Peak Oil Workshop

City of Port Phillip

9th December 2011

Prepared by the Institute for Sensible Transport

This report was commissioned by the City of Port Phillip and prepared by Elliot Fishman and Phil Hart (Institute for Sensible Transport). Contact Elliot Fishman T: +61 3 9489 7307 E: info@sensibletransport.org.au www.sensibletransport.org.au PO Box 273 Fairfield VIC Australia, 3078. Design and Layout by Merry Creative

Contents
1. 2. 3. 4. About this report Peak oil and why its important for local government Workshop presentations and activities Key workshop questions 4.1 4.2 5. 6. 7. Whats the City of Port Phillip already doing to reduce oil dependency? CEO Challenge How would you reduce Council oil use by 25% by 2020 if you were the CEO? 01 02 03 04 04 07 08

Conclusion and next steps

Appendix One Snapshot of government reports on peak oil 09 Appendix Two Introduction to Peak Oil by Phil Hart (PowerPoint Slides) 10

1 About this report

In mid 2011, the City of Port Phillip committed to hold a Peak Oil Workshop, which took place in December 2011. The workshops aim was to improve Councils understanding of oil depletion and what it means for local government. This report is designed to capture the key messages that emerged from the half-day workshop.

Port Phillip staff during the Peak Oil Workshop

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

2 Peak oil and why its important for local government

The worlds oil resources are finite and the greatest share of those resources were discovered in the United States and the Middle East as long ago as the 1930s and 1940s. Oil is a fantastically rich and convenient source of energy, and it is no surprise that we have become addicted to it. But in contrast to our growing demand, worldwide discovery of oil peaked in 1964 and has been on a declining trend ever since. For the engineers in the industry, applying available technology and expanding exploration into new frontiers, the work remains challenging and rewarding. But for more than two decades, the industry has discovered less oil than the world economy has demanded and we now consume five barrels for every one discovered. While we are not running out, supply of oil cannot grow forever. Production of this finite resource must at some time peak and begin a long decline. We already depend on 120 of the largest fields for half the worlds oil supply. Almost all of these fields are mature and production from many is in decline. The smaller and more challenging oil fields available to the industry today cannot make up for the decline in these giant oil fields. In the words of one oil company executive, peak oil is either here or very close. A report from the UK Industry Taskforce on Peak Oil & Energy Security sends a clear message: As we reach maximum oil extraction rates, the era of cheap oil is behind us. We must plan for a world in which oil prices are likely to be both higher and more volatile and where oil price shocks have the potential to destabilise economic, political and social activity. There are two challenges for government and policy-makers. Firstly, to recognise the situation we face, and secondly to take action to mitigate the worst implications of the crunch. Our message to government and businesses is clear. Act now. Richard Branson, Founder, Virgin Group Ian Marchant, CEO, Scottish & Southern Energy Brian Souter, CEO, Stagecoach Group Philip Dilley, Chairman, Arup Jeremy Leggett, Chairman, Solarcentury

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

3 Workshop presentations and activities

The workshop involved a combination of presentations on peak oil and group activities, designed to gauge the thoughts of Council staff on what oil depletion means for the City of Port Phillip. The workshop presentations started with an introduction to peak oil by Phil Hart (see Appendix 2 for PowerPoint slides), who formerly worked in the North Sea oil and gas industry. This presentation was followed by an opportunity for questions and discussion. Elliot Fishman then presented on oil consumption and vulnerabilities across various local government areas, such as waste management, meals on wheels and infrastructure planning.

Phil Hart discussing peak oil with Port Phillip staff

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

4 Key workshop questions

Workshop participants were asked to form groups to discuss the City of Port Phillips past, current and future actions to reduce oil dependency.

4.1

Whats the City of Port Phillip already doing to reduce oil dependency?

The following offers a snapshot of the key initiatives undertaken by the City of Port Phillip to reduce oil dependency.

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Green asphalt

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

Council staff recording their thoughts on initiatives to mitigate the impact of peak oil on Council business

Word Cloud: Top 90 most common words used by staff on what Council is already doing to address oil dependency.

