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When the well runs dry

From The Irish Times
Published: Jul 15, 2006

EXTRACT: “…once the row over Shell Exploration and Production’s pipeline plan is resolved. It is estimated to hold seven trillion cubic feet of gas – enough to supply 60 per cent of the Irish market for 10 years.”

THE ARTICLE

Ireland is the ninth most oil-dependent economy in the world – how well prepared will we be when the world’s supply of oil and gas runs out, asks Frank McDonald , Environment Editor

One thousand barrels per second – that’s the staggering level of current oil consumption worldwide. President George Bush, an oilman to his core, admitted last February that the US is “addicted to oil”. But so too is the rest of the world – including Ireland; we are even more dependent on imported oil than the gas-guzzling US.

But at least Bush has admitted it. As Steve Sawyer, climate change expert at Greenpeace, said of the president’s State of the Union address: “The first step in curing an addiction is recognising that you have a problem.” It was even speculated that this might foreshadow the establishment of an “Oilaholics Anonymous” programme.

For every barrel of oil added to known reserves, five barrels are being consumed, as the Irish Academy of Engineering noted this week. “As a consequence total reserves are now at their peak and will decline steadily until oil runs out in approximately 2050/2060.” And with demand outstripping supply, this will lead to ever higher prices.

Dr Colin Campbell, a former oil company geologist and founder of the Association for the Study of Peak Oil, predicts that global production will peak in 2008, while French prime minister Dominique de Villepin is not alone in believing that the world has entered the “post-oil era”, and the Pentagon has flagged a new era of “resource wars”.

The US consumes 25 per cent of all the oil produced worldwide and must import more than half of the 20 million barrels a day needed to support the American way of life. And since its once mighty oilfields now account for just 3 per cent of known reserves, alternatives must be found to importing more oil from unstable parts of the world.

That’s why Bush has increased the budget for “clean energy” research into zero-emission coal-fired electricity-generating stations, solar and wind-power technologies, and “clean, safe nuclear energy”. Also on the White House’s energy agenda is a research drive to replace petrol and diesel with hybrid, electric, ethanol- and hydrogen-powered cars. Breakthroughs in these areas would enable the US to replace more than 75 per cent of its oil imports by 2025, Bush said. “By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past”.

Some of the world’s leading oil companies are already diversifying into renewable energy, as a hedge against peak oil; BP has adopted the sunflower as its logo, with the slogan “Beyond Petroleum”. All of them are making spectacular profits, none more so than Exxon Mobil, which posted a surplus of $32 billion (25.2 billion) in 2005 – the biggest recorded.

For more than a century, oil has been the lifeblood of the world economy. Not only has it provided fuel for industry, power stations, cars, trucks, buses, ships and aircraft, but it is also the feedstock for plastic polymers, petrochemicals, nylon, synthetic clothes and numerous other products we take for granted.

All of this was fine when oil was cheap and plentiful. But it isn’t now, nor will it be in the future. What’s pushing up the price is the law of supply and demand, with China as the principal driver; its consumption has nearly doubled in the past decade and is likely to double again over the next 10 years, devouring an extra six million barrels a day.

India, Brazil and other major developing countries will also sustain a high level of demand for oil in the decades to come, against the backdrop of dwindling reserves. Even with a steep rise in production in the Middle East (which accounts for 65 per cent of known reserves), this cannot be met – so the price of crude oil will rise dramatically.

BRITAIN, OUR NEAREST neighbour, has seen the writing on the wall. With its own supplies diminishing and the country set to import up to 80 per cent of its gas by 2020, massive investments are being made in pipeline and storage facilities in order to diversify the sources of supply beyond Russia and Algeria, to Qatar and even as far as Malaysia.

This is obviously designed to ensure that Britain does not become too dependent on Gazprom, the Russian state gas monopoly – especially in the wake of what happened last January, when it pulled the plug on Ukraine. But supplies of natural gas, though more plentiful than oil, are not infinite, and production is expected to peak around 2030.

At present, 95 per cent of Ireland’s energy comes from fossil fuels, of which 90 per cent are imported. What if these supplies were disrupted due to geopolitical conflict? How are we to deal with continuing price hikes for oil and gas as wells inevitably dry up? And what plans are in place to keep electricity running through the national grid?

In a major energy review published last month, the Joint Oireachtas Committee on Communications, Marine and Natural Resources called for an informed debate on nuclear power. However, it seems highly improbable that this option would find favour with the public, at least until other, less controversial avenues have been fully explored.

We need all the alternative energy we can get, because Ireland is the ninth most oil-dependent economy in the world. Oil accounts for more than 57 per cent of our overall energy consumption, significantly above the EU average of 43 per cent; indeed, we’re even more dependent on “black gold” than the US – and we have no oilfields of our own.

With Ireland “more exposed to the dual threats of price increases and supply disruption than any other country in Europe”, Joint Oireachtas Committee chairman Noel O’Flynn TD (FF) said: “The alarm bells are ringing and action to develop policies that deliver sustainability and ensure economic growth are an immediate national imperative”.

