensive oil.
 We foresee dire consequences: shortages, price spikes,
economic disruption, and a desperate push to wrest oil
from "unconventional" sources such as tar sands, oil
shale, or coal.
 We need to curb our oil use and develop sustainable
alternatives now.
Oil Price Spike 2008

This has already caused big spikes in energy prices – including natural gas and electricity – with potentially devastating
economic and social impacts.
“Global production of oil – including biofuels and so-called ‘nonconventional’ sources – has scarcely risen since early
2005, while the price of oil has soared from $10 per barrel in 1998 to $140 per barrel in June 2008.”
(U.S. Energy Information Administration, Argus Media.4)

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Economic crisis?

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The NEXT Crisis …..
AGENDA FEBRUARY 11, 2010, 5:47 A.M. ET

The Next Crisis: Prepare for Peak Oil

As Europe's leaders gather in Brussels today, they have only one crisis
in mind: the debts that threaten the stability of the European Union.
They are unlikely to be in any mood to listen to warnings about a
different crisis that is looming and that could cause massive
disruption.

A shortage of oil could be a real problem for the world within a fairly
short period of time. It was unfortunate for the group which chose to
point this out yesterday that they should have chosen to do so on the
day the Organization of Petroleum Exporting Countries, or OPEC,
reported that the effects of the financial downturn had led to a slight
downgrade in its forecast for oil consumption this year.

Against the gloomy economic backdrop that Europe currently

provides, siren voices shrieking that a potential energy crisis is
imminent and could be worse than the credit crunch are liable to be
dismissed as scaremongers.

The North Sea Shearwater platform was producing

years beyond expectations.

SOURCE
THE NEXT CRISIS: PREPARE FOR PEAK OIL
By PATIENCE WHEATCROFT
FEBRUARY 11, 2010, 5:47 A.M. ET
http://online.wsj.com/article/SB10001424052748704140104575057260398292350.html?mod=wsj_share_facebooK
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Oil Prices To-day …2010
What is “Peak Oil”?
Peak Oil is also called

"Hubbert's Peak"
– Named for the Shell geologist
Dr. Marion King Hubbert.
– In 1956, Hubbert accurately
predicted that US domestic oil
production would peak in
1970.

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The Hubbert Curve
Decline in Supply
Oil Producing Countries Past Peak

Oil production in a given country tends to go into decline at about the halfway point because of falling pressure in the
underground reservoirs, and because oil companies usually discover and exploit the largest oil fields first.

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Global view

MAX
Plateau
PEAK OIL SCENARIO
Buyer’s Seller’s
Cheap Easy to Extract Oil Market Market
Expensive – Difficult to Extract Oil
2010 2020 2030

9-11

Obama

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SHELL “Scramble” Scenario
Considering Scramble, What Will the World be
Like?
 Environmentally the world will not be the
most pleasant place to live, there will not be
any taxes on CO2 emmisions, so there will be
a high carbon dioxide output. There will be a
number of CO2 Reduction plans, but because
of rapid change and high prices consumers
are not interested and these plans will fail.
 Economically the world won't do too great
either, due to rapid changes in technology
every 5 to 10 years the economy will be
unstable, and not very strong. Chances are
that the Global Fincancial Crisis will continue
for another few years, slowly recovering, and
when we change technology again the crisis
will go downhill even further.
Will there be an oil war?
 Yes, in fact there already is an oil war.
America in Iraq. It is an early oil war, and a
sign of desperation. We need a drastic Shell strategies!
change in technology to prevent the further
wars.

Source
PRESENT & FUTURE OF OIL
http://fromoiltowhat.com/future.html
Oil Wars!
What does peak oil mean for our societies?

Our industrial societies and our financial systems were built

on the assumption of continual growth
 Growth based on ever more readily available cheap oil.
Oil in particular is the most convenient and multi-purposed
of these fuels.
 Oil currently accounts for about 43% of the world's total fuel
consumption, and 95% of global energy used for transportation.
 Oil and gas are feedstocks for plastics, paints, pharmaceuticals,
fertilizers, electronic components, tyres and much more.
 Oil is so important that the peak will have vast implications
across the realms of war and geopolitics, medicine, culture,
transport and trade, economic stability and food production.
 Significantly, for every one joule of food consumed, around 10
joules of fuel energy have been used to produce it.

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Economic Impact

When oil production starts to decline, the economic impact will be dramatic.

Economic growth is largely dependent upon a growing oil supply. The International Energy Agency
has forecast oil demand to expand at a rate of 1.3% annually over the period 2004-2030.

But after the peak, many forecasters expect global oil production to fall at 2-4% a year, meaning that
the deficit between the oil we want and the oil we get will expand by 3-5% a year. Within 10-15
years of the onset of decline we could have just half the oil supply that projections say is required to
sustain economic growth.