The City of Port Phillip has begun the policy work to help Council and community reduce their oil consumption. The following documents provide a brief snapshot of recent work to help reduce emissions, congestion and increase the role walking and cycling can play to meet local transport needs.

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

GREENHOUSE PLAN
LOW CARBON CITY

City of Port Phillip

Sustainable Transport Strategy

A Connected and Liveable City
Take Local Action: Be Part of the Solution

City of Port Phillip

City of Port Phillip

Walk Plan 20112020

Feet First: Making pedestrians the priority

Bike Plan 20112020

Pedal Power: Making bike riding better

City of Port Phillip strategies supportive of a low carbon future.

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

4.2

CEO Challenge How would you reduce Council oil use by 25% by 2020 if you were the CEO?

Staff were asked to imagine they were CEO and given the task of reducing the City of Port Phillips oil consumption by 25% by 2020 (at an organisational rather than community level). Ideas were generated individually at first and then refined in small work groups. Through an informal voting exercise, participants indicated which of the ideas they felt would provide the most effective means of reducing Councils fuel consumption. We have summarised this feedback by rating the selected ideas as high, medium or low effectiveness in the table below.

Initiative Initiative
Improve technology: Communication, teleconferencing & work from home Charge for waste by weight: reducing service, encourage composting Reduce Council vehicle fleet Reduce over-servicing, e.g. street/beach cleaning Fuel switching to biofuels from waste products & hydrogen buses Parking/traffic restrictions to increase the efficiency of service delivery vehicles Education/travel behaviour change Include oil consumption in key selection criteria for Council contracts Improving cycle facilities and increase bicycle fleet Annual public transport tickets for staff Electric vehicle fleet for community care
Proposed initiatives by staff to reduce oil dependency across Council business

Rating
High High High High Medium Medium Medium Medium Low Low Low

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

5 Conclusion and next steps

Peak oil is a critical risk management issue for local government. Rising demand for oil and serious supply limitations present a significant threat to business continuity and service delivery. Waste management, meals on wheels and road maintenance are just a few of the responsibilities local governments are expected to carry out every day; and each are highly dependent on oil and petroleum products. The City of Port Phillip is vulnerable to the threats posed by peak oil and this workshop has provided an opportunity for Council staff to explore what it means for them and what can be done to increase resilience. This workshop has outlined the key principles of peak oil and oil vulnerability planning. Council staff have been able to articulate what the City of Port Phillip is currently doing in other policy areas which may strengthen Councils position in the likely event of volatile oil prices. The workshop has also generated some preliminary ideas about how service delivery could be adapted to a future of constrained oil supply and rising or volatile oil prices. This should be seen as the start of Councils journey towards developing a service delivery model that is more robustly positioned for a future of declining oil supply. To enhance Councils preparedness for a future of volatile oil prices, a comprehensive audit of current oil consumption should take place. This, along with the above workshop outcomes can act as the basis for a strategic assessment of the vulnerabilities faced by Port Phillip, across Councils service areas, to fluctuating oil prices. By working with service area teams, Council can look for opportunities to reduce fuel consumption and strengthen business continuity, using a risk management approach. In addition to the risks peak oil poses to business continuity for Council, peak oil is a significant threat to the community. Council should investigate peak oil vulnerabilities and mitigation options for the general public living, working or studying in the City of Port Phillip.

