Unconventional Liquids, Peak Oil and Climate Change

Abstract:

Oil is the largest source of primary energy in the world, at 32% of 2014 consumption. Forecasts by the International Energy Agency suggest oil will continue to provide the largest share of global energy through 2040, even with new policies to mitigate greenhouse gas emissions. The IPCC’s Representative Concentration Pathway (RCP) scenarios indicate that between 1.5 and 3.8 trillion barrels of oil will be burnt between 2015 and 2100.

Various sources suggest that the world has 5 to 6 trillion barrels of remaining recoverable oil, more than half of which are in low grade deposits. Although oil sands and extra heavy oil are claimed to hold 1.5 trillion barrels, assessments of major deposits in the Canadian oil sands and the Venezuela Orinoco Belt, which hold the bulk of these resources, total less than 500 billion barrels of recoverable oil. Kerogen oil (oil shale), which has never been produced in anything but miniscule volumes, comprises an additional trillion barrels of these estimates. These unconventional deposits are very different from the conventional oil of the past as:

- they are rate constrained, as they require massive upfront capital investments and lengthy construction periods, and therefore cannot be scaled up quickly in response to declines in conventional production.

- they are expensive, both in terms of cost per barrel and the large energy inputs required for production. The best in situ oil sands deposits may yield an energy return of 3:1 and kerogen oil even less if it ever becomes commercially viable. This compares to 10:1 or more for conventional oil.

Shale oil (light tight oil), may yield another 300 billion barrels worldwide, but suffers from high decline rates, expensive wells and limited availability of high quality deposits.

The most productive and economically viable portions of these unconventional deposits tend to be exploited first, leaving the less productive, higher cost oil for later.

As a result, increasing global oil consumption will prove extremely difficult beyond the next few years, even with much higher prices. Long term oil consumption assumptions in RCP4.5, RCP6 and RCP8.5 are therefore too high, given the geological and economic characteristics of remaining recoverable resources. Consumption of other fuels would need to be increased to retain the radiative forcing in these RCP scenarios.