WORLD ENERGY [R]EVOLUTION A SUSTAINABLE ENERGY OUTLOOK <strong>energy</strong> resources & security of supply GLOBAL STATUS OF GLOBAL FUEL SUPPLIES GLOBAL POTENTIAL FOR SUSTAINABLE BIOMASS POTENTIAL OF ENERGY CROPS AROUND 80% OF GLOBAL ENERGY DEMAND IS MET BY FINITE FOSSIL FUELS. © R. KASPRZAK/DREAMSTIME “<strong>the</strong> issue of security “quote.” of supply is now at <strong>the</strong> top of <strong>the</strong> <strong>energy</strong> WHO WHERE/WHAT policy agenda.” GREENPEACE INTERNATIONAL CLIMATE CAMPAIGN 68
The issue of security of supply is now at <strong>the</strong> top of <strong>the</strong> <strong>energy</strong> policy agenda. Concern is focused both on price security and <strong>the</strong> security of physical supply. At present around 80% of global <strong>energy</strong> demand is met by fossil fuels. The unrelenting increase in <strong>energy</strong> demand is matched by <strong>the</strong> finite nature of <strong>the</strong>se resources. At <strong>the</strong> same time, <strong>the</strong> global distribution of oil and gas resources does not match <strong>the</strong> distribution of demand. Some countries have to rely almost entirely on fossil fuel imports. The maps on <strong>the</strong> following pages provide an overview of <strong>the</strong> availability of different fuels and <strong>the</strong>ir regional distribution. Information in this chapter is based partly on <strong>the</strong> report ‘Plugging <strong>the</strong> Gap’ 60 , as well as information from <strong>the</strong> International Energy Agency’s World Energy Outlook 2008 and 2009 reports. status of global fuel supplies Oil is <strong>the</strong> lifeblood of <strong>the</strong> modern global economy, as <strong>the</strong> effects of <strong>the</strong> supply disruptions of <strong>the</strong> 1970s made clear. It is <strong>the</strong> number one source of <strong>energy</strong>, providing 32% of <strong>the</strong> world’s needs and <strong>the</strong> fuel employed almost exclusively for essential uses such as transportation. However, a passionate debate has developed over <strong>the</strong> ability of supply to meet increasing consumption, a debate obscured by poor information and stirred by recent soaring prices. <strong>the</strong> reserves chaos Public data about oil and gas reserves is strikingly inconsistent, and potentially unreliable for legal, commercial, historical and sometimes political reasons. The most widely available and quoted figures, those from <strong>the</strong> industry journals Oil & Gas Journal and World Oil, have limited value as <strong>the</strong>y report <strong>the</strong> reserve figures provided by companies and governments without analysis or verification. Moreover, as <strong>the</strong>re is no agreed definition of reserves or standard reporting practice, <strong>the</strong>se figures usually stand for different physical and conceptual magnitudes. Confusing terminology - ‘proved’, ‘probable’, ‘possible’, ‘recoverable’, ‘reasonable certainty’ - only adds to <strong>the</strong> problem. Historically, private oil companies have consistently underestimated <strong>the</strong>ir reserves to comply with conservative stock exchange rules and through natural commercial caution. Whenever a discovery was made, only a portion of <strong>the</strong> geologist’s estimate of recoverable resources was reported; subsequent revisions would <strong>the</strong>n increase <strong>the</strong> reserves from that same oil field over time. National oil companies, mostly represented by OPEC (Organisation of Petroleum Exporting Countries), have taken a very different approach. They are not subject to any sort of accountability and <strong>the</strong>ir reporting practices are even less clear. In <strong>the</strong> late 1980s, <strong>the</strong> OPEC countries blatantly overstated <strong>the</strong>ir reserves while competing for production quotas, which were allocated as a proportion of <strong>the</strong> reserves. Although some revision was needed after <strong>the</strong> companies were nationalised, between 1985 and 1990, OPEC countries increased <strong>the</strong>ir apparent joint reserves by 82%. Not only were <strong>the</strong>se