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Page added on March 12, 2016
Coal Shock Model
The views expressed do not necessarily reflect the views of Ron Patterson.
The eventual peak in World fossil fuel output is a potentially serious problem for human civilization. Many people have studied this problem, including Jean Laherrere, Steve Mohr, Paul Pukite (aka Webhubbletelescope), and David Rutledge.
I have found Steve Mohr’s work the most comprehensive as he covered coal, oil, and natural gas from both the supply and demand perspective in his PhD Thesis. Jean Laherrere has studied the problem extensively with his focus primarily on oil and natural gas, but with some exploration of the coal resource as well. David Rutledge has studied the coal resource using linearization techniques on the production data (which he calls logit and probit).
Paul Pukite introduced the Shock Model with dispersive discovery which he has used primarily to look at how oil and natural gas resources are developed and extracted over time. In the past I have attempted to apply Paul Pukite’s Shock Model (in a simplified form) to the discovery data found in Jean Laherrere’s work for both oil and natural gas, using the analysis of Steve Mohr as a guide for the URR of my low and high scenarios along with the insight gleaned from Hubbert Linearization.
In the current post I will apply the Shock model to the coal resource, again trying to build on the work of Mohr, Rutledge, Laherrere, and Pukite.
A summary of URR estimates for World coal are below:
The “Laherrere+Rutledge” estimate uses the Rutledge best estimate for the low case and Laherrere’s low and medium cases for the medium and high cases. Laherrere also has a high case of 750 Gtoe for the World coal URR, which seems too optimistic in my opinion. The “high” estimate of Steve Mohr has been reduced from his “Case 3” estimate of 670 Gtoe by 40 Gtoe because I have assumed lignite and black coal resources are lower than his high estimate.
An update of David Rutledge’s estimate using the latest BP data through 2014 gives a URR of about 400 billion tonnes of oil equivalent (Gtoe) for coal. The Rutledge 2009 estimate was about 350 Gtoe.
My initial estimate was in billions of tonnes (Gt) of coal at 800 Gt for the low estimate (a round number near Steve Mohr’s low estimate of 770 Gt) and 1300 Gt for the high estimate (about the same as Steve Mohr’s high estimate), my medium estimate was simply the average of the high and low estimates. I came across Jean Laherrere’s estimate after I had developed my model, surprisingly his medium estimate is a little higher than my guess, which is usually not the case (for other fossil fuels).
I do not have access to discovery data for coal, but based on World Resource estimates gathered by David Rutledge, most coal resources had been discovered by the 1930s. I developed simple dispersive discovery models with peak discovery around 1900 for each of the three cases, these are rough estimates, I only know is that coal was discovered over time. The cumulative coal discovery models in Gtoe are shown in the chart below for the low, medium and high URR cases.
In each case about 75% of coal discovery was prior to 1940.
Coal resources have been developed very slowly, especially since the discovery of oil and natural gas. As a simplification I assume that the rate that the discovered coal is developed remains constant over time.
A maximum entropy probability density function with a mean time from discovery to first production of 100 years is used to approximate how quickly new proved developed producing reserves are added to any reserves already producing each year. For example a 1000 million tonne of oil equivalent (1 Gtoe) coal discovery would be developed (on average) as shown in the chart below:
Reading from the chart, about 9 Mtoe of new producing reserves would be developed from this 1850 discovery in 1860 and about 5 Mtoe of new producing reserves would be developed in 1920. About half of the 1000 Mt discovered in 1850 would have become producing reserves by 1920, so the median time from discovery to producing reserve is about 70 years (the mean is 100 years due to the long tail of the exponential probability density function).
The model takes all the discoveries for each year and applies the probability density function (pdf) above to each year’s discoveries (the pdf is 1000 less than shown in the chart because we multiplied the pdf by 1000 to show the new producing reserves in Mtoe.) Then the new producing reserves from each year’s discoveries are simply added together in a spreadsheet, not complicated, just an accounting exercise.
The new producing reserves curve (when everything is added up) is shown below for the medium URR case (510 Gtoe):
Each year new producing reserves are added to the pool of producing reserves while some of these reserves are produced and become fossil fuel output. This is indicated schematically below:
If the Fossil fuel output is less than the new producing reserves added in any year, then the producing reserves would increase during that year, if the reverse is true they would decrease.
