Will crude oil become a luxury good?
Article from TÜV SÜD Journal 4/2010
 | Crude oil is not an infinite resource. Experts disagree on when the »black gold« will no longer flow from the depths of the Earth. Oil companies must drill into formations that are increasingly difficult to tap. This will mean higher prices for consumers. Even as the search for oil continues, researchers are intensely working on suitable alternatives. |
The era of crude oil will come to an end. On this point, experts are certain. They just do not know exactly when. »We will continue to produce crude oil 100 years from now. But it will definitely not be in the amounts that we produce today,« says Hilmar Rempel of the German Institute for Geosciences and Natural Resources. Will oil then be sold only in vials or as portions? At the moment, such scenarios appear to be a vision of the distant future. But scientists of the Association for the Study of Peak Oil and Gas (ASPO) are worried: Oil will become an expensive, scarce resource. As early as 2013, experts envision a dramatic shortage of oil with a price of $200 a barrel being a realistic possibility, say experts of the British think tank »Chatham House.« The highest price ever reached by oil was set in 2008 when it hit $147 a barrel.
Despite the uncertainty, one fact is clear: At some point, the world will reach the stage of »peak oil,« the period when global oil production hits its highest level. Predictions about the specific time when this will occur diverge widely. The U.S. Energy Information Administration maintains that the peak was reached in 2005. But the German Institute for Geosciences and Natural Resources is more optimistic. »We think that peak oil will be reached between 2030 and 2035 if conditions remain favorable,« Rempel says. Proven oil reserves around the world total about 160 billion tons of crude oil – while consumption amounts to about 4 billion tons a year. But a number of uncertainties complicate the forecasting process. »We don't know what sort of de-velopments in technology and demand will occur over the next few years,« the energy expert says.
On the other hand, it is easier to answer the question about today's oil reserves: The overall poten-tial of conventional crude oil, including untapped de-posits, totals »about 405 billion tons,« according to an institute study titled »Reserves, Resources and the Availability of Energy Raw Materials.« »The largest amount of oil reserves is in the Middle East. This region has huge untapped fields,« Rempel says. The members of the Commonwealth of Independent States and North America are next on the ranking of regions with the greatest overall potential. »Nearly two-thirds of the expected potential has already been tapped in North America while the total in the CIS is just more than one-third and nearly one-quarter in the Middle East,« the study says.
Environmental impact increases
One point remains clear: the reserves of conventional crude oil are drying up and will be unable to meet demand in the foreseeable future. This could pave the way for the era of so-called unconventional oil: expensive raw materials like oil sands and very heavy oil that are extremely complicated to produce. The main production site of oil sands is Canada. But there is a prob-lem: the raw materials must undergo complicated treatment before being upgraded into oil. For example, oil sands are extracted at a depth of 30 meters and then converted into a black, viscous mass through the use of heat, water and centrifuges. The bitumen forms the basis for synthetic crude oil.
For the environment, the production of oil sands amounts to a real case of applying the pressure: forests must be cleared, the soil suffers virtually irreversible damage caused by the underground-extraction methods used in the operations, and the production process consumes huge amounts of water. The resulting waste water is a hazardous brew of toxins. The yields, on the other hand, are small, and the oil content of the sands is frequently less than 10 percent.
Complicated drilling process
At the same time, major oil companies are facing additional challenges: the days of easily accessible crude oil are over. Drills must cut deeper and deeper into the Earth in their search for oil. In addition, drillers no longer shy away from environmentally fragile areas like Alaska. For several years now, special processes have made it possible to explore geological formations up to 6,000 meters below the surface of the Earth by using three-dimensional techniques. Oil-production technology has also made considerable strides in past decades – including horizontal drilling. In this tech-nique, a vertical hole is dug several kilometers below the surface. The well bore is then deviated in the area of oil and gas layers, and the drilling is then done horizontally. These horizontal sections within the oil reservoirs can stretch for several kilometers. »With this technique, you can drill for extremely long dis-tances and enormously expand the contact surfaces of oil reservoirs. With significantly fewer bore holes, oil companies can produce the same amount of oil that they did before this technology went into use,« Rempel says.