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How do we manage an Energy crisis?
NGV Natural Gas Vehicles!
Reacting to crisis
Short term
– Building Services
• Power
• Water
• Comms
• Waste
– Transport
• Natural Gas!
• Encourage people to use
– trains & bus
– bicycles
– Not cars

– Telecommute
• Internet for work

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Longer Term Alternatives?
Ethanol/Methanol?
Solar power!

Wind power!

Nuclear!

Alternative fuels may help but ….

unless we change our lifestyles these new technologies will come to naught.

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NOTE On Alternative fuels
The best non petroleum source of
power is
 Hydroelectricity!

Most alt fuels have a negative

EROI*
 Oil Shales/Kerogen?
 Coal to gas!
 Hydrogen?
 Nuclear Fission?
 Nuclear Fusion!

*EROI Energy Return on Investment

What to expect?

Lifestyle changes …..go green!

Sustainable economics!
A balance between capitalism & socialism!

BUT ….

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What Behavioral changes are necessary?
NEW YORK!
CHINA?

Western consumer lifestyle in the East?

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What happened to the Bicycles in Beijing …?
The millennia-old Middle Kingdom can claim to have invented many
things _ fireworks, the umbrella, paper and the compass among
them _ but not the bicycle.

According to Amir Moghaddass Esfehani, a

historian at the Technical Institute of Berlin, the
Chinese first learned of bicycles from a customs
official named Binchun who visited Paris in 1866
and wrote of Parisians riding vehicles made of
"two wheels with a pipe in the middle."
Back then, well-heeled Chinese generally got around in rickshaws or
sedan chairs, both hauled by manpower. It was only after expatriate
Americans and Europeans began cycling around Chinese cities that
the fashion took off, Moghaddass writes in "The Bicycle and the
Chinese People."
Through the three decades of Communist central planning, bicycles
were encouraged as transport; buses were crammed and infrequent,
taxis virtually unheard of.
For the Beijing Olympics, the city is offering visitors 50,000 bicycles
for rent, but many bike pathways in Beijing and Shanghai have been
taken over by right-turn and bus-only lanes. Big offices and hotel
buildings generally provide bicycle parking onsite only for
employees.
Shanghai's 10 million bikes are banned from many main streets. A
trip from Hongqiao, in the western suburbs, to the busy Nanjing
Road shopping district is an obstacle course around no-go zones and
subway construction projects. The riverside bike paths so familiar in
Western cities are nonexistent.

SOURCE
Bikes, China's icon, thrive despite car invasion
ELAINE KURTENBACH | July 7, 2008 07:27 AM EST
http://www.huffingtonpost.com/2008/07/07/chinas-bike-culture-bikes_n_111144.html?just_reloaded=1
Paris!
A New Fashion Catches On in Paris:
Cheap Bicycle Rentals
By STEVEN ERLANGER
Published: July 13, 2008PARIS — They’re clunky,
heavy and ugly, but they have become modish —
and they are not this season’s platform shoes.
A system for renting Vélib’ bicycles has A system for renting Vélib’
become hugely popular in Paris, where bicycles has become hugely
about 20,600 of the bikes are in service. popular in Paris, where about
Self-service rental stations are ubiquitous in Paris. 20,600 of the bikes are in service.
A year after the introduction of the sturdy gray bicycles
known as Vélib’s, they are being used all over Paris. The
bikes are cheap to rent because they are subsidized by
advertising, and other major cities, including American ones,
are exploring similar projects.
About 20,600 Vélib’ bicycles are in service here, with more
than 1,450 self-service rental stations. The stations are only
some 300 yards apart, and there are four times as many as
there are subway stations, even in a city so well served by
its metro system.

SOURCE Self-service rental stations are

A New Fashion Catches On in Paris: Cheap Bicycle Rentals ubiquitous in Paris.
By STEVEN ERLANGER Published: July 13, 2008
http://www.nytimes.com/2008/07/13/world/europe/13paris.html?_r=3&oref=slogin

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Using the Bicycle

Electric Bicycle Transportation System

Monday, July 27, 2009 12:30PM - By Chris Weiss
Winners of the Future City Mobility competition, Marten Wallgren, Il Choi, David Seesing and Miika Hekkinen designed
this project dubbed London Garden, envisioning a cleaner, more integrated future for London’s transportation.
The design begins with electric bicycles that operate in three modes: standard; exercise mode, in which resistance is added to generate and
store electricity; and electric, which uses stored electricity to power a motor. The foldable bikes are designed for community use and stored in
bus stops modeled to look like trees, blending seamlessly with the natural landscape. The bus stops also generate electricity using sun, wind
and rain water. The bicycles work in conjunction with electric buses and taxis, where they’re brought aboard and used as seats, bringing their
energy reserve in for use by the vehicles. [via Tree Hugger]
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Building Energy Efficiency?
Buildings today account for
– up to 40 percent of the world’s energy
use and
– are responsible for nearly 40 percent
of the world’s greenhouse gas
emissions.
Technology is available today to reduce
these by up to 70 percent.
– That’s as much as taking every single
car, truck and bus off the road around
the world.
With prompt action and smart policies, we
can fundamentally and dramatically reduce
the energy needed for the buildings we
live and work in every day.