The fossil fuel output divided by the producing reserves is called the extraction rate.
Using data from David Rutledge for fossil fuel output to 1980 and data from BP’s Statistical Review of World Energy from 1981 to 2014, I extrapolated the extraction rate trend from 2000 to 2014 to estimate future coal output. The chart below shows the discovery curve, new producing reserves curve, and the output curve for the scenario with a URR of 510 Gtoe.
Note that when new producing reserves are more than output the producing reserves will increase (up to 1986), after 1993 output is higher than the new producing reserves added each year so producing reserves start to decrease. Producing reserves are in the following chart for the medium scenario (URR=510 Gtoe).
The fall in producing reserves combined with increased World output of coal from 2000 to 2013 required an increase in extraction rates from 1.5% to 2.9%. I assume after 2014 that this increase in extraction rates continues at a similar rate until reaching 4% in 2026 and then extraction rates gradually flatten, reaching 5.1% in 2070.
Clearly I do not know the future extraction rate, this is an estimate assuming recent trends continue. For this scenario with a coal URR of 510 Gtoe output peaks in 2026 at about 4250 Mtoe/year.
For the low and high URR cases the details of the analysis are covered at the end of the post. The extraction rate trend from 2000 to 2014 was also extended until a peak was reached and then the increase in extraction rates were assumed to lessen until a constant rate of extraction was reached.
The three scenarios(low, medium, and high) are presented in the chart below.
The low scenario peaks in 2013 at about 4 Gtoe/a, the medium scenario peaks in 2025 at about 4.3 Gtoe/a, and the high scenario peaks in 2045 at about 4.9 Gtoe/a. Note that the medium scenario is not my best estimate, it is simply a scenario between possible low or high URR cases, reality might fall on any path between the high and low scenarios, depending on the eventual URR and extraction rates in the future.
A blog post by Luis de Sousa covered Jean Laherrere’s estimate of future coal output with URR between 550 Gtoe and 750 Gtoe.
For comparison, I have adjusted my chart (shown above) to have a similar scale as Jean Laherrere’s chart.
Note that only the two higher scenarios in my chart can be roughly compared with the lower two scenarios in Laherrere’s chart (510 compared with 550 Gtoe and 630 compared with 650 Gtoe). My scenarios peak at higher output at a later year and decline more steeply as a result.
The chart below is Steve Mohr’s medium independently dynamic scenario, where supply responds to coal demand.
The Chart above labelled C Case 2 is figure 5-8 from page 69 of Steve Mohr’s PhD Dissertation, the peak output is 210 EJ/year in 2019 (from Table 5-7 on page 71), Case 2 has a URR of 19.4 ZJ or 465 Gtoe (ZJ=zettajoule=1E21 J). My medium scenario (URR of 21.3 ZJ) has a lower peak output of 180 EJ/year, which occurs 6 years later than Mohr’s scenario. (1 Gtoe=41.868 EJ=4.1868E-2 ZJ).
It is interesting that Jean Laherrere’s larger URR scenario (550 Gtoe) has a peak of 4 Gtoe/year, while Mohr’s smaller URR (465 Gtoe) has a peak of 5 Gtoe/year. Mohr’s scenario was created in 2010 before the 2014 slowdown in Chinese coal consumption and he may have assumed that China and India would resume their rapid increase in coal consumption from 2010 to 2025. Jean Laherrere’s scenario was created in 2015 and in his 550 Gtoe scenario he may assume that the recent decrease in World coal output (in 2014) will continue in the future.
My medium scenario (510 Gtoe) is between Mohr’s medium (case 2) scenario and Laherrere’s low scenario. I have created two new scenarios using a URR of 510 Gtoe which match the peak output of Laherrere’s 550 Gtoe scenario and Mohr’s 465 Gtoe scenario. I have also created a “plateau” scenario with URR=510 Gtoe with World output remaining at the 2014 level until 2025. The various scenarios are presented in the chart below.
The extraction rates in the 4 different 510 Gtoe scenarios can be compared in the chart that follows.
Generally a higher peak in output leads to steeper annual decline rates, the chart below compares annual decline rates for the 4 different 510 Gtoe URR scenarios.