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

6 Appendix One Snapshot of government reports on peak oil

Peak Oil Workshop City of Port Phillip. Prepared by the Institute for Sensible Transport

7 Appendix Two Introduction to Peak Oil by Phil Hart

(PowerPoint Slides)

Peak Oil: A Change in Direction

Phil Hart

1 Litre Petrol = 10 kWh Energy Solar Panels = 5 kWh/Day Three months to fill your tank

We depend on production from old giant oil fields

14 giant fields

20% 50% 30%

4000 smaller fields

100 large fields

Ghawar

Saudi Arabia

260km long 5 million barrels of oil per day 7% of the world's crude oil supply from one giant field

Euan Mearns 2007 Ghawar Base Case europe.theoildrum.com

Impact of Technology?
Spindletop, East Texas 10th January 1901 Well Depth 1,139 ft (347 m) 100,000 barrels per day United States Average Oil Well 2008 10 barrels per day BP 'Tiber' Deepwater Gulf of Mexico Well Depth 35,000 ft (10,500 m) Water Depth 4,000 ft (1200 m) Cost > $200 million per well

Unconventional oil is.. unconventional

Each barrel of oil requires two to five barrels of water, carves up four tons of earth, uses enough natural gas to heat a home for one to five days, and adds to the greenhouse gases slowly cooking the planet, according to the industry's own calculations.
-

Washington Post

Spindletop Energy Return >100:1 Tar Sands Energy Return ~3:1 Biofuels Energy Return ~2:1

Technology at Work

What do the Oil Companies Say?

Christophe de Margerie CEO TOTAL
-

The world will never be able to produce more than 89 million barrels a day of oil.

Financial Times, 16th February 2009

Dr Jim Buckee retired CEO Talisman Energy

- - -

"It's obviously unsustainable and the world is increasingly drawing on the bigger, older fields. You couple that notion with the irreversibility of decline and you've got a very alarming picture." Peak oil is either here, or very close.

ABC News, 30th January 2008

IEA World Energy Outlook 2004

IEA World Energy Outlook 2010

Peak Oil in a Nutshell

Existing Reserves

OPEC Reserves 'overstated' OPEC can't produce 'as much as we need' forever Middle East oil province - thoroughly explored and developed (except Iraq) Rate of Oil Discoveries peaked in 1960's Geology of major world oil provinces well understood No new 'Middle East' waiting to be found Application of 'technology' has been a reality for twenty years Easy gains have already been achieved Increasing recovery limited by decreasing energy returns
-

Future Discoveries

Technology & 'Reserves Growth'

..but oil is not 'Running Out' either!

Oil Prices and Production: 2002-11

Peak Oil and Climate Change

Meet TREV: Two-seater Renewable Energy Vehicle

Weight: 300 kg Top speed: 120 km/h Range: 150 km Two comfortable seats Space for two bags Energy-efficient tyres, brakes and suspension Complies with road safety regulations

Uses less than 1/5th of the energy required by a conventional sized car.

Peak Oil & Local Government

info@sensibletransport.org.au phil@sensibletransport.org.au

Elliot Fishman Phil Hart

Handil Oil Field, Indonesia

SPE, Journal of Petroleum Technology (Jan 2008) 12,500 b/d in 2003 to 23,000 b/d in 2007

Biofuels

IEA 2009: Despite the recent downturn, world use of biofuels is projected to recover in the longer term, reaching 1.6 mb/d in 2015 and 2.7 mb/d in 2030 ~ 2.5% of total liquids production

The hike in OPEC countries estimates of their reserves was driven by negotiations at that time over production quotas, and had little to do with the actual discovery of new reserves. IEA World Energy Outlook 2004

World Oil Use

Transport

61%

Petrol, Diesel, Aviation Fuel Heating Oil & Diesel Generators Plastics Agriculture Pharmaceuticals Road Surfacing

Heating / Power Generation / Industrial Petrochemical Feedstocks Asphalt / Tar

~28%

~7%

~3%

Lubricants

<1%

Oil dependencies for local government

Oil dependencies for local government Council Fuel Use

CEO Challenge

Imagine that YOU are the CEO of City of Port Phillip. What ideas would you implement to reduce oil use by 25% by 2020?

CEO Challenge

What if you were Kay Rundle? What ideas would you implement to reduce oil use by 25% by 2020?

CEO Challenge

What if you were Tim Costello? What ideas would you implement to reduce oil use by 25% by 2020?

Peak Oil & Local Government

info@sensibletransport.org.au phil@sensibletransport.org.au

Elliot Fishman Phil Hart