New technologies, however, can pose significant risks. The latest example: the oil disaster in the Gulf of Mexico, triggered by offshore drilling. »This was a chain of the most unfortunate events. People and technology failed,« Rempel says. Nonetheless, the expert at the German geosciences institute thinks offshore drilling is relatively safe. The requirement: The latest technology must be used, and the drilling crews must have received the best training possible.
»New-generation fuels« gaining speed
The search for crude oil in the depths of the Earth is not the only work being intensively carried out – a fervent hunt for alternatives to oil is being conducted as well. As Dr. Werner Zittel, an energy expert at Ludwig Bölkow Systemtechnik, says, »We must abandon oil before it abandons us.« As a result, fuel tanks will be increasingly filled with renewable resources. The No. 1 end consumer of fuel remains the transportation sector – after all, even the most fuel-efficient engine has to make trips to the filling station. In Germany alone, more than 50 percent of oil consumption in 2009 involved road mobility. The Agency for Renewable Energies says that only biofuels are currently capable of making a strong contribution to efforts to lower crude-oil consumption. In Germany last year, just 5.5 percent of fuel needs were covered by biofuels. But this total is to rise considerably: »By 2020, biodiesel, plant oil and bioethanol produced by sustainable agricultural practices will be able to meet one-fifth of today's demand for fuel without endangering the supply of food,« says Jörg Mayer, Managing Director of the Agency for Renewable Energies.
Biofuels include plant oil and rapeseed oil methyl ester, or simply biodiesel. Usually produced from rapeseed, it has been a popular fuel for years. Since 2004, it has been possible to blend up to 5 percent of it into conventional diesel fuel. Another alternative is bioethanol, which is made from amylaceous raw materials like sugar beets, grain and potatoes. Up to 5 percent of it is added to typical blends with conventional fuels.
Bioethanol and biodiesel are considered first-generation biofuels. The second generation includes synthetic biofuels, or biomass-to-liquid (BtL). At the moment, though, these fuels are still in the test and research phase. They are expected to reach market maturity by 2015. Natural-gas vehicles can also use a methaneenriched biogas. The strengths of the »new-generation« fuels: They are – with the exception of the methane – liquid, storable and transportable in broad-scale networks of filling stations. The EU Renewable Energy Directive mandates that 10 percent of fuels be produced from renewable raw materials by 2020.
Environmental protectors from agriculture?
Another positive side effect produced by rapeseed, sugar beets and friends: »Green« fuels ease the burden humans place on the environment. During combustion, they release only the amount of carbon dioxide that the plants bound during their growth phase. This means that they help reduce emissions of greenhouse gases. As a result of their production process, however, they are not 100 percent climate neutral. Despite their benefits, energy plants are frequently the target of criticism. Growing them threatens the world's food supply and promotes the clearing of rain forests because more and more cultivable land is needed. Nonetheless, only 2 percent of the world's cultivable land is being used to grow such energy plants as rapeseed, corn, sugar cane and oil palm. However, the increased production of biofuels could promote deforestation particularly in developing countries. For this reason, the European Union has issued sustainability standards for biofuels. For many European farmers, the cultivation of rapeseed and sugar beets or the investment in biogas systems has become a second pillar of their farming operations. As a result, very little biomass used for biodiesel is imported into Germany. Instead, up to 90 percent of it comes from domestic production.
Back to the roots
By using biofuels, the automobile is actually getting back to its historic roots. At the beginning of the 20th century, nobody would have come up with the idea of filling the car's tank with precious crude oil: The auto-maker Henry Ford powered his Ford Model T with ethyl alcohol. In Germany, Nicolaus Otto, the inventor of the internal combustion engine, used potato schnapps in 1860. And Rudolf Diesel, who invented the diesel engine, tested the power of nature in 1912: he used peanut oil instead of diesel fuel.