Peak Oil News: The Last Straw

Wednesday, April 09, 2008

The Last Straw

Monbiot.com


A new generation of biofuels turns out to be another environmental disaster

By George Monbiot


Now they might start sitting up. They wouldn’t listen to the environmentalists or even the geologists. Can governments ignore the capitalists?

A report published last week by Citibank, and so far unremarked by the media, proposes “genuine difficulties” in increasing the production of crude oil, “particularly after 2012.”(1) Though 175 big drilling projects will start in the next four years, “the fear remains that most of this supply will be offset by high levels of decline”. The oil industry has scoffed at the notion that oil supplies might peak, but “recent evidence of failed production growth would tend to shift the burden of proof onto the producers”, as they have been unable to respond to the massive rise in prices. “Total global liquid hydrocarbon production has essentially flatlined since mid 2005 at just north of 85 million barrels per day.”

The issue is complicated, as ever, by the refusal of the OPEC cartel to raise production. What has changed, Citi says, is that the non-OPEC countries can no longer answer the price signal. Does this mean that oil production in these nations has already peaked? If so, what do our governments intend to do?

Nine months ago, I asked the British government to send me its assessments of global oil supply. The results astonished me: there weren’t any(2). Instead it relied exclusively on one external source: a book published by the International Energy Agency. The omission became stranger still when I read this book and discovered that it was a crude polemic, dismissing those who questioned future oil supplies as “doomsayers” without providing robust evidence to support its conclusions(3). Though the members of OPEC have a powerful interest in exaggerating their reserves in order to boost their quotas, the IEA relied on their own assessments of future supply.

Last week I tried again, and I received the same response: “the Government agrees with IEA analysis that global oil (and gas) reserves are sufficient to sustain economic growth for the foreseeable future.”(4) Perhaps it hasn’t noticed that the IEA is now backtracking. The Financial Times says the agency “has admitted that it has been paying insufficient attention to supply bottlenecks as evidence mounts that oil is being discovered more slowly than once expected … natural decline rates for discovered fields are a closely guarded secret in the oil industry, and the IEA is concerned that the data it currently holds is not accurate.”(5) What if the data turns out to be wrong? What if OPEC’s stated reserves are a pack of lies? What contingency plans has the government made? Answer comes there none.

The European Commission, by contrast, does have a plan, and it’s a disaster. It recognises that “the oil dependence of the transport sector … is one of the most serious problems of insecurity in energy supply that the EU faces”(6). Partly in order to diversify fuel supplies, partly to cut greenhouse gas emissions, it has ordered the member states to ensure that by 2020 10% of the petroleum our cars burn must be replaced with biofuels. This won’t solve peak oil, but it might at least put it into perspective by causing an even bigger problem.

To be fair to the Commission, it has now acknowledged that biofuels are not a green panacea. Its draft directive rules that they shouldn’t be produced by destroying primary forests, ancient grasslands or wetlands, as this could cause a net increase in greenhouse gas emissions. Nor should any biodiverse ecosystem be damaged in order to grow them(7).

It sounds good, but there are three problems. If biofuels can’t be produced in virgin habitats, they must be confined to existing agricultural land, which means that every time we fill up the car we snatch food from people’s mouths. This, in turn, raises the price of food, which encourages farmers to destroy pristine habitats - primary forests, ancient grasslands, wetlands and the rest - in order to grow it. We can congratulate ourselves on remaining morally pure, but the impacts are the same. There is no way out of this: on a finite planet with tight food supplies you either compete with the hungry or clear new land.

The third problem is that the Commission’s methodology has just been blown apart by two new papers. Published in Science magazine, they calculate the total carbon costs of biofuel production(8,9). When land clearance (caused either directly or by the displacement of food crops) is taken into account, all the major biofuels cause a massive increase in emissions.

Even the most productive source - sugarcane grown in the scrubby savannahs of central Brazil - creates a carbon debt which takes 17 years to repay. As the major carbon reductions must be made now, the net effect of this crop is to exacerbate climate change. The worst source - palm oil displacing tropical rainforest growing in peat - invokes a carbon debt of some 840 years. Even when you produce ethanol from maize grown on “rested” arable land (which in the EU is called set-aside and in the US is called conservation reserve), it takes 48 years to repay the carbon debt. The facts have changed. Will the policy follow?

Many people believe there’s a way of avoiding these problems: by making biofuels not from the crops themselves but from crop wastes. If transport fuel can be manufactured from straw or grass or wood chips, there are no implications for land use, and no danger of spreading hunger. Until recently I believed this myself(10).

