One Chart Says It All: Why Oil’s New Supply Boom Is A Bust For The Climate

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"One Chart Says It All: Why Oil’s New Supply Boom Is A Bust For The Climate"

by Lorne Stockman, Steve Kretzmann, and David Turnbull, via Oil Change International.

What if you knew that smoking that one last packet of cigarettes was going to give you cancer?  Imagine if our understanding of cancer was so precise as to allow doctors to predict with virtual certainty that smoking that particular pack, which you just picked up at the corner store, would definitely be the last straw and cause you to contract life-threatening cancer?  Obviously, you would not smoke that pack.

In the world today, global warming is our collective cancer, and despite dire and clear warnings, the oil industry is still smoking away. The best climate science in the world tells us that in order to avoid the worst impacts of climate change, we need to limit global warming to no more than 2 degrees Celsius.  But the amount of new oil production the industry is bringing online over the next eight years is exponentially more than we can afford to burn and stay under two degrees.  We simply cannot afford to burn all the oil that the industry is capable of producing over the next few years, and in the long term.

It is worth noting that this is a new equation that reaches essentially the same conclusion as the Carbon Tracker / Bill McKibben Math, but by using the actual plans of the industry itself rather than estimates of fuels in the ground.  Carbon Tracker measured the total amount of carbon in fossil fuels in existing reserves (2,795 gigatons) and found them to be five times more than can be safely burned (565 gigatons).  That is terrifying, although this does not tell us along what timeline those reserves will be pulled out of the ground.

In this case, we are looking at what the oil industry is building or is expected to build in the next eight years (110.6 million barrels per day of oil production capacity), and comparing it to what experts agree that our oil usage needs to be in just the next eight years if we are to avoid climate disaster (88.1 million barrels per day).  In short, what this new analysis tells us is that the oil industry is in fact developing more than enough oil over the next 8 years to lock in climate chaos.

Oil’s New Supply Boom

In June 2012, a paper from the Harvard Kennedy School’s Belfer Center for Science and International Affairs shook the energy policy world.  The paper was titled Oil: The Next Revolution.

In the paper, Leonardi Maugeri, a former executive at Italian oil giant ENI and fellow of the Belfer Center’s Geopolitics of Energy Project, detailed the astounding level of investment and activity going on in the global oil industry today.

Maugeri conducted a unique field-by-field analysis of the major oil projects proposed and under construction in most of the world’s oil producing zones. He concluded that just less than 50 million barrels per day (b/d) of oil production capacity is potentially under development through to 2020.  He adjusted this down to 28.6 million b/d after factoring risks that would prevent some of these projects materializing.

When factoring in the decline in production from currently producing fields he concluded that by 2020 global oil production capacity could reach 110.6 million b/d (See Figure 1).

The United States and Canada are at the forefront of this oil boom. Triggered by high global oil prices, the development of technology to access unconventional oil resources in these countries is a significant factor in the global oil boom. Canada’s tar sands and America’s tight oil, obtained through hydraulic fracturing (fracking) and horizontal drilling, are the new heavyweights in North American oil production.

Maugeri’s analysis has U.S. production growing by 3.5 million b/d by 2020, to 11.6 million b/d[1]; this factors-in infrastructural constraints on development and decline in existing fields. He forecasts Canadian oil production, led by tar sands production and tight oil, growing 2.2 million b/d to 5.5 million b/d. See Table. So the U.S. and Canada alone could be contributing 32% of the world’s oil production growth over the next 8 years.

Maugeri’s analysis indicates that the global oil industry, with North America leading the charge, is currently investing in an energy production scenario that guarantees global climate chaos.

Finally, it should be noted that Maugeri’s analysis of the industry’s growth is by no means the most aggressive.  Citigroup, for one, has a much more bullish scenario for the North American oil industry that has been widely cited, including by both U.S. Presidential campaigns.

Narrow pathway for climate stability

The International Energy Agency produces annual energy demand forecasts using several scenarios.  These scenarios include one that charts where current policies take us and another mapping where policies that would have a strong chance at constraining climate change to within 2 degrees would place energy demand.

If we use the 2011 IEA scenarios as a benchmark, the difference between the oil production capacity that the industry is currently planning for 2020 and where oil demand must be to constrain climate change is a staggering 22.5 million barrels per day.

Therefore, 79% of the oil production capacity being planned today for 2020 is over and above the safe level of global oil demand in that year.

Perhaps even more worrying is the fact that the IEA Current Policies Scenario is in line with a rise in global temperatures of 6oC. This is commonly considered to herald an unlivable planet. Even under this disastrous scenario the industry’s current objectives represent an excess of 16 million b/d.

