April 2nd 2011


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Articles from this issue:

ENERGY SECURITY: What Australia must do before the oil runs out

EDITORIAL: Nuclear panic: the first casualty is truth

China leading the way with safe nuclear energy

JAPAN: Why Japan will recover from Sendai quake-tsunami

NATIONAL AFFAIRS: Water Act won't work: Harvard professor

CANBERRA OBSERVED: Gillard's line on same-sex marriage, euthanasia

EUTHANASIA: SA euthanasia bill sidesteps safeguards

DEVELOPMENT AID: Australia funding abortions in Mongolia

FOREIGN AFFAIRS: Good intentions not enough to defeat Gaddafi

UNITED NATIONS: Gender diversity battle at UN women's session

CULTURE: Hollywood's war on our children

FAMILY AND CIVILISATION: The growth and decline of the Roman economy

FEMINISM: How feminism demeans women and destroys families

CINEMA: Stalin's forgotten victims remembered: Peter Weir's The Way Back (rated M)

BOOK REVIEW: Obama, the questions mount

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ENERGY SECURITY:
What Australia must do before the oil runs out


by Joseph Poprzeczny

News Weekly, April 2, 2011

The peak oil crisis, whereby oil production reaches a maximum rate after which it enters terminal decline, was first canvassed 55 years ago by a distinguished Texan petroleum geologist, Dr M. King Hubbert (1903-1989).

Western Australian energy scientist David Archibald hails the long-forgotten Hubbert as an intellectual giant whose pioneering studies offer important lessons for Australia as it grapples with its future energy needs.

Failure to heed Hubbert’s warning, says Archibald, will mean a massive dislocation of Australia’s economy, and even a prolonged recession, in the not-too-distant future.

Archibald, who works in the fields of oil exploration and climate science, was speaking recently at the Perth launch of a new book, of which he is a co-author, Energy Security 2.0: How Energy is Central to the Changing Global Balance in the New Age of Geography.

He referred to what was probably Dr Hubbert’s main claim to fame, which was his investigations into future yields of American oil fields. In a 1956 lecture to the American Petroleum Institute, Hubbert made his famous prediction — although long forgotten by politicians and the public — that United States oil production would peak in the early 1970s and decline thereafter.

And precisely that happened in 1973, meaning Hubbert scored what riflemen call “a centre-bull”.

On another occasion, Hubbert uttered a memorable one-liner: “Our ignorance is not so vast as our failure to use what we know.”

Archibald has applied Hubbert’s 1956 methodology to calculate when OPEC and non-OPEC producers’ oil output will peak.

Archibald said: “Non-OPEC oil production will halve by the end of this decade, from close to 40 million barrels per day to 20 million barrels per day. Non-OPEC oil output peaked in 2005.

“Although OPEC’s decline will not be as pronounced, it will be well under way by the middle of this decade. Amongst other things, this means that countries like Australia will be dependent on fewer suppliers.”

Archibald predicted that the coming oil price rise after 2015 will mean considerable disruption to all countries and economies that have failed to prepare to adapt.

Archibald reminded his audience that, on October 19, 2005, Australia’s then Labor Opposition leader, Kim Beazley (now Australian ambassador to the United States), made this very point in an address to the Australian Institute of Company Directors.

Mr Beazley said on that occasion: “After 25 years in Parliament, I see an Australia more exposed than ever before … (and) growing more and more reliant on the rest of the world for our fuel, for our money and for our security.

“We must increase the use of Australian transport fuels and reduce our reliance on foreign oil. We must develop and use those fuels that will become cheaper in the future.…

“We must make Australia less vulnerable to external shocks. We must make Australia less reliant on the foreign oil affecting our trade deficit and foreign debt.…”

Mr Beazley discussed Australia’s energy needs for the following decade, saying: “These are my questions today in October 2005. But in October 2015, if we do nothing, I expect the questions to be even more damning.