Unfortunately most agricultural “waste” is nothing of the kind. It is the organic material which maintains the soil’s structure, nutrients and store of carbon. A paper commissioned by the US government proposes that, to help meet its biofuel targets, 75% of annual crop residues should be harvested(11). According to a letter published in Science last year, removing crop residues can increase the rate of soil erosion 100-fold(12). Our addiction to the car, in other words, could lead to peak soil as well as peak oil(13).

Removing crop wastes means replacing the nutrients they contain with fertiliser, which causes further greenhouse gas emissions. A recent paper by the Nobel laureate Paul Crutzen suggests that emissions of nitrous oxide (a greenhouse gas 296 times more powerful than CO2) from nitrogen fertilisers wipe out all the carbon savings biofuels produce, even before you take the changes in land use into account(14). Growing special second generation crops, such as trees or switchgrass, doesn’t solve the problem either: like other energy crops, they displace both food production and carbon emissions. Growing switchgrass, one of the new papers in Science shows, creates a carbon debt of 52 years(15). Some people propose making second generation fuels from grass harvested in natural meadows or from municipal waste, but it’s hard enough to produce them from single feedstocks; far harder to manufacture them from a mixture. Apart from used chip fat, there is no such thing as a sustainable biofuel.

All these convoluted solutions are designed to avoid a simpler one: reducing the consumption of transport fuel. But that requires the use of a different commodity. Global supplies of political courage appear, unfortunately, to have peaked some time ago.

References:

1. Citi, 4th February 2008. Industry Focus: Oil Companies - International.

2. See http://www.monbiot.com/archives/2007/05/29/what-if-the-oil-runs-out/

3. International Energy Agency, 2005. Resources to Reserves: Oil & Gas Technologies for the Energy Markets of the Future. Available electronically at: http://www.iea.org/textbase/nppdf/free/2005/oil_gas.pdf

4. Email from the Energy Desk, Department for Business, Enterprise and Regulatory Reform, 8th February 2008.

5. Dino Mahtani, 26th December 2007. Oil watchdog reworks reserves forecasts. The Financial Times.

6. Commission of the European Communities, 23rd January 2008.
Proposal for a Directive of the European Parliament and of the Council
on the promotion of the use of energy from renewable sources, p8. http://ec.europa.eu/energy/climate_actions/doc/2008_res_directive_en.pdf

7. Commission of the European Communities, 23rd January 2008.
Proposal for a Directive of the European Parliament and of the Council
on the promotion of the use of energy from renewable sources, Article 15. http://ec.europa.eu/energy/climate_actions/doc/2008_res_directive_en.pdf

8. Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, Peter Hawthorne, 7th February 2008. Land Clearing and the Biofuel Carbon Debt. Science. Doi 10.1126/science.1152747.

9. Timothy Searchinger, Ralph Heimlich, R. A. Houghton, Fengxia Dong, Amani Elobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, Tun-Hsiang Yu, 7th February 2008. Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land Use Change . Science. Doi 10.1126/science.1151861.

10. I am grateful to Jim Thomas from the ETC Group for putting me right.

11. US Department of Energy and US department of Agriculture, April 2005. Biomass as Feedstock for a Bioenergy and Bioproducts Industry: the Technical Feasibility of a Billion-Ton Annual Supply. http://www1.eere.energy.gov/biomass/pdfs/final_billionton_vision_report2.pdf

12. David Pimentel and Rattan Lal, 17th August 2007. Letter: Biofuels and the Environment. Science.

13. This term has been used by Alice Friedemann, 10th April 2007. Peak Soil: Why cellulosic ethanol, biofuels are unsustainable and a threat to America. http://www.culturechange.org/cms/index.php?option=com_content&task=view&id=107&Itemid=1

14. PJ Crutzen, AR Mosier, KA Smith and W Winiwarter, 1 August 2007. N2O release from agro-biofuel production negates global warming reduction by replacing fossil fuels. Atmospheric Chemistry and Physics Discussions 7, pp11191–11205. http://www.atmos-chem-phys-discuss.net/7/11191/2007/acpd-7-11191-2007.pdf

15. Joseph Fargione et al, ibid.


3 Comments:

At 10:10 AM, April 10, 2008, Anonymous Anonymous said...

PURE BULLSHIT !

You might as well join the EVANGELICAL GANG and pray for the "apocalypse" !

Not all biofuels are the same for reality's sake. How the hell do you expect people to "conserve" if you don't give them the alternative renewables?

 
At 10:16 AM, April 10, 2008, Blogger Anaconda said...

This post does reflect that there are numerous oil rigs currently drilling for oil: That idea needs to be expanded on for purposes of clarity, and, as yet, unrealized potential oil finds of consequential magnitude.

