ASPO-USA Denver Conference Report (Friday)
John Hickenlooper stamping mayoral approval on the conference.
He doesn't think the sky is falling due to Peak Oil, but he believes it's something that we need to be aware of and be thinking about. "Over the next ten or twenty years it's going to play a powerful role". But he believes in relatively painless adaptation - there will be a plateau and then gradual decline, and there is "abundant time" to make the changes that need to be made. Precisely because oil has been so cheap, there are lots of low hanging fruit in conservation to find.
Under his leadership, Denver is studying city oil use and what would happen at varying levels of oil price - how would the city adapt. A big focus on integrated transport and land-use planning. The Denver area has a very large transit system just approved by voters. The FasTracks system will involve 57 new stations and 50 of them are close to brownfield sites that can be redeveloped with high density zonings to allow 5-8 story buildings that have mixed use residential and commercial buildings.
Denver has reduced the vehicle fleet 7% - and the city uses hybrids and biodiesel. Denver International Airport uses 100% alternative fuels. The mayor is trying to promote telecommuting to area businesses - even 10-20% of the week in telecommuting would makes a big difference to congestion and fuel usage. He is trying to look at whether real-estate agents could be persuaded to launch a TV campaign to promote people moving closer to work (on the theory that the real estate agents would have a lot to gain in getting everyone to shuffle around and be closer to work).
No doubt the mayor is putting his best foot forward in his presentation, but all in all the level of consciousness and creativity that is starting to go into thinking about this issue in Denver is extremely impressive.
Tom Petrie recaps Thursday's talks
The heart of his arguments are well worth contemplating. It's properly caveated. It's possible to come to different conclusions, but I admire his intellectual courage. Anyone who wants to know where we truly are needs to read his book.Petrie emphasizes that oil sands are there, but difficult to develop. "We might not even get [to 5mbpd] because of the environmental issues".
A questioner asked him about can we really get rid of foreign oil? Petrie replied that we don't really need to get all the way there, just most of the way there to reduce foreign leverage on us to reasonable levels. He believes we could get substantially there in a decade or a decade and a half. (But I think he was mistakenly assuming that much of Henry Groppe's heating/power oil usage was domestic, whereas actually there isn't much of that left in the US after the late seventies).
Another questioner asked whether exploration made any financial sense at this point (Wood McKenzie has argued that much recent exploration is costing more than the net present value of the oil found.) However, Petrie believes that if the price stays at $40-$60 it definitely justifies further exploration.
Roger Bezdek proving that a PhD in economics is no impediment to thinking clearly and well about energy issues.
He briefly discussed the long history of incorrect predictions of oil runinng out or peaking, but said, "Wrong is not wrong forever". Some critics have accused peak-oilers of crying wolf, but "The message of that parable is that people were eventually eaten by the wolf."
He also noted that the optimists on peak oil were the same people and institutions optimistically wrong on US natural gas production, which is now pretty clearly in serious trouble. However, the Hirsch report is not focussed on when peak oil will be, but rather on how it might, or might not, be mitigated.
He then went through the Hirsch report mitigation options. All mitigations were basically taken as optimistic limiting cases of massive crash programs. The programs they included were vehicle fuel efficiency, gas-to-liquids, coal-to-liquids, and tar-sands.
They estimate that vehicle lifetimes are: autos, 17 yrs; light trucks, 16 yrs; heavy trucks, 28 yrs; and aircraft, 22 years, and they assumed that vehicle fuel efficiency could be increased via CAFE 30% after 3 years, then 50% after 3 more years. (This may be a little pessimistic in my view, as we are already seeing major model-switching by consumers away from SUVs and into small cars).
They assumed current GTL projections would be scaled up by a factor of two, oil sands/heavy oil (Canada/Venezuela) production estimates of 2.5 times a base of 3mbpd projection in 2030, and CTL based on five new 100kbpd plants per year worldwide.
This gives them 20mbpd total after 10 years from all the wedges. They then assume world production post-peak goes like the US with oil decline at 2% and extrapolated world demand at 2%. Then their Scenario 1 (most likely), is that nothing is done until peak hits - this leads to huge shortages of liquid fuels. Scenario 2 (start 10 years before peak), leaves some, but a much smaller, problem. Only if mitigations are started 20 years early is the problem avoided altogether.
He thinks China has already started mitigations - they have multiple CTL plants at the MOU stage, much stronger vehicle efficiency regulations than the US (but people don't follow the rules).
A questioner asked him about renewables and plugin-hybrids. He generally encourages renewables but hasn't carefully studied the options. He thinks plugin hybrids are way oversold due to battery weight and replacement cost which totally kills the gasoline saving.
Charles T. Maxwell
Charles Maxwell provides us with the wisdom of Athens.
He began with some general comments that while capitalism has much to recommend it, huge sharp movements in price cause problems. In particular, he's concerned about their tendency to further promote the excessive debts of the US - both consumer and government. He's worried about the impact on the over-extended banking sector of a real energy crisis.