Spurred on by rising oil prices since 2003, the global oil industry, with the U.S. and Canada at the forefront, has invested billions of dollars in developing technology to access billions of barrels of previously inaccessible oil. This may have postponed the so-called “peak oil” crisis but it has precipitated a far worse crisis that will be irreversible.

The IEA 2 degree Scenario (also known as the 450 Scenario, which recent science suggests is conservative), states that global oil demand should peak by 2018 and steadily decline thereafter. We are currently not on that trajectory, but investing in and developing capacity to surpass it by over 25% can only guarantee that we will not make it. Instead, the world needs to aggressively invest in oil demand reduction rather than a continued unsustainable binge.

We need to constrain global oil production to within climate limits now, before the oil industry locks us into inevitable climate disaster.

This piece was originally published at Oil Change International and was reprinted with permission.

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28 Responses to One Chart Says It All: Why Oil’s New Supply Boom Is A Bust For The Climate

  1. Paul Magnus says:

    How does a world of legacy energy depletion look… increasingly panicked and chaotic…

    Lack of Energy Strategy = Doomsday for Future Generations
    http://ecowatch.org/2012/doomsday-future-generations/

    While rushing to exploit our valuable and diminishing fossil fuels, Canada’s government is simultaneously “streamlining” environmental regulations and review processes, cutting scientific staff and departments and limiting public debate on projects that could irreparably damage our rich natural heritage. Some provinces are attempting to water down hard-won environmental laws, like endangered species legislation, that act as a critical hedge against environmental degradation.

    • Paul Magnus says:

      The federal government is also neglecting its legal obligations to protect species at risk. Ecojustice, on behalf of five conservation groups including the David Suzuki Foundation, recently launched a lawsuit to challenge the government’s multi-year delays in producing recovery strategies for species that would be affected by the proposed Enbridge Northern Gateway project.

      If we don’t slow down and try to look at ways out of the mess, energy issues will continue to increase, like the Hydra of Greek mythology. With pipelines, the main issue is rapid tar sands expansion. But other massive energy projects are also coming down the pipe—from huge dams, like the Site C in northern B.C., to proposed drilling for oil and gas in the Gulf of St. Lawrence and the Arctic. To what end?

      Not only are fossil fuel companies making record profits, they’re being subsidized by Canadian taxpayers to the tune of $1.4 billion a year. Instead of giving them money, shouldn’t we be compelling them to put at least a small portion of their enormous profits into reducing the massive greenhouse gas emissions they cause?

    • Mulga Mumblebrain says:

      It’s the same here in Australia. Every new Rightwing regime in the states is fanatically opposed to every environmental gain eked out over the last few decades, and they are being wound back and destroyed with gusto. Green parties and environmentalists are relentlessly pilloried, particularly by the Murdoch hate-machine. When mass movements mobilised by social media oppose ecological destruction, as with the recent defeat of the proposal to bring a Dutch ‘super-trawler’ to the country, the Right screeches and raves in anger at the actions of the ‘mob’.
      The truth is that all capitalist economies are plutocratic oligarchies, with a cynical veneer of ‘democracy’ behind which the truth, of absolute elite power and privilege and the utter impotence of the proles, lies well hidden. The MSM is now, more than ever, a morally corrupt propaganda and brainwashing apparatus, without moral values save serving their owners and protecting their jobs. And environmentalism, with its explicit critique of capitalist destructiveness, is the ‘new Communism’, a hate figure to be relentlessly pilloried and demonised. It will, inevitably, grow much, much, worse, because that is the way the Right works. Be prepared for the first ‘false-flag’, ‘Green terrorism’ outrage, followed by a harsh crackdown, because the Bosses’ global rule is threatened by environmental awareness in a manner that is utterly unprecedented.

  2. Paul Magnus says:

    “A new scientific report concludes that climate change is already costing the world $1.2 trillion a year and is eating up 1.6 percent of global GDP, and rising. It’s also killing at least 400,000 people every year, mainly in developing countries. That’s not counting the 4.5 million people a year who die from air pollution caused by burning fossil fuels.

    As Michael Zammit Cutajar, former executive secretary of the UN Framework Convention on Climate Change, told the Guardian: “Climate change is not just a distant threat but a present danger—its economic impact is already with us.”

    Climate Portals shared a link.
    https://www.facebook.com/pages/Climate-Portals/139434822741700

  3. rollin says:

    As I sit here waiting for a hurricane to hit the northeast US in late October, almost unheard of and with a track that is highly unusual also, I wonder if fossil fuel use will ever get under control. Apparently, according to this article, depletion is not a problem and the knowledge/evidence of climate change is being ignored. Will we wait until the 2030′s when all the problems will come to a head for a “perfect storm” on human civilization to actually do something about this on a meaningful scale? As the chief said to the cavalry scout who tried to stop the war “Too late Natnan, too late…”.

