Energy Security

Tackling Effects of ‘Peak Oil’

 

By

Maj. Gen.  S. C. N. Jatar, Retd

 

 

The major energy security concern that the new UPA government will face is ensuring secure supply of oil and gas.  As ‘Peak Oil’ is looming large over the world, there is need to develop alternate sources of energy.  The government has already signed a nuclear deal with America. 

The Nuclear Deal

India currently has 4.1GW of nuclear power plants in operation with an additional 3.1 GW under construction.  Plans are to increase this output to 20GW by 2020, which will make it to about 15% of the total electricity output.  The government has set a target to generate more than 25% of India’s total energy from nuclear power by 2050.  This target is an almost impossibility to attain. 

Our planners need to appreciate that nuclear energy cannot wholly replace oil & gas, especially for transportation needs.  There is no economically viable fluid substitute on the horizon for crude oil so far. 

What is ‘Peak Oil’?

“Peaking will strike the world.  No one knows when.” 

Hence, both from short and long term points of view, the most important issue for the government is to draw up a plan to combat the effects of ‘Peak Oil’.  This should be done by research & development for alternative sources of energy in the short term and more importantly, by preparing for the time when ‘Peak Oil’ strikes in the long term. 

Former Soviet Union production peaked in 1988.  Chinese, Mexican and Canadian production will peak in the next few years.  US & Norway will peak in 6 to 8 years.  Indonesia and China are now net importers of crude oil.  OPEC production is likely to peak between 2025 and 2030. 

‘Peak Oil’, the day when oil production reaches its maximum and begins a decline is fast approaching.  Problem Day is the day when demand permanently exceeds supply, resulting in a sharp and lasting rise in prices to suppress that demand, which is likely by 2010.[1] 

Mitigation Measures

In 2004, when the UPA first took the reigns, oil prices were about the same as now (US $ 60/bbl).  In its second reign, supply position has further eased because of the recession and the world does not presently face acutely the shortage of supply.  This has given a feeling of complacency to our planners.  Mitigating the effects of ‘Peak Oil’ requires long-term solutions and perhaps there is no better time than now to begin these efforts.  Global recession has halted investment in exploration and energy projects, which could result in reaching the record prices of July 2008 once the world recovers from economic crisis. [2] 

Peak oil presents the world with a risk management problem of tremendous complexity and enormity.  Prudent risk minimization requires the implementation of mitigation measures roughly 20 years before peaking to avoid a very damaging world liquid fuels shortfall and minimising economic costs.  Since it is uncertain when peaking will occur or whether it will be due to geological or investment limitations, the challenge is indeed vexing.[3]  Mitigation basically involves changing the life style of the human race because we are truly a ‘hydrocarbon society’.  It embraces a wide range of actions such as, replacing all machinery, including for transportation, that presently run on petroleum; improving energy efficiency technologies; developing hybrids (e.g. diesel-hybrids); improving oil recovery; researching in production of unconventional oil, e.g. hydrates, heavy oil, bitumen, oil sands, and tar sands; improving gas-to-oil technology; fuel switching to electricity; and using ‘hydrogen’.[4]

Extending useful life of remaining oil reserves

It is not mere fascination with “peak oil”; another critical aspect to the world economy is to secure access to inexpensive and suitable fuel from any source to power its current fleet of passenger vehicles, load carriers, and aircraft. 

Efforts to manufacture additives for blending into petrol and diesel are in full swing to extend the useful life of the world's remaining oil reserves. 

Energy Returned On Energy Invested (EROEI)

In order to decide whether our efforts to use renewable energy sources as additives to oil are viable, it is useful to understand the concept of EROEI.  The most common additive in India is ethanol from Jatropha plant.  When we substitute a source of energy — oil, for instance – with a positive EROEI with another energy source such as ethanol with a negative EROEI, there is a loss of gross energy produced.  According to current data, the returns on extracting oil from tar sands works out to roughly three barrels of oil for every two consumed, representing an EROEI of about 1.5.  The figures of EROEI for the US for non-renewables are all positive while for renewables such as ethanol (corn), it is just 0.78 and for bio-diesel (soybeans), it is negative at minus 0.79.  

The Indian government is promoting rapid expansion of a biodiesel crop, jatropha: by 2012 some 14 million hectares are to be planted on what it has classified as “wasteland” [5] but reports are already coming in of farmers being dispossessed of fertile land by companies wanting to grow jatropha. [6]  All of this amounts to nothing less that the re-introduction of the colonial plantation economy, redesigned to function under the rules of the modern neo-liberal, globalised world. 

Environmentalists have warned against biofuels, saying they could produce twice the carbon emissions of the fossil fuels they replace, environmentalists have claimed.[7]  Friends of the Earth said rules introduced a year ago requiring a percentage of UK transport fuels to be “green” could have created an extra 1.3 million tonnes of CO².  

 

Supporters claimed that in the 1st year of the Renewable Transport Fuels Obligation, the industry had shown it was possible to produce sustainable fuels in the UK.  But Friends of the Earth claim the RTFO could be producing the equivalent emissions of putting an extra 500,000 cars on the road.  The group’s director Andy Atkins said: “Trying to cut emissions by adding biofuels to petrol is like trying to cut down on beer by lacing your pints with vodka”. Until ministers can prove that biofuel actually cuts carbon, UK should stop biofuels being added to petrol and diesel, he said.  

Long-term Studies & Action Plan to Combat Looming ‘Peak Oil’

‘Peak Oil’: India needs to identify the critical issues surrounding the occurrence and mitigation of world oil production peaking and make plans to mitigate the effects of peak oil.  This needs to be done 20 years in advance of peaking i.e. it should have started ‘yesterday’.

EROEI: India needs to initiate studies to work out energy returned on energy invested (EROEI) for all renewables, especially Jatropha for each State separately because conditions differ.  Only where the ERORI is positive and there are no adverse effects on soil, food production and costs, should we encourage planting of Jatropha. 

Substitution outside Transportation Sector: According to studies in UK, the scope for substitution for oil is much greater outside the transport sector than within it.  Such substitution will reduce the demand for oil absolutely and increase the availability of oil for transport uses.  India’s uses about 35 % of its oil consumption on transportation, using more oil outside the transport sector, where competing fuels have been available for long.  This aspect needs a detailed study for Indian conditions. 

Substitute for Liquid Hydrocarbons: Transportation uses liquid hydrocarbons to the extent of a high of about 70 % in the US and a low of about 40 % in India.  There is yet no substitute for liquid hydrocarbons for transportation.  India needs to have dedicated research teams to evolve a substitute. 

1257 Words



[1] Miller, Richard G, “Question regarding Hubbert”, millerr@bp.com, 12 May 2005

[2] Mason, Rowena, “Oil will hit peak after recession”, Telegraph.co.uk, 26/04/09

[3] Hirsch, Robert L., Senior Energy Program Advisor, Science Applications International Corporation (SAIC), “Peaking of world oil production – recent forecasts”. 05/02/07

[4] Hirsch, Robert L., Senior Energy Program Advisor, SAIC, “Peaking of world oil production, Impacts, Mitigation & Risk Management”

[5] UNCTAD Report, 2006, http://tinyurl.com/2apse3

[6] For a discussion on the problems with jatropha in India, see: http://tinyurl.com/2ktt3v, ref: Stop the Agro Fuel Craze)

[7] “Biofuels could pollute more”, The Economic Times, 21/04/09