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Roger Weller, geology instructor

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Petroleum
Odessa Solomon

Physical Geology

Fall 2006 

Outlook Good for Petroleum’s Future?

 

With all the recent effect that the price of oil/gas/petroleum has had on our economy, I thought it would be prudent to research the actual availability of petroleum, as well as our consumption, to see if all the concern over the overuse of petroleum was merited.  The following information may surprise you.
 

            Now it’s known that gasoline is being used more and more, especially as we continue to grow as a society.  Petroleum products are easily recognized in the gasoline we use to fuel our cars and the heating oil we use to warm our homes. Less obvious are the uses of petroleum-based components of plastics, medicines, food items, and a host of other products. Petroleum products fall into three major categories: fuels such as motor gasoline and distillate fuel oil (diesel fuel); finished nonfuel products such as solvents and lubricating oils; and feedstocks for the petrochemical industry such as naphtha and various refinery gases. Demand is greatest for products in the fuels category, especially motor gasoline.
 

            A lot of people thought after the 9/11 tragedy Americans wouldn’t fly as much, however as time goes by and people begin to put the tragedy into the back of there minds they are wandering back through the terminals and into the aisles of aircraft all over the country. This is leading to more consumption.
 

According to the International Civil Aviation Organization, passenger kilometers flown globally increased 75 times between 1975 and 2000; although improvements in engine design have improved efficiency of jet fuel use, the amount of oil used for aviation traffic is expected to increase.
 

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In addition, there are innumerable products and consumer goods manufactured from byproducts of oil refining, including plastics and fertilizers. Very few manufactured goods do not include some petroleum-based product.
 

In the U.S. the number of automobiles on the road continues to increase; the number of passenger automobiles exceeds 500 million worldwide. After a relatively brief period in the 1970s when economy cars began to capture the market, the average miles per gallon of automobiles in the U.S. has been declining. More than half of all new cars sold are now sports utility vehicles, which are not subject to the same standards under the Clean Air Act for gas mileage.
 

                                                         

 

By 2000, there were 2.1 cars per person in the U.S., slightly more than in Japan, with 2.4 cars per person, and lower than in Germany, with one car for every two persons. As developing countries grow, their demand for automobiles increases; the number of automobiles worldwide is expected to continue to increase.
 

To help the reader grasp the magnitude of the petroleum industry on Earth, it is useful to know some contextual background information. Total worldwide daily production in round figures is about 80 million barrels per day (b/d)—1 barrel = 42 gallons. This figure includes actual crude oil and the crude equivalents of light hydrocarbon liquids condensed from natural gas production. The U.S. consumes about 20 million b/d, or 25% of the world total. This means that ~300 million people, only ~5% of the world’s population, consume one-quarter of the petroleum produced.  The Middle East, according to BP Statistical Review of World Energy, held 65.4 percent of global proven reserves in 2002; Central and South America held 9 percent, the Former Soviet Union held 7 percent, and the U.S. about 2.9 percent of proven reserves. In 2002, the Middle East produced 28.5 percent of world oil production.
 

Petroleum is 40% of the total energy consumed in the U.S. and about 90% of that is used in transportation of all types. This converts to 2.8 gal. per day per person in the U.S., while the rest of the world averages only 0.42 gal. per day per person. The least developed countries have consumptions less than a tenth of a gallon per day. We are clearly the big consumers. It is important to realize, however, that if the U.S. stopped using any oil, it would only raise the average daily per capita of the remaining six billion humans to 0.56 gal. per day. Conversely, for the same six billion humans to enjoy our standard of consumption would require production increases from 80 million b/d to 400 million b/d.   That is a five-fold increase in production and use of petroleum.

 

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Optimists maintain that the future availability of petroleum crude oil is unlimited and there is no need to worry about satisfying rapidly increasing consumption, even though production in major mature fields is declining and the rate of major new discoveries is in danger of not keeping pace with reserves depletion.  This attitude is typified by the following statement made by V. E. McKelvey, former director of the USGS, in 1972 (italics added):

            "Personally, I am confident that for millennia to come we can continue to develop the mineral supplies needed to maintain a high level of living for those who enjoy it now and to raise it for the impoverished people of our country and the world. My reasons for thinking so are that there is visible undeveloped potential of substantial proportions in each of the process by which we create resources and that our experience justifies the belief that these processes have dimensions beyond our knowledge and even beyond our imagination at any given time."
 

Pessimists assert that the historical peak in petroleum production is imminent and will herald dire shortages and political unrest. Other address the scientific objectivity and validity of these opposing viewpoints.
 

The present U.S. refining capacity is about 16 million b/d, so to meet our 20 million b/d consumption we have to import effectively 4 million b/d of refined products. Our domestic crude production is about 6 million b/d, so our refineries are processing about 10 million b/d of imported crude oils. Even the optimistic oil supply proponents would have to admit that this level of greenhouse gas carbon dioxide emissions is asking for climatic problems.
 


Photo courtesy Phillips Petroleum Company
 

Conclusion

In the short term, however, there are no viable alternatives to petroleum-based technologies that are cost-effective and likely to be adopted on a large scale. Hydrogen technologies are promising for automobiles, in addition to other technologies for increasing efficiency and reducing emissions, but many of these technologies have not yet proven sufficiently attractive to consumers to change the market. 

So even if the fundamental natural supply of crude oil is unlimited, that fact alone does not mean we will have enough petroleum products to meet increasing demand. Diligent scientists and engineers can likely invent innovative technology to overcome many if not all existing limits. However, as long as our collective demands for investment returns are too high and too short term to properly underwrite the large long cycle time investments in our petroleum energy infrastructure, we risk precipitating disruptions and shortages in petroleum product supply. We should keep in mind also that the demand side of technology can change the outcome quite effectively. The whole SUV phenomenon is mostly a marketing coup and has very little objective necessity. SUVs and other low gas mileage consumer vehicles have artificially increased demand for gasoline in the U.S. We don’t have to consume energy at near the rates that we do. We need to apply return on investment metrics to our personal energy consumption to see what we are getting for our expenditures. We also need to engage the political process to find a way to raise the incentive to invest in long term lower return financial instruments. The intended result is to ensure that sufficient capital is available to support improvements in refining technology and in conversion of alternative carbon sources to liquid petroleum products. The technology versus investment allocation issue seems like a “chicken or the egg first” question and at that point it appeals to our basic strength of will and courage to take the necessary risks and strive to build a healthy rewarding future.

 

Sources

·         Goodstein, D. 2004. Out of Gas, W.W. Norton & Company Inc., New York, NY.

·         Heinberg, R. 2003. The Party’s Over, New Society Publishers, Gabriola Island, BC, Canada.

·         Heinberg, R. 2004. Power Down, New Society Publishers, Gabriola Island, BC, Canada.

·         U.S. Government Department of Energy website: http://www.eere.energy.gov/industry/petroleum_refining/pdfs/profile.pdf

·         ExxonMobil website: http://www.exxonmobil.com/corporate/Campaign/Corp_campaignhome.asp

·         Chevron website (Petroleum Prospecting Primer button): http://www.chevron.com/learning_center/primer/

·         http://www.321energy.com/editorials/rudesill

·         http://www.oilrefineries.com/