  4. Joan Savage says:

    Eight years – that should make headlines somewhere.
    The key paragraph: “In this case, we are looking at what the oil industry is building or is expected to build in the next eight years (110.6 million barrels per day of oil production capacity), and comparing it to what experts agree that our oil usage needs to be in just the next eight years if we are to avoid climate disaster (88.1 million barrels per day). In short, what this new analysis tells us is that the oil industry is in fact developing more than enough oil over the next 8 years to lock in climate chaos.”

    Sometimes I am so numbed by information over-stimulation that it can be a challenge to react to something more significant than others.

    Eight years is another stunner, is it not?

    • In a sense it is a stunner, yes. But in a sense it is not- EVERY macro trend in the political/economic world at the present time is toward increased production and usage of fossil fuels. It is hard to see for me- but there it is. A quote from a favorite show of mine (‘The Wire) Omar: “You want it to be this way, but it is the other way.” :(((

      • Being a pedant says:

        Not to be a pedant, but Marlow says it. For people who know the characters, it’s much more ominous this way, as Marlow was ruthless, calculating, and utterly emotionless. Much like some industries we know well around here.

    • Mulga Mumblebrain says:

      Climate chaos has been ‘locked in’ for years. We are all ‘locked in’, too, like the paralysed patient unable to act save himself, thanks to a ‘democratic’ system that works only in the interests of the economic elite, who, quite plainly, want the ecological disaster to occur.

  5. dick smith says:

    3 Math Issues RE: “Carbon Tracker measured the total amount of carbon in fossil fuels in existing reserves (2,795 gigatons) and found them to be five times more than can be safely burned (565 gigatons).”

    1. UNITS matter. None are used. It is GtCO2, not GtC. Please be careful.

    2. TIME FRAMES matter. McKibben and this article continue to use an out-of-date number. Take a look at the CTI Report from 2011. It looks at the period from 2000 to 2050, deducts what we emitted from 2000 to 2010, and says we can safely emit only 565 GtCO2 from 2011 to 2050. When you deduct 2011 GtCO2 emissions and 2012 emissions to date, the “safe” GtCO2 budget is now probably less than 500 GtCO2.

    3. Mixing apples and oranges. The yellow line in the chart above is based on “even odds” (that is 50/50, or 50%) of staying below 2C warming. The 565 GtCO2 figure is based on having and 80% of chance of staying below 2C.

    • Solar Jim says:

      You are quite correct. The Carbon Tracker site states total carbon resource as carbon dioxide, which is incorrect. Also, if the 565 figure represents CARBON, then this represents more carbon burned as “fossil fuel” in history.

      There is something fishy going on, and the authors of this post do not seem to understand some basic aspects about global warming.

      • dick smith says:

        The 565 is a safe budget of co2 emissions from 2010 to 2050 (not carbon in the ground). For that time period it is a valid number.

  6. Ken Barrows says:

    Unless the price of oil keeps rising (and it has actually fallen this year so far), all this oil ain’t coming to market. In the last seven years, big price rises have led to a little more production. The lack of net energy could nip this in the bud before it really gets going.

  7. Ron Sonntag says:

    Boiling frogs. The problem is not in fine nuances of the numbers. The problem is corruption in the form of citizen’s united. Until money is ripped out of politics, decisions will hinge on the biggest donors and will have little or nothing to do with the science. Unregulated corporate greed does not have a far horizon. It only cares about this year’s bonuses and how to avoid any responsibility for future liabilities.

  8. Artful Dodger says:

    The Conservative Government in Canada is fast-tracking a NAFTA-like treaty with China. If it passes on October 31 (only 5 weeks after its introduction), it will eliminate the ability of Provinces to control their own natural resources, and create secret tribunals giving Chinese companies the ability to force Canadian resource extraction.

    The Canada-China Foreign Investment Promotion and Protection Act (FIPPA) would allow Projects like the Northern Gateway Pipeline to be forced through without consent from either the Province of B.C. or First Nations land owners. Federal Conservatives mean to have their way with the tar sands, and time is short to prevent it.
    http://www.vancouverobserver.com/politics/commentary/bc-has-one-week-and-one-chance-delay-canada-china-treaty-treaty-expert-clark

  9. Mulga Mumblebrain says:

    Imagine if the hundreds of billions being invested in genocidal hydrocarbon extraction was invested in renewables and ecological repair. The Bosses would still profit, perhaps even more so. Their power would remain intact, and our civilization would go on, and their descendants would live to enjoy their inherited wealth.
    But the Bosses have chosen, with increasing determination, the path of global destruction. Assuming that they are not, themselves, ignorant Dunning-Krugerites, then the deliberate nature of the destruction simply screams to be recognised. They want this disaster to happen, and will destroy any resistance to it. Unless we recognise this truth concerning the global overclass, we will get nowhere.