Peak oil proponents fail to take into their analysis and predictions the hottest arena for new petroleum exploration:

Deepwater, deep-drilling off-shore oil exploration.

There are three examples to cite: Chevron has drilled a well, the Jack 2, in the Gulf of Mexico, which hit oil at over 20,000 feet below the floor of the Gulf in 7,000 feet of water, for a total of 28,000 feet below the surface. Estimates of oil recovery range from 3 to 15 billion barrels. This oil find has been described in Chrevron's "Human Energy" ad campaign.

Oil has been discovered 180 miles off the coast of Brazil, 16,000 feet below the floor of the Atlantic Ocean. Estimates of oil recovery vary, but initial testing of this group of oil wells, has caused some analysts to describe it as "Ghawar" like. Most likely this overstates the find, yet the point should not be lost that this is a huge find.

Oil has been found in 9,000 feet of water in the Nigerian Delta off the coast of West Africa.

Three discoveries, three distinct locations, in varying geologic environments. These three finds are not the only finds of this kind and size, but highlight in concrete terms the potential.

To get a further idea of the potential, place in mind's eye all the off-shore areas within 180 miles of a coast line or on an outer continental shelf.

There is no reason to think these are isolated finds of limited potential, rather, they are a window onto unexplored tectonic boundaries, where, presently, 65% of proven reserves are located in giant oil wells, in land areas open to conventional drilling (Saudi Arabia and Iraq sit over a tectonic boundary).

Deepwater, deep-drilling is in its infancy. Truly, this is the new frontier, of virgin oil prospecting territory where oil exploration hasn't even scratched the surface.

Politics has been the barrier to added production, not supplies. And this is where deepwater, deep-drilling is especially attractive to the West's oil industry. Yes, capital investment is intensive and risk is large, but also, Western oil services providers, such as Transocean, have proprietary knowledge and expertise, which make their participation essential to successful development. Nationalized oil sectors need Western proprietary expertise and capital for this capital and expertise intensive exploration. Also many of these areas of potential exploration are under control of governments open to Western private petroleum corporations taking the lead.

The technical and financial factors added together with the geologic potential of deepwater deep-drilling, suggest that the oil industry sector still is a good place to invest.

A word or two should be said about predictions of Peak oil. Mathew Simmons has been a leader of this view and presumably has invested accordingly and advised others to so invest. Simmons has a dog in the fight regarding Peak oil.

Simmons has been confronted about deepwater deep-drilling. His reaction has been dismissive to say the least. Responding in the vein of, it was lucky, might not pan out, and was risky.

Specifically: "The great Brazil find, as best laid out in the February issue of World Oil is a great example of the handful of extremely expensive, rank wildcat wells finding at least traces of hydrocarbons."

Again, expensive, yes, but also profitable at $100 a barrel oil, actually profitable down to $70 a barrel oil. Risky? What oil exploration isn't risky? The industry has grown up with risk. "Wildcat" oil? Well, just another example of independents being the leaders of the industry, but also inaccurate as Chevron and the other large companies are also heavily investing in deepwater, deep-drilling, and its paying off at the bank.

Traces of hydrocarbons? No, Simmons has been flat out contradicted by others in the field, with a much stronger knowledge base, and not so financially invested in gloom and doom.

In short, Mathew Simmons has simply too big a financial conflict of interest to be taken seriously on Peak oil.

One caveat, lead time is large in this area of exploration. Finds made today will take years to come on line and hit the refinery. But to reiterate, our problems, today, are not supply, but production. Good politics can go a long way to bridge the gap between today's 85 million barrel a day oil thirst and tomarrow's increasing thirst.

Mathew Simmons and his "Doom Team" exacerbate political and perception problems that have no basis in the physical reality of petroleum supply.

Deepwater, deep-drilling is the new frontier of virgin prospecting, and for those big enough to play, a favorable technical, financial, and political open field, not seen in decades, since the heyday of the late 50's and early 60's.

To the winner go the spoils.

For more information on deepwater, deep-drilling with links to tradepapers, news articles, and scientific papers Google Oil is Mastery, which focusses on deep oil.

 
At 9:05 PM, April 15, 2008, Anonymous Anonymous said...

Ive been reading that bio fuel can be made from algae grown in ponds in desert regions. I hear its meant to be high quality and a possible green alternative. It will mean less land clearing and food crops being turned to petro-crop use. Is this the case? I do not think they are saying will mean business as usual for the oil economy (far from it) but perhaps the best long term option for a post or approaching post hydrocarbon world.

 

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