Until the Celtic Tiger era, Ireland’s oil consumption per capita was below the EU average. But for every 1 per cent increase in economic growth, oil use has gone up by 2 per cent, according to Gerard O’Neill, of Amarach consultants – largely as a result of the explosion in car numbers and road traffic generally since the mid-1990s.

The figure for private cars rose by more than two-thirds between 1994 and 2004, from 939,022 to 1,582,833. Over the same period, the number of goods vehicles (trucks, commercial vans and so on) nearly doubled, from 135,809 to 268,082 – reflecting the fact that more and more freight is being moved by road to serve the booming economy.

Petrol or diesel is needed to keep all of these cars and trucks moving, so it’s no wonder that the transport sector is the fastest-growing contributor to Ireland’s energy bill and the greenhouse gas emissions blamed for causing climate change. Ethanol and other biofuels may provide an alternative, but not in the immediate future.

Overall, the transport sector consumes 40 per cent of the energy we use, and its consumption is growing by around 8 per cent a year. We have become one of the most car-dependent countries in the world – largely because of a pattern of development that apes Atlanta rather than Amsterdam – the sprawl city versus the compact one.

We also need more gas for space heating and electricity generation. With the Kinsale Head gas field running out of supplies, the best prospect is the Corrib field off the Mayo coast, once the row over Shell Exploration and Production’s pipeline plan is resolved. It is estimated to hold seven trillion cubic feet of gas – enough to supply 60 per cent of the Irish market for 10 years.

AFTER IT RUNS out, and assuming no other fields are developed, we will have to import all our gas, via Britain, from the European grid supplied mainly by Gazprom. As for whether Europe would be “held to ransom”, the benign view taken in Brussels, Dublin and other EU capitals is that Russia wouldn’t “bite the hand that feeds it”.

Nonetheless, its use of geology to further geo-political aims in relation to Ukraine sent shivers down spines and led to an urgent energy review, and it was hardly surprising that the Green Paper produced by the European Commission last March identifiedenergy security as the top priority – well above switching to renewable sources.

Friends of the Earth (FoE) found this focus understandable, but warned that Europe is vulnerable in relying on “oil from the volatile Middle East and gas from an increasingly authoritarian Russia”. It said the most effective way to secure supplies would be to stop wasting energy and produce more from renewable sources, such as wind and biofuels.

“The EU Commission is missing an opportunity to lead a revolution in how we produce and consume energy. Europe should invest heavily in energy-saving technologies and in renewables like solar and wind power, instead of clinging to fossil fuels and nuclear – a policy grounded in the days of the dinosaurs,” said FoE’s Jan Kowalzig.

As he pointed out, if Europe cut its energy consumption simply by using existing energy sources more efficiently, it would save 60 billion worth of gas imports over 15 years. And with the prices of fossil fuels soaring, it makes economic sense for business and industry – and householders, too – to reduce their energy bills.

The Commission itself, in a Green Paper published last June, suggested that energy efficiency could cut consumption by 20 per cent between now and 2020. Half of the savings could be made simply by member states implementing legislation dealing with the energy efficiency of buildings, domestic appliances and energy services.

Ireland, however, has been “totally unprepared” to deal with the emerging energy gap, according to Tommy Broughan TD, the Labour Party’s energy spokesman. Indeed, Minister for Communications, Marine and Natural Resources Noel Dempsey is only now finalising a Green Paper on energy policy – the first in the State’s history.

The fact that energy is not even included in his Department’s title speaks volumes about the Government’s complacency – until it was jolted to take action by the steep rise in oil prices and gnawing uncertainty over future gas supplies. Now, there’s a scramble to find solutions that would also help to cut our greenhouse gas emissions.

Last March, Dempsey introduced a grants scheme to encourage householders to switch from oil- and coal-fired heating to renewable technologies, such as wood pellet boilers, solar panels and geo-thermal heat pumps. There was a flood of applications, and more than 3,500 grants were approved within the first three months.

But the money allocated for the scheme is capped at 27 million and the number of homes that will benefit – 10,000 – is miniscule in the context of the national housing stock of 1.5 million units. So too are the savings; by the end of its five-year life, these will amount to 54,000 barrels of oil and 23,000 tonnes of carbon dioxide per annum.

Meanwhile, after a very slow start, the wind power industry is more confident that Ireland will achieve the EU target of generating 13.2 per cent of its electricity from renewable sources by 2010. Wind will account for 80 per cent of the 1,400-megawatt renewables mix, with existing hydro and new small hydro schemes making up the balance.

However, it seems unlikely that we will do anything really radical, such as following Sweden’s example. It aims to become the first country in the world to eliminate the use of fossil fuels, by focusing on renewable energy sources, and has set out to break its dependency on oil as early as 2020. The brave new world beckons for us all, sooner or later.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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