    • Michelle M says:

      They “think” they will survive a global disaster. Without their servants, having to deal with a despoiled planet on their own, and not knowing the first thing about surviving with little to nothing, when their stored supplies run out, they will be worse off than those that have learned to survive in a harsh world. The very people they tried to rob and destroy…the poor…they will be the survivors.

      • Merrelyn Emery says:

        Many of the poor have no more knowledge of how to survive a harsh climate than the rich have. Only those who have not lost their traditional knowledge and ways of learning stand a decent chance, ME

        • Mulga Mumblebrain says:

          I’ve often thought that ME, in regard to the Australian indigenous. They’ll simply have to go bush again, and soon the two hundred year nightmare of dispossession, genocide and pitiless racist contempt will be but an unhappy memory, maybe a new ‘Dreaming’ story or two. I’m sure that they will welcome a few feral white-fellas, too, although they’d all better avoid the survivalist, Mad Max types, until they’ve wiped themselves out in typically ‘civilised’ wars of extermination.

    • quokka says:

      Mumble,

      It’s not hundreds of billions – in 2012 over one trillion dollars will be invested in oil and gas exploration and production, following on from bumper years in 2010 an 2011. The amount is unprecedented.

      It’s starting to look like peak oil (in the immediate sense) is wishful thinking. There are no resource constraints to stop humans thoroughly cooking the planet.

      • Mulga Mumblebrain says:

        Right-o, quokka-tens of hundreds of billions. I stand corrected. You’re quite right about the planet cooking. Do you agree that it must be deliberate?

        • quokka says:

          The problem with oil is it such useful stuff, and there is currently no obvious way of replacing it. I think radically cutting oil consumption is likely to prove more difficult than we could guess. It’s not a comforting thought.

          Cleaning up electricity generation may be difficult but it is doable and I think relatively easier. It is critically important right now. We really need to see some leading countries decarbonize electricity supply by 2030 or so, or the games up. Promises about the 2040s are not good enough.

    • Bernard J. says:

      Mulga.

      I’m firmly convinced these days that there are only two things that could stop humanity’s unwavering determination to burn as much fossil carbon as is possible – a serious global influenza pandemic, or a nuclear world war.

      Conscious human efforts – at least at the national level for almost all countries – will amount to nothing more than a splattered gnat on the windscreen of a sportscar doing 50 over the limit.

  10. Ray Kondrasuk says:

    I slump in despair after perusing the reader reviews, heavily tilting to the top 5-star rating for Senator James Inhofe’s (R-Okla) new book, “The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future”.

    Here are two that snagged my eye:

    5.0 out of 5 stars Truth, April 5, 2012
    By
    Rodney R. Stubbs “Rodux” (Salem, OR USA) – See all my reviews
    (REAL NAME)
    This review is from: The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future (Hardcover)
    What a fantastic read. It confirms what I already know about this fraud being perpetrated by our Universities to prove a negative. The phony carbon market scam in Europe is collapsing, the solar energy products use more electricity to manufacture the photovoltaic cells that the cells will generate in their lifetime and the windmills consume vast amounts of electricity to keep from falling over leaving a small margin net power. Thank you Senator for your hard work to bring this hoax to life.

    5.0 out of 5 stars The great expose of the “Greatest Hoax.”, April 5, 2012
    By
    Geoffrey J. Brown “Brown sceptic” (Australia) – See all my reviews
    (REAL NAME)
    This review is from: The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future (Hardcover)
    The world needs to know the truth. The Alarmists have been pushing the falsified man made global warming hypothesis for too long.
    Global temperatures in 2012 are right at the satellite era mean.
    Sea ice area is right at the satellite era mean
    Satellites show that sea level hasn’t risen for several years
    Seven years without a major hurricane strike in the US – the longest period on record
    Seven years without a hurricane strike in Florida – the longest period on record
    No long term trend in severe tornadoes
    Drought at historic lows in Australia
    US drought area below the long term mean
    Polar bear populations flourishing
    No long term trend in snow cover
    Every indicator of global warming is failing.

    I doubt these Inhofe-lauding reviewers ever visit this site.

    Sigh…

  11. Jamie says:

    My understanding is that Maugeri’s analysis is nonsense and that there isn’t a hope in hell that the global oil industry could be producing 110mbpd in 2020.

    • Solar Jim says:

      Then according to these authors we will remain at an asserted “safe” level of massive annual carbonic acid contamination emissions as we approach the gates of hell and high waters.

      We can rest easy now (since our brains have been removed).

  12. Zhtwn says:

    Jamie, you’ve nailed it. For a detailed review of the Maugeri numbers and methods, check out Jean Laherrère’s reviews at TheOilDrum:

    http://www.theoildrum.com/node/9495

    http://www.theoildrum.com/node/9547