He thinks high prices are important because there's not much else causing people to make the energy transition we need to make. There's no leadership from government, very little attention from academia, and not much coverage from the media. "Sure there's an article from time-to-time but their heart's not in it - they think we're a bunch of kooks". However, he believes high prices will continue (sharply disagrees with Lee Raymond's view that prices will go back to $22 - we will never see $22 again).
Energy conservation is going to be a big wide area of investment that will be critical. However, for people to make the necessary investments, there has to be a continuation of high energy prices. His predictions for average prices (and he stresses that these numbers will be wrong - he just doesn't know which way):
Lee Raymond's $22 never shows up! He believes the non-OPEC peak is in 2010 (his numbers don't agree with Groppe's, but he thinks he has to follow his own). He believes that in 2006-2008 supply and demand will be growing roughly in balance and prices flattish, with new projects coming on stream.
After 2010, we will be in the situation of Oliver Twist wanting more from OPEC. Prices will go up further after 2010 due to their pricing power.
He emphasized the risk of shocks along the way - Venezuela, Nigeria (tribes not getting a fair deal from government), Russian's want to do it their way - Russian supply will increase, but slower than we would like because they aren't going to invite Western companies in to do production. Iraq will not be stable at all, Iran has the problem with the nuclear issue.
His worst nightmare is a Chavez assassination - this would cause the Chavista's to hold onto power and coup attempts from the upper middle class leading to civil war, and oil exports closed down within days. 14% of our supply goes offline within 10-11 days. The market would bid oil up to $100/barrel within two days of the assassination. He contrasted the 45 days oil on water with Saudia Arabia versus 5 days in Venezuela, giving us far less time to react.
His view on natural gas is that with the advent of LNG in a pretty big way around mid 2008, he is looking for prices of $6-7 by 2009. That will have an impact on domestic drilling and the oil service industry.
He loved the alternative energy presentations and thinks renewables will probably do a bit better than the cynics think. However, he basically endorses the Hirsch report - he gets the same kind of shortages in his analysis. We have choices along a spectrum of planned conservation versus planned going-without. We will need to look at combining errands, carpooling. This may have benefits - he highlighted the sense of community in Community Solution's Cuban movie.
He ended up by highlighting a parallel between Athens and war with Sparta and the current US situation. The escalating costs and difficulties of the war led to a political impasse - partisanship in the legislature (sound familiar?). Democracy began to fail. Democracy in Athens ended up being eclipsed by a tyrant in order to get decisions in time out of the system. He fears that outcome in the US.
Jason Mark, Vehicles Program Director for the Union of Concerned Scientist's Clean Vehicles Program.
His main focus was vehicle fuel efficiency. He outlined how currently available technologies could improve Explorer fuel mileage from 20mpg to 28mpg. This would cost about $800 more in the showroom, but that will pay for itself within 1-2 years at the gas pump. Hybrids move beyond this. However, there's concern over muscle-hybrids such as the Accord - the hybrid technology is mainly going to provide more power, rather than more fuel efficiency.
He discussed alternative fuel vehicles. Ethanol and lignin/cellulose; they have great hope for biofuels. Plug-in hybrids - challenge is battery cost. Fuel cells - many somewhat sceptical but UCS supports. He gave a very interesting graph on oil demand - with the contributions of conventional vehicles, hybrids, alternative fuel vehicles he thinks we could get US transportation oil usage down by about 25% by 2030. This assumes constant mileage travelled growth.
He thinks politically that the debate on vehicles is shifting - with oil hawks concerned about the national security implications of oil dependence, the agricultural industry looking for biofuel profits, and the faith community asking what would Jesus drive. The policy ball could now move forward.
The audience chimed in with answers to what would Jesus would drive: bicycle, skateboard, or sandals.
Kelli Kammerer on clean cars.
Kelly covered the current hybrids in production: the Accord (29mpg/37mpg), the new Civic (2006) hybrid (49mpg/51mpg), and for the truly serious peak-oiler the Insight (60mpg/66mpg). However, she pointed out that zero oil would be displaced by 2020 if all vehicles went hybrid but we otherwise had business-as-usual, because the efficiency gains would just offset the increases in VMT (vehicle miles traveled).
Kelly spent a lot of time promoting the CNG Civic GX as being green and displacing imported oil by running on domestic natural gas. This came across as quite odd at a Peak Oil conference. I guess Honda hasn't kept abreast of the North American NG supply situation. Hopefully Kelly stuck around for some of the other speakers and can take the message back.
Honda's view of the ultimate solution is hydrogen fuel cell cars. They have built a few at $1m each, and one is in use by the Spallino family in California. Kelly emphasisized the hydrogen infrastructure planned by the Governator in California. There are major challenges to hydgrogen, and Honda views it as 15-20 years away from commercial production.