Summary
Coal is an important energy resource, but we do not know how the size of the economically recoverable resource that will eventually be recovered. The mainstream view is that there are extensive coal resources that are economically recoverable, research by Rutledge, Mohr, and Laherrere contradicts this view.
My estimates of the coal URR are based on the work of David Rutledge and Steve Mohr. Recent work by Jean Laherrere has coal URR estimates which are higher than my estimates, his medium scenario (650 Gtoe) is higher than my high case (630 Gtoe) and his estimates are usually conservative. My estimate may be too conservative, though my medium case (URR=510 Gtoe) is somewhat higher than the best estimate of Steve Mohr (465 Gtoe), whose work on coal is the best that I have found.
The average of the best estimate of Mohr and Laherrere’s medium case is about 550 Gtoe, a little higher than my medium case and similar to Laherrere’s low case. Based on the recent work by Laherrere, my best estimate would be 560 Gtoe (570 Gtoe is the average of my medium and high cases and 550 Gtoe is the average of the Mohr and Laherrere medium cases, the average of all 4 is 560 Gtoe).
The peak for world coal output will be sooner than most people think, the range is 2013 to 2045, my estimate is 2025 to 2030 with peak output between 4 and 5 Gtoe/year (2014 output was about 4 Gtoe/year).
Works Cited
De Sousa, Luis. “Peak Coal in China and the World, by Jean Laherrère.” attheedgeoftime.blogspot.com. Web. 11 March. 2016.
Mohr, Steve. Projection of world fossil fuel production with supply and demand interactions. 2010. Web. 11 March. 2016.
Oil Conundrum. theoilconundrum.com. Web. 11 March. 2016.
Rutledge, David. “Estimating long-term world coal production with logit and probit transforms.” International Journal of Coal Geology. 85 (2011): 23-33. Web. 11 March. 2016.
Appendix with details of Low and High cases
With links to Excel files at end of appendix
Low case-URR=390 Gtoe
High Case- URR=630 Gtoe
Further reading
Oil Shock Model with Different URRs
Links to excel files with models
26 Comments on "Coal Shock Model"
diemos on Sat, 12th Mar 2016 9:08 am
As I always like to say, ” We haven’t even STARTED on the underwater coal deposits yet.”
Davy on Sat, 12th Mar 2016 11:32 am
I would mention these studies rarely address their subject matter in an economic collapse. If it is the case we are in a significant economic decline with no recovery then our numbers change significantly. It is possible economic activity could fall be 50% in the next 5 years. If this is the case we will have a surplus supply overhang from demand destruction. We will be too poor to transition to renewables. Many NUK, Coal, and gas energy assets will play out per this economic collapse as built out assets available without expensive development.
Pennsyguy on Sat, 12th Mar 2016 12:04 pm
Very true Davy. An energy transition requires:
1. Political & social will to
make the transition.
2. Wealth to fund it.
3. Affordable/available energy to build the new infrastructure.
4. Expertise to build it.
5. Industrial infrastructure
to mfg. the components.
6. All of the above for
several decades.
In the U.S., I doubt if we have any of the above, even if renewables could provide the required power without substantial nuclear or fossil fuel inputs.
Nony on Sat, 12th Mar 2016 3:40 pm
Zero based charts. Now that’s more like it!
GregT on Sat, 12th Mar 2016 6:24 pm
I think that Nony just had an orgasm.
Truth Has A Liberal Bias on Sat, 12th Mar 2016 10:07 pm
Hey Davy why don’t you fix this fault and do a study of your own? I’m guessing the answer is cuz you’re a fucking retard who can’t. Your opinion is worth less than a fly on Dennis’ shit. Why don’t you shut the fuck up for a change? Asshat.
twocats on Sat, 12th Mar 2016 10:42 pm
Davy,
I don’t see coal resources being stranded. Too easy to get out of the ground, or blow out of the mountain, or whatever. I don’t see electricity generation being taken out either by an economic collapse. The 2007-9 “Great Recession” only managed to plateau it.
Electrical generation in the US has been on a plateau since 2005. Coal usage has been on a plateau since 1990 in terms of total electricity provided: in and around 1.5 – 2 bkw (30 – 40% of total generation).
The only real category coal has really dropped in is as percentage of the total with the rise of natural gas, this from 2005 to 2012, but we are talking 10%.
