Peak Oil is You
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Page added on October 17, 2015
Even BP admits, some existing oil reserves are unburnable
The idea of a carbon bubble — the scenario in which fossil fuel-related investments become “stranded assets” as the world moves away from fossil fuels — has been gaining mainstream credence in recent months. From coal communities seeking help to transition from fossil fuels to vastly improved renewables that are competing directly with carbon emitting fuels, there are good reasons to question the idea that fossil fuel demand will continue to grow in the coming decades.
Still, I wasn’t expecting the latest development in the carbon bubble story.
The new economics of oil
As reported over at The Guardian, oil giant BP has just admitted that some existing fossil fuel reserves are unburnable, and that some oil will have to remain in the ground if we are to have any hope of keeping global climate change within “safe” (which, at this point, really just means “less dangerous”) limits. In a speech entitled The New Economics of Oil, the company’s chief economist, Spencer Dale, endorsed the idea that even burning our existing, known reserves of oil, coal and gas would set us on course for catastrophic climate change. And that’s even before we start talking about any new reserves that companies are still uncovering:
“Existing reserves of fossil fuels — i.e. oil, gas and coal — if used in their entirety would generate somewhere in excess of 2.8trn tonnes of CO2, well in excess of the 1trn tonnes or so the scientific community consider is consistent with limiting the rise in global mean temperatures to no more than 2C. And this takes no account of the new discoveries which are being made all the time or of the vast resources of fossil fuels not yet booked as reserves.”
Coal will go first
Dale’s analysis does throw in some important caveats: coal is a more carbon-intensive fuel than oil or gas, so it’s reasonable to assume that coal consumption will be hit hardest first. Dale also speculated that successful development of carbon capture and storage (CCS) systems could allow us to decouple fossil fuel burning from its associated emissions. Still, says Dale, oil companies (and everyone else) can no longer assume that oil prices will continue to rise as supply runs out.
This is what many observers have been saying for some time. While conventional wisdom said that prices would rise inexorably as we approached peak oil, the reality is looking rather different. At some point — and we may already be seeing this with Saudi Arabia refusing to curtail supply to drive up prices — producers will start competing over remaining market share of a potentially shrinking economic pie. That means lower prices. And lower prices mean some “unconventional” (read “more expensive”) sources of fossil fuels (tar sands, shale, Arctic oil), may never see the kind of price-per-barrel that would justify the investment.
Energy players reposition themselves
As I wrote in a piece for sister site TreeHugger, there’s a shift underway in the traditional dynamics of energy politics. While previously fossil fuel emitters like utilities, coal miners and oil companies were unified in their opposition to reducing carbon emissions, what we are increasingly witnessing is different interests trying to position themselves favorably for the inevitable transition to a low-carbon economy. That means oil companies pointing the finger at coal (see Dale’s comments on coal above) and boosting their investments in natural gas and other energy sources. It means forward-thinking electric utilities embracing renewables and energy efficiency. And it means these same lower carbon utilities becoming increasingly interested in electrified transportation as a means to compete with oil.
Will oil majors invest in renewables?
The CEO of Royal Dutch Shell — a company that recently put its controversial plans to drill for new oil in the Arctic on hold — has just stated that solar will become the backbone of the energy economy. Given that less than a decade ago, the company dropped its investments in solar as unaffordable, it will be interesting to see if it now changes its course. In the meantime, Total Oil just announced plans to invest $500 million in renewables annually.
I have a feeling things are going to change in the energy industry — and fast.
59 Comments on "Even BP admits, some existing oil reserves are unburnable"
GregT on Sun, 18th Oct 2015 1:02 pm
“The problems being food production”
Sorry, should have said modern industrial agriculture. We can still produce food without the use of fossil fuels, but nowhere near enough to feed a planet that is so vastly overpopulated.
onlooker on Sun, 18th Oct 2015 1:22 pm
“So boat you can bash me all you like but I am satisfied with my self and my life enough to preach about it as an option to your failed cornucopian life. I call your life a failure because the American Dream is a failure and that dream is killing the planet. It is you that boasts about your life and the American Dream. I am boasting about mine life and my opposition to the American Dream failed lifestyle. Is that fair enough. Time will tell but your life looks dated and mine appears to have a future.” I think this quote is useful to all those who would bash Davy for having the courage to defend at least the idea that once was America and the hard working, decent folks yet gullible folks living in the US. I must commend you Davy, I had not heard your full story, for someone of your station to recognize the futility of this lifestyle both personally and for the entire planet is truly admirable. I hope you always stay on this board offering your posts.
BobInget on Sun, 18th Oct 2015 2:14 pm
Breaking News;
Palestinians signaling wider war with Israel.
http://www.nytimes.com/aponline/2015/10/18/world/middleeast/ap-ml-israel-palestinians.html?_r=0
GregT on Sun, 18th Oct 2015 2:16 pm
Absolutely agree onlooker.
GregT on Sun, 18th Oct 2015 2:40 pm
“Israeli Prime Minister Benjamin Netanyahu said Sunday ……”Israel is not the problem at the Temple Mount, Israel is the solution,”
Another reference to the temple mount. I don’t think that most in the west fully understand the importance of this statement.
BobInget on Sun, 18th Oct 2015 3:31 pm
Will Netanyahu cave and negotiate a two state solution or go for “The Final Solution”,
( Nazi style collective punishment)
If he does the latter, I believe more probable, will it unite Arabs and Persians against Israel and Allies? (Saudi Arabia and US)
With Israel already opposing Iran and Russia, (the two main players in Syria) How will this
third intifada, up-rising, effect US relations?
Israel has been waiting for the casus belli
(excuse) to bomb Iran. Any aid to Palestinians by Iran during Israel’s bombing campaign, will be construed as such.
Following is an example of current rhetoric
” Netanyahu and likeminded Israeli fascists who ignore fundamental international law principles, enforcing collective punishment, firing missiles at Palestinian civilians from US-supplied F-16s, shells from tanks and artillery, high-powered weapons used by Israeli soldiers, trained to hate Arabs, feel no remorse about slaughtering them”.
http://www.thepeoplesvoice.org/TPV3/Voices.php/2015/10/13/does-netanyahu-intend-full-scale-war-on-
joe on Sun, 18th Oct 2015 5:11 pm
Bob, notice how this puts the Palestinian Authority in a huge pickle. Obviously they can’t support these attacks, but if they condemn them then they lose weight with their people.
Only extremists on both sides are winning now. This won’t end well for anyone.
rockman on Sun, 18th Oct 2015 8:35 pm
“Imagine that, only 189 drilling rigs are fueling slight over production in an ever expanding nat gas market. Just a few years ago it took over 1600 drilling rigs to produce considerably less.” Actually the number of rigs drilling for NG has hung around 300 to 400 for several years until the fall off in 2015. Nothing close to 1,600 rigs.
The number of US NG wells has been relatively flat since 2010. The reason NG production has been increasing despite having much fewer rigs drilling then we had 7 or 8 years ago is horizontal completions…most notably in the Marcellus.
The dynamics are too complex to represent with just a few simple stats IMHO.
Kenz300 on Tue, 20th Oct 2015 10:13 am
Fossil fuels are the past…….. alternative energy sources like wind and solar are the future…..
Solar and Wind Just Passed Another Big Turning Point
http://bloom.bg/1WK34MZ