australia’s fuel tank is almost empty. , page-4

Conclusions

The potential oil production prospects of different countries and regions vary immensely.
However, on balance, when an aggregation is done across the globe, it is likely that that we have entered around 2006 onto a plateau in potential oil production that will
last only about another eight years to 2016. After that, the modelling is forecasting what can be termed ‘the 2017 drop-off’.

The outlook under a base case scenario is for
a long decline in potential oil production to begin in 2017, which will stretch to the end of the century and beyond. Because global natural gas production is expected to show slower growth after 2020, and because Natural Gas Plant Liquids are a major liquids component, the outlook is
similar for ‘total liquids’ as defined by the EIA.
The outlook is not really changed much if a scenario of increased Middle East oil production is played out. The result of that scenario is that oil production continues
its growth for longer and then falls far more recipitously.

This could potentially be a worse scenario, as far as the world being able to cope with the transition.

So, if the prognosis for plateau and then decline of conventional petroleum liquids is accepted, the question arises as to how the world will cope with the prospect of one of its major and convenient energy sources being progressively withdrawn.

There are really three options:
Oil is replaced with other (equally rich and abundant) energy 1. sources (opening
the whole debate about alternative energy sources).
2. Improved energy efficiency results in energy use per unit of GDP declining
markedly to match the shortfall.
3. GDP declines to match the shortfall.
The first option opens the whole debate about alternative fuel sources. For example, coal-to-liquids and gas-to-liquids production in Australia and worldwide is set to
begin in earnest at about the same time as forseen here for the beginning of the decline in conventional petroleum liquids (about 2017).

How much of the constant annual decline in production foreseen can be replaced by continually ramping up
production from ‘fungible’ fossil fuels? What about the greenhouse gas implications?
If electric vehicles begin to make inroads, what are the the infrastructure requirements and lags, and what about the greenhouse gas implications of the elctricity generation
energy sources—coal or renewables?

The second option leads to consideration of necessary infrastructure changes to supply and support new energy-saving technologies, and the lags involved in this.
Again, greenhouse gas issues are important.

Alternatives under options 1 and 2 will be the subject of a future BITRE report.

However, it would seem that, given the magnitude of the potential supply reductions, many adaptations in many areas will be required—the so-called ‘wedges’ approach
(Lovins et al 2004, Hirsch et al 2005).
It should be noted that this report concentrates on the long-run potential supply of conventional petroleum liquids.

In order to understand the dynamics of the oil
market, not only potential supply, but also demand and price need to be considered.

In the short run, the effects of the global economic slow down are likely to mean that lower demand, not limits on potential supply, will be the limiting factor for oil
production. Thus lower GDP growth will be running the show in the short run, and the associated lower oil prices wil in fact make it harder to progress options 1 and 2
to deal with the long-run trends. World oil demand/price dynamics are the subject of a second future BITRE report.


In conclusion, this report has demonstrated that although the oil production prospects of different countries and regions vary immensely, the prospects for the
potential supply of world conventional petroleum liquids can be summarised as ‘flattish to slightly up for another eight years or longer (depending on the duration of
the global economic slowdown) and then down’. Such a finding poses challenges for global transport and more generally, given the magnitude of the downturn foreseen
for the rest of the century, and given the inertias inherent in our energy systems and transport vehicle fleets