There are enough utility welfar programs out there that even if unemployment went up to 30 or 40% most people would continue to get electricity delivered during their unemployment benefits stretch and beyond.
GregT on Sat, 12th Mar 2016 11:06 pm
“Hey Davy why don’t you fix this fault and do a study of your own? I’m guessing the answer is cuz you’re a fucking retard who can’t. Your opinion is worth less than a fly on Dennis’ shit. Why don’t you shut the fuck up for a change? Asshat.”
Davy may be a delusional 1%er, with red white and blue blinders on, but he isn’t a fucking retard like you are. Asshat.
theedrich on Sun, 13th Mar 2016 5:34 am
Davy wrote: “It is possible economic activity could fall by 50% in the next 5 years. If this is the case we will have a surplus supply overhang from demand destruction. We will be too poor to transition to renewables.”
Agreed. It might indeed happen that the current global socio-political situation could indefinitely extend the doldrums we are already experiencing. Pure economic and extraction considerations are only part of the picture. As usual, we will be told by TPTB that some new technomagic will save us shortly, but we have heard that kind of propaganda far too often to believe it any longer.
Global criminal networks of every kind are metamorphosing and metastasizing rapidly. “Democracy” is a phenomenon of past history, replaced by new types of totalitarianism adroitly using ministries of propaganda and cybernetics in every possible field. Opiate addiction is destroying vast segments of civilization at all levels, as is the degradation of national IQs due to the importation of primitive ThirdWorlders to do servile work at slave wages.
It can be assumed that governments, led by the U.S., will do everything in their power to delude and fleece their populations, with no concern whatsoever for the extended future. In short, an ever more complex, Tainteresque house of cards is being constructed, one which will be increasingly susceptible to unexpected “black swan” events.
The slow but inexorable diminution in global energy supply will be only one of the factors leading to collapse.
makati1 on Sun, 13th Mar 2016 6:30 am
Twocats, deep denial is also a a fault of yours. You need to do some serious research before you make your fingers type on the keyboard. The average coal use by Americans is over one ton per person per year. I suggest you get your pick, shovel and wheelbarrow and mine your ton this year if it is so easy. Also, the net energy of coal is barely above that of wood these days.
Again, you ASS-U-ME that there will be “unemployment” payments or welfare when the SHTF. Got news for you. Those social programs are already being shrunk along with the tax base. Ditto for any ‘assistance’ from your local utility. They are struggling to survive and will NOT be supporting those who cannot pay.
The 3rd world is coming to the US fast. Be patient. Soon you will understand why I choose to live in the Philippines.
Davy on Sun, 13th Mar 2016 7:36 am
2Cats, many coal mines will be stranded in an economic collapse situation in regards to the economic viability of many resource to be developed. These new mines will not have the capex to get off the ground. There will not be the demand is really the key. If we are in a decline period we are going to see demand destruction influencing supply downwards. Current productive mines may be more than enough to supply lower demand.
This whole idea of decline and collapse has a wide spectrum of scenarios. If we fall way down the ladder we will not mine much coal at all. We will be scavenging mines with whatever is available. If this is a long drawn out decline for example 20 years of dropping activity the former is more likely. I feel we are in a destructive period of a declining plateau with a bumpy descent. Like the bumpy plateau of the most recent 10 years it is a hidden phenomenon. The bumpy plateau appeared to be a growth period per many indicators but the reality is we had broad based malinvestment that will not bring a return ever. All it will be good for is some salvage and cannibalization. In fact is will hurt growth by draining the system of liquidity and productive activity. We are clearly seeing this taking place currently. This bumpy descent we are in now feels like a bumpy plateau but the reality is all our tools to maintain growth have been spent and we have the hangover of all the malinvestment from the bumpy plateau. Oil production has been clearly damaged. Financial systems are a mess with NIRP and a cashless society the latest rage. What kind of policy joke is that?