EXAMPLES
from around the globe.

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Sustainable Vancouver ….
Vancouver, Canada
Vancouver is a coastal city, home to more than 560,000 people, and
was named the world’s most livable city by the Economist magazine.
It’s proved to be not only the most livable, but also Canada’s model
for using renewable energy sources.

Vancouver has an ambitious 100-year plan for clean and green living.
The city already leads the world in hydroelectric energy, which
currently makes up 90 percent of its power supply. It also plans to­
reduce its greenhouse gas emissions to levels 20 percent lower than
reported in 1990 during the formation of the Kyoto P­rotocol. Fossil
fuels will be reduced with city investments in wind, solar, wave and
tidal energy systems.

Additionally as part of its energy-efficient plans, Vancouver hasn't

been shy with implementing emerging technologies. Solar-powered
trash compactors have sprung up around the city, each the size
equivalent to a normal trashcan but able to hold five times the waste
(which puts fewer emissions-spewing garbage trucks on the roads).

SOURCE Sustainable Vancouver

http://www.cityofvancouver.us/sustainability.asp

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Masdar Abu Dhabi
NORMAN FOSTER’S GREEN DESERT UTOPIA In Abu Dhabi
http://www.inhabitat.com/2007/05/09/norman-fosters-green-desert-utopia-in-dubai/

Not settling for mere zero-energy, Adrian Smith + Gordon Gill’s Masdar Headquarters are setting new design standards
for green building, with their scheme that generates more energy than it consumes. The Masdar Headquarters building
outside of Abu Dhabi is also the first building in history to generate power for its own assembly, using a solar roof pier
that will be built first to power the rest of the construction.
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 China
US-China collaboration:
– Green Building Design: For the 2008
Olympics in Beijing China, the U.S.
Department of Energy (DOE) teamed
up with the Beijing Science and
Technology Group to focus on
developing green goals, one of them
being the development of Chinese
green building standards. With the
assistance of Joseph Huang of the
Lawrence Berkeley National
Laboratory, the DOE also provided
technical design review and energy
analysis for the design of the Beijing
Olympic Village.
– Sustainable Development: Heller
Manus Architects based in San
Francisco, California was selected by
Guangzhou City, China’s third largest
city, to develop and design a master
plan based on eco-city and smart
growth design principals.
– Smart Grid: Intel and the State Grid
Corporation of China Lab worked
together to develop grid modeling and
Guangzhou - China’s third largest city simulation software, network isolation,
power station automation, and
Source applications of embedded technologies.
Green Architecture And Building Report
http://www.gabreport.com/gabreport/2009/11/2nd-annual-uschina-green-energy-conference-a-catalyst-for-change-and-innovation.html

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Conclusion
Global oil production is at or near a
peak
and a permanent decline will follow.
 Life and societies will change
forever:
– our transport systems,
– how we produce food,
– where we work and live
 esp in cities with tall buildings &
highways.
 Local government policies need
to be changed, if we are to
have any chance of mitigating
the economic effects of peak
oil.
– The continued expansion of road
and air infrastructure
– no longer makes any sense.
 Food supplies should be our
primary concern.
– In a world of constrained transport,
– food security will increasingly
depend upon local supply.

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Where are we today?

Based on consensus it is likely that global oil production will ‘peak’ and go into sustained
decline within the next few years if it has not done so already.

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Last word …

The most fundamental change needed is in the way people think.

Local policy will be fundamental to the transition to a lean-energy future.

Thank You

CARTOONS from Ken Taylor: POST PEAK OIL CRISIS

http://www.islandbreath.org/2006Year/14-energy/0614-07PeakOilWorldView.html

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 READINGS
Peak Oil Primer
http://www.energybulletin.net/primer.php

Life After the Oil Crash

http://www.lifeaftertheoilcrash.net/

Post Oil Cities

http://www.postoilcities.org/?p=142

Prepared by
Harjono Zainal Abidin
QUORUM Oil & Gas Sdn Bhd
Kuala Lumpur
18-Mar-2010

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