“As Australians queue for petrol at around $4, $5, potentially up to $10 a litre even further down the track, the questions will be:

“How had our governments not seen the writing on the wall? Didn’t our leaders foresee the soaring demand? Didn’t our leaders do their sums and realise demand would outstrip supply? Couldn’t they foresee the threats to supply?

“Why didn’t they put the national interest first? And why was Australia so unprepared?

“Friends, we need to prepare Australia for such a world now.”

Archibald fully concurs with what Beazley warned five years ago. He says that Australia has all the required natural and man-made wherewithal with which to achieve greater energy self-reliance.

Australia has massive coal reserves and, since the cost of oil is rising and will continue doing so, it is time to launch a program of rapid transition to utilising liquid fuels that are derived from coal.

Coal-to-liquid (CTL) fuels, such as diesel for heavy haulage and farm usage, is the way ahead, he argues.

He says: “CTL projects in Australia would have an enormous national security benefit in diversifying sources of supply. Many coal companies in Australia have potential long-term liquid fuels production that dwarfs that of most oil companies.”

All they need to do is build coalfield-based plants, employing the Fischer-Tropsch process, already in use in China, South Africa and the US, which converts coal or natural gas into different liquid fuels.

“China’s approach to energy security is instructive,” he adds.

According to its projected domestic supply and demand trajectories, China will be importing, or otherwise substituting, 10 million barrels per day by the end of the decade, not that far short of the US import rate of 14 million barrels per day.

“In response to this,” observes Archibald, “China has begun a CTL plant, with three Fischer-Tropsch plants and one liquefaction plant commissioned and three Fischer-Tropsch plants already under construction, for total planned production in excess of 600,000 barrels per day.”

He adds that fuel, fertiliser and chemical inputs are presently 22 per cent of Australian farms’ average costs. Almost all these inputs are presently extracted from oil and natural gas feedstock.

He predicts: “The rising oil price will result in these input costs at least tripling by the end of the decade, increasing total costs by the order of 50 per cent.”

Yet Queensland, New South Wales, Victoria, South Australia and Western Australia all have many centuries’ supply of lignite (brown coal) and other low-grade coals that could rapidly make Australia self-sufficient not only in heavy haulage fuels but also in farm fuels and fertilisers.

This option, however, is being jeopardised by the threat of a Commonwealth Government tax on carbon dioxide gas — or what Prime Minister Julia Gillard wrongly calls “a price on carbon”.

“Australia, along with a lot of the rest of the world, is sleepwalking towards a major economic dislocation due to rapidly tightening world oil supply,” warns Archibald.

“Imported oil should be displaced, primarily by liquid fuels generated from low-grade coal and supplemented by vehicles using natural gas, liquid petroleum gas and batteries. In turn, coal in power generation should be displaced by molten-salt breeder reactors burning thorium.

“This would provide Australia with hundreds of years of abundant energy and a high standard of living.

“To depart from this optimum resource allocation, or delay its implementation, will have the result of degrading Australia’s standard of living and would put national security at risk.”

Joseph Poprzeczny is a Perth-based writer.

 

References:

Gregory Copley, Andrew Pickford, Yossef Bodansky and David Archibald, Energy Security 2.0: How Energy is Central to the Changing Global Balance in the New Age of Geography (Perth, WA: ISSA Indo Pacific Pty Ltd, 2011)

M. King Hubbert, “Nuclear energy and the fossil fuels”, lecture delivered in San Antonio, Texas, March 1956, for the American Petroleum Institute.
URL: www.hubbertpeak.com/hubbert/1956/1956.pdf

See also The Hubbert Tribute website, at:
URL: www.mkinghubbert.com/about/mkinghubbert

The Hon. Kim C. Beazley MP, “Developing the Australian fuel industry: Labor’s blueprint number three”. Address to the Australian Institute of Company Directors, Melbourne, October 19, 2005.
URL: http://parlinfo.aph.gov.au/parlInfo/download/media/pressrel/RANH6/upload_binary/ranh64.pdf;fileType%3Dapplication%2F.pdf




























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