Energy production in this new period will likely stagnate especially with renewables that have a large upfront cost with a long payback. How is anyone going to justify more investment in these sources if grid demand is declining and governments are unable to subsidize them? More likely we will use the cheapest of what we have. This is an important point because currently most studies rarely have an economic decline as part of their variables. They always show a standard growth range of at least 2-3%. In my opinion most every analysis today is invalid because we are not in a growth period anymore we are in a bumpy descent with deflation and decay. It is hidden and can be explained away but it is there everywhere especially in China where the growth powerhouse of the last 15 years drove global growth. China is a dead man walking. China is coal and coal will suffer the same decline as China for this reason.
marmico on Sun, 13th Mar 2016 8:29 am
The 3rd world is coming to the US fast
Spare me your barefoot bull shit.
marmico on Sun, 13th Mar 2016 8:51 am
Ooops, makati’s barefoot bull shit.
shortonoil on Sun, 13th Mar 2016 9:58 am
The Coal Shock Model, like the Oil Shock Model is based on an assumed URR. The URR at any point in time depends on the price, and the commodity’s production costs. The URR of tomorrow is likely to be quit different than it is today. We saw that happening to oil, where a 70% decline in price reduced reserves by a comparable amount. Coal prices have also declined by about 30% over the last five years. The fact that the reserves of any energy source is a time dependent quantity can hardly be ignored!
http://www.zerohedge.com/news/2016-03-12/court-decision-could-accelerate-oil-and-gas-bankruptcies
Omitting the impact of the energy delivered by an energy source can also hardly be ignored. Energy is the only critical value to be considered. That is reflected in its price and production costs. Surfaced mined lignite which delivers very little energy, like Powder River, can be extracted for $6 per ton, deep mined coal with a very high energy content can run as high as $100. Like oil, coal also has an integrated relationship with the economy:
“The price of oil depends on the strength of the economy, and the strength of the economy depends on oil’s ability to power it.”
http://www.eia.gov/coal/markets/#tabs-prices-1
http://www.eia.gov/coal/annual/pdf/table28.pdf
http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb0709
Ignoring coal’s impact on the economy by ignoring its value to that economy as energy source tells us very little about its future availability? Actually, it tells us nothing at all!
Kenz300 on Sun, 13th Mar 2016 11:56 am
If the world is to have any hope of dealing with Climate Change we need to stop building any more coal fired power plants and begin to shut down the oldest and dirtiest ones replacing them with safe, clean wind and solar power.
makati1 on Sun, 13th Mar 2016 8:39 pm
mar, the 3rd world is all around you in the lower 48. You just have not noticed yet. Be patient. You soon will.
BTW. I only wear shoes when I go out on the street. A pair of cheap sneakers lasts for years. How much do you waste on shoes? ^_^
Practicalmaina on Mon, 14th Mar 2016 10:03 am
COAL SUCKS! https://youtu.be/bDCsc3CU5ww
The KOCHE brothers should be tarred and feathered.
twocats on Mon, 14th Mar 2016 10:36 am
The low end URR on Dennis’ analysis is 390 Gtoe, which means we are peaking now and indicates a 50% decline by 2040. That seems pretty dramatic to me.
The statement on Davy’s post that I have a question with is this somewhat misleading gem:
“It is possible economic activity could fall be 50% in the next 5 years.”
1) possible, but unlikely. I know you think the odds are 100%, but I would say its more like 5%
2) a 50% fall in economic activity does not necessarily mean a 50% fall in Coal extraction
3) a 50% fall in coal extraction at any point in the next 5 years would mean complete and utter collapse of global civilization, not just “the US becomes a 3rd world country”
I know YOU believe that Makati, you’ve made it abundantly clear. And I know I touched a serious nerve on the “coal is easy to extract issue”.
But don’t blame ME for Humanity, not my fault.
Humans have been dying for centuries being sent into mines. The Romans:
“Condemned criminals and slaves punished for any offence were also sent to work in mines”
http://www.historyforkids.net/roman-slaves.html
I got a source that is at your level so you will understand it.
On the entitlements issue, there you make some decent points, but I just don’t see it all unraveling in 5 years. Yes it may very well be reduced, but the number of people on Food Stamps has been going UP, not down.
So we are talking about a serious reversal and the system risking a massive upheaval if they downgrade lifestyles too quickly. I don’t think they are that desperate about energy availability and in fact the danger right now is in the opposite direction, as my Ray Dalio post explained.