dubious revisions never corrected, but many of <strong>the</strong>se countries have reported untouched reserves for years, even if no sizeable discoveries were made and production continued at <strong>the</strong> same pace. Additionally, <strong>the</strong> Former Soviet Union’s oil and gas reserves have been overestimated by about 30% because <strong>the</strong> original assessments were later misinterpreted. Whilst private companies are now becoming more realistic about <strong>the</strong> extent of <strong>the</strong>ir resources, <strong>the</strong> OPEC countries hold by far <strong>the</strong> majority of <strong>the</strong> reported reserves, and <strong>the</strong>ir information is as unsatisfactory as ever. Their conclusions should <strong>the</strong>refore be treated with considerable caution. To fairly estimate <strong>the</strong> world’s oil resources a regional assessment of <strong>the</strong> mean backdated (i.e. ‘technical’) discoveries would need to be performed. non-conventional oil reserves A large share of <strong>the</strong> world’s remaining oil resources is classified as ‘non-conventional’. Potential fuel sources such as oil sands, extra heavy oil and oil shale are generally more costly to exploit and <strong>the</strong>ir recovery involves enormous environmental damage. The reserves of oil sands and extra heavy oil in existence worldwide are estimated to amount to around 6 trillion barrels, of which between 1 and 2 trillion barrels are believed to be recoverable if <strong>the</strong> oil price is high enough and <strong>the</strong> environmental standards low enough. One of <strong>the</strong> worst examples of environmental degradation resulting from <strong>the</strong> exploitation of unconventional oil reserves is <strong>the</strong> oil sands that lie beneath <strong>the</strong> Canadian province of Alberta and form <strong>the</strong> world’s second-largest proven oil reserves after Saudi Arabia. Producing crude oil from <strong>the</strong>se ‘tar sands’ - a heavy mixture of bitumen, water, sand and clay found beneath more than 54,000 square miles 61 of prime forest in nor<strong>the</strong>rn Alberta, an area <strong>the</strong> size of England and Wales - generates up to four times more carbon dioxide, <strong>the</strong> principal global warming gas, than conventional drilling. The booming oil sands industry will produce 100 million tonnes of CO2 a year (equivalent to a fifth of <strong>the</strong> UK’s entire annual emissions) by 2012, ensuring that Canada will miss its emission targets under <strong>the</strong> Kyoto treaty. The oil rush is also scarring a wilderness landscape: millions of tonnes of plant life and top soil are scooped away in vast opencast mines and millions of litres of water diverted from rivers. Up to five barrels of water are needed to produce a single barrel of crude and <strong>the</strong> process requires huge amounts of natural gas. It takes two tonnes of <strong>the</strong> raw sands to produce a single barrel of oil. gas Natural gas has been <strong>the</strong> fastest growing fossil <strong>energy</strong> source over <strong>the</strong> last two decades, boosted by its increasing share in <strong>the</strong> electricity generation mix. Gas is generally regarded as an abundant resource and public concerns about depletion are limited to oil, even though few in-depth studies address <strong>the</strong> subject. Gas resources are more concentrated, and a few massive fields make up most of <strong>the</strong> reserves. The largest gas field in <strong>the</strong> world holds 15% of <strong>the</strong> Ultimate Recoverable Resources (URR), compared to 6% for oil. Unfortunately, information about gas resources suffers from <strong>the</strong> same bad practices as oil data because gas mostly comes from <strong>the</strong> same geological formations, and <strong>the</strong> same stakeholders are involved. 60 ‘PLUGGING THE GAP - A SURVEY OF WORLD FUEL RESOURCES AND THEIR IMPACT ON THE DEVELOPMENT OF WIND ENERGY’, GLOBAL WIND ENERGY COUNCIL/RENEWABLE ENERGY SYSTEMS, 2006. 61 THE INDEPENDENT, 10 DECEMBER 2007 69 7 <strong>energy</strong> sources and security of supply | STATUS OF GLOBAL FUEL SUPPLIES