Honda has no plans for plugin hybrids.
Steve Mut searches for hard-to-find hydrocarbons.
Shell has been working on in-situ oil shale production for 22 years. Their first small scale field test was in 1996. They basically use slow heating to crack kerogen and replicate the natural formation process of oil, only much faster. They did another recent small test, and are working on a final larger test before making a commercial go/no-go decision.
They use electric resistance heaters in wells and heat the rock to 600-700 degrees for 3-4 years. Light hydrocarbons come bubbling up, and via "smart carbon sequestration", gunky carbon residue is left behind. They estimate their EROEI is 3.5 (counting primary heat for power generation to gasoline output heat content). They get 2/3 liquids and 1/3 gas (inc propane/butane).
They use a freezewall to isolate the process from groundwater, which would ruin both their thermal efficiency and the groundwater. This kind of freezewall has been used in mining for years.
The overall CO2 profile of the process is similar to average crude, and better than the process for handling the marginal barrel of imported heavy crude.
Further testing is necessary - Shell is still in research mode. However, if all goes well, the hope is to have commercial operation starting by the end of the decade.
In response to questions, Steve guesstimated that oil shale production would still be pretty negligible by 2015, but might, if things go really well, get to 5mbpd by 2030. He thought the chance of getting to 10mbpd was very tiny. If oil prices went to $100/barrel, there might end up being a trillion barrels of reserves recoverable.
The gist of his presentation was that we cannot continue growing exponentially in a finite system, and we should not try and "fill the gap" between post-conventional-oil-peak supply and demand, because the higher we manage to get supply by the time we do peak in all liquid fuels, the worse we as a civilization are going to crash afterwards. We need to figure out how to have a high standard of living while using less and less energy. We must be focussed on how to move to renewables as quickly as possible before we terminally mess up the planet. He opposes drilling in ANWR - he's been there and he doesn't think the environmental impact will be that bad, but he doesn't think when we have such tiny reserves as a nation that it makes any sense to use them up as fast as we can. He uses as a running example the contrast between Easter Island (where the inhabitants of a fascinating civilization ended up "living in caves and eating rats and each other"), and the Apollo 13 mission where by acutely careful energy and resource rationing and cooperation, the astronauts managed to eke things out and get home safely.
What kind of world are we leaving for our grandchildren and greatchildren? What will they say about us - what terrible people we were that we used up this rich endowment in such a short time?I think what is so incredibly inspiring about Roscoe is that he's speaking his truth straight from the heart without the slightest concern about whether anyone's going to approve or not. These things desperately need saying, and he's going to say them and damn the short-term consequences. The normal slippery politician spin-shit is utterly missing from the man. He's a hero, or at least he's now mine.
Paul Morris planning for less oil.
He advocates placemaking - mixed use, higher density, development that is friendly to pedestrians and cyclists. It should have civic plances, green spaces, and proximity to mass transit. However, transit system must attract riders - must have high quality development around the station and the station itself must be a place of character and distinction.
His basic pitch is this kind of development can lower oil use, versus the alternative. (To which I asked, yes, but how many percentage points of oil decline per year can you land-use types cover for us? They do not know the answer yet.)
Terry Penney trains to change the battery in his plug-in hybrid.
He likes plugin-in hybrids - believes they make sense economically already, although "battery makers are all liars." He checks battery life in his own lab. Toshiba/NEC have announced a battery in 2008 with 80% recharge in 2 mins for electric cars.
He believes plugin-hybrids will be a huge enabler of wind capacity - cut peak utility capacity needed (because they hybrids can generate power in a pinch), and fill-in base load and can use power at especially windy times. However, this vision needs better batteries to work.
Peter Dea delivers the truly scary news.
Basically, the price soared after 2001 when excess capacity disappeared. Rig count has exploded (up 63%) but gas production is declining (2%). Current annual well decline is 31% (it used to be 17%), average yields/new well are dropping several percent per year, and half of the gas flow required by 2012 has to come from fields that haven't yet been discovered. He no longer thinks LNG is going to reduce price any - he thinks it will just prevent prices from exploding too much higher than they've been recently.
Panel on Municipal Responses
Beth Conover charms the dueling panelists into submission.
Pat Murphy demonstrating that small communities know a thing or two about tailoring
Julian Darley saying unpopular things
Jack Pommer explains that politicians are just as bad as we feared.
We need to look at everything we do because everything we do prolongs the problem. Peak oil is going to be the single biggest issue facing whoever replaces me after term limits.
And at this point, Beth Conover pulled off a minor miracle in extracting out of this panel of two in-the-trenches politicians and two radical social critics almost complete consensus on a huge range of points from the need to steadily decrease energy use, cars, supporting more family farmers, etc.
Finally, the big man who led the organization of the whole effort came to bid us adieu:
Steve Andrews giving concluding remarks.