Practicalmaina on Mon, 14th Mar 2016 10:50 am
Twocats, this is the year man’s negative effect on his own future will become abundantly clear. Climate change will be blowing the walls off deniers homes and the profit margin for coal is on a downward march. Obama claims he is going to stop subsidizing coal by undercharhing for coal from federal lands. These coal company’s operate with thousands and thousands of health and safety infractions every year bease they can not compete if theh took the timw or monew to provideo a safe woreplace or remOtley safe environment in general. Company’s are being consolidated and then liquidated to fuck over pensions for workers who sacrifsed their health for “progress” Also that dbag scalia is dead so now coal company’s will begin to have added cost due to an attempt at pollution mitigation.
Downgrade lifestyle? If my family inhaled less coal pollution from hundreds and even thousands of miles away, I would see that as an upgrade, even if I it means me having a modest home and lifstyle.
Practicalmaina on Mon, 14th Mar 2016 10:58 am
I see a 50% decrease in “overall economic activity” ie whaT uncle Sam knows about, as a good thing. A more environmentally friendly economy would have significant bartering because it would be a localized one. In a world of local economy anyone on any skill level would have value because they can do some level of physical activity, and permeaculture-maintaining repairing tools ect is time and energy intensive. Better than today IMHO
twocats on Mon, 14th Mar 2016 11:43 am
Practical,
The framework you are posing here contradicts the implied framework set up by Davy and Makati in the above fire-and-brimstone posts. Can’t change the framework halfway through a debate. So I’m not disagreeing with you, I’m saying irrelevant to Davy’s statement.
Davy didn’t say, “We all discover we are attached to the earth and voluntarily choose to reduce coal usage by 50%”
No, it was, we all freeze to death in our homes because we can no longer afford the cost of coal, or something I guess to that effect. It’s not clear what demand is getting destroyed in his 50% reduction scenario.
There’s virtually no amount of climate change that can occur in 5 years that will reduce coal extraction by 50%.
Scalia’s death is important, but the case still has to go through DC circuit, and the ruling won’t issue until the Fall. At that point the US supreme court can either do nothing (ruling stays), hear the case (4-4 outcome, ruling stays), or suspend the case until there’s a ninth justice (ruling is suspended). Could be serious trouble for coal within 5 years. 50% of global production trouble? Nah.
Practicalmaina on Mon, 14th Mar 2016 11:56 am
Twocats, I get what your saying and I can respect that, but I do see 5 years of climate disruption being very significant. We are only now getting to the point where extreme eather is being directly linkes, and accepted in the scientific community, to global warming.
It is all about the mighty dollar, and it only takes one bad hurricane season to rack up the damage. One significant season with multiple Sandy or Katrina would bring our economy to its knees. Yes I know storm damage causes more BAU usually but the financial center of the wold getting creamed by a once in a hundred year hurricane, 2 times in ten years, will wake some people up.
Practicalmaina on Mon, 14th Mar 2016 12:06 pm
*hopefully, there I fixed it. I saw a comment on a different website saying that the feds were going to start investigating some of the conservative organizations that have been spreading misinformation about the clkmate.
I am all for free speech but the next generation deserved a chance.
twocats on Mon, 14th Mar 2016 1:07 pm
Practical, definitely agree that the climate chaos is surreal. We’ve blown past events that were supposed to happen in 2050 or even 2100. the cautionary principle has been beaten to a bloody pulp and tossed out the window. scientists studying the issue are being heavily pressured to not sound too great an alarm.
i could definitely see the next 5 years including several Sandys or Katrinas.
If we get more than 1 a year it could be more than the system could handle. Yes, given that scenario I could see Davy’s contraction scenario happening. The probability on that event? fuck me freddy no idea.
Practicalmaina on Mon, 14th Mar 2016 1:28 pm
Time to start building round homes in the central us, I would say, with plenty of extra bracing and tie downs to the Earth. At the rate we are going I see the future requiring hobit style homes instead of Jetson style homes. If the next five years does not bring multiple super sized storms within a year, than sometime in the following 50 years it becoming the norm is almost guarenteed, in my opinion.
Kenz300 on Tue, 15th Mar 2016 9:26 am
Climate Change is real…. it will impact all of us……we need to move to clean energy production with wind and solar power and clean energy consumption with electric vehicles………
Fossil fuels are the cause of Climate Change….. we need to deal with the cause….
the world needs to move away from coal and embrace the future of wind and solar energy