Oil companies and stranded assets

[biffvernon]

More evidence for stranding the assets from Christophe McGlade & Paul Ekins

http://www.nature.com/articles/nature14 ... 1DycINZkvg

The geographical distribution of fossil fuels unused when limiting global warming to 2 °C

[Tarrel]

...and more angst about the financial impacts of those assets being stranded:

https://www.holyrood.com/articles/news/ ... ial-system

[clv101]

The report says: “The carbon bubble could burst at any time. It will burst when the market accepts that not all fossil fuels are going to be burned. Carbon based assets could become stranded assets and lose value overnight, causing a financial shock which could pose a threat to economies whose financial sectors are heavily dependent on the fossil fuel industry.

The whole premiss of the carbon bubble is that pro-active action will/might be taken to limit extraction, thereby devaluing otherwise economically extractable reserves to zero.

Thing is, oil's price falling below $50 has already removed billions of barrels from the table, moving them from their extractable reserve status at $100 back to their previously unextractable resource status. Most of the ~4 mbpd unconventional growth from the US will dry up within in a few years at these prices. Then, the economist will tell us, price will rise and with it supply... However, I doubt we can actually afford the price it takes to maintain current extraction rates.

[PS_RalphW]

The rate of extraction will decline, but the resource will be extracted eventually, as the remaining global economy will be forced to become more energy efficient, until it can afford the costs of extraction again, or alternatives Ie renewables , replace fossil fuels on a far greater scale. Humans will never leave economically competative fuel in the ground. Any country or society which did would be overthrown by another using fossil energy to power the invasion.

[Pepperman]

Then, the economist will tell us, price will rise and with it supply... However, I doubt we can actually afford the price it takes to maintain current extraction rates.

It's also dependent on the banks being prepared to finance the tight oil producers. If the banks get seriously burnt by this round of price fluctuations they might well be disinclined to bankroll a lot of the production we're seeing now given that the high oil prices that are needed to prop these projects up cannot be relied on.

[biffvernon]

The rate of extraction will decline, but the resource will be extracted eventually, as the remaining global economy will be forced to become more energy efficient, until it can afford the costs of extraction again, or alternatives Ie renewables , replace fossil fuels on a far greater scale. Humans will never leave economically competative fuel in the ground. Any country or society which did would be overthrown by another using fossil energy to power the invasion.

It all rather hinges on what is 'economically competitive'. If solar panels provide the desired utility at lower cost than tar sand the tar will be left in the ground just as flints were when bronze was invented. There has been a gradual increase in the inclusion of what were previously regarded as externalities. The polluter pays principle certainly extends to oil tankers that crash and one day will extend to greenhouse gas emissions from the burning of fossil fuel. (Or we're doomed.)

[PS_RalphW]

Until you can power military drones and cruise missiles and tanks efficiently with biofuels, drones and cruise missiles and tanks will be employed to retain access to fossil fuels.

Ironic, really.

[emordnilap]

The rate of extraction will decline, but the resource will be extracted eventually, as the remaining global economy will be forced to become more energy efficient, until it can afford the costs of extraction again, or alternatives Ie renewables , replace fossil fuels on a far greater scale. Humans will never leave economically competative fuel in the ground. Any country or society which did would be overthrown by another using fossil energy to power the invasion.

+1 Spot on. There are enough vehicles in existence to use up remaining FFs and cheap fuel means even more will be produced.

[emordnilap]

Article in Nature:

The geographical distribution of fossil fuels unused when limiting global warming to 2°C

Policy makers have generally agreed that the average global temperature rise caused by greenhouse gas emissions should not exceed 2°C above the average global temperature of pre-industrial times.

It has been estimated that to have at least a 50 per cent chance of keeping warming below 2°C throughout the twenty-first century, the cumulative carbon emissions between 2011 and 2050 need to be limited to around 1,100 gigatonnes of carbon dioxide (Gt CO2).

However, the greenhouse gas emissions contained in present estimates of global fossil fuel reserves are around three times higher than this and so the unabated use of all current fossil fuel reserves is incompatible with a warming limit of 2°C.

That seems clear enough to me. What about everyone else? How many more times can the message be ignored?

[emordnilap]

And Monbiot takes it up. He's good, very good at times. Take this for instance:

Were the world’s governments to regulate the wellhead rather than just the tailpipe, logistically the task would be a thousand times easier. Instead of trying to change the behaviour of 7 billion people, they would need to control just a few thousand corporations.

These companies would buy permits to extract fossil fuels in a global auction. As a global cap on the amount of fossil fuel that could be burnt came into force, the price would rise, making low carbon technologies, such as wind, solar and nuclear, much better investments. The energy corporations would then have no choice but to start getting out of dirt and into clean technologies. The money from the auction could be used either to compensate poorer nations for not following us down the coal hole or to help them survive in a world in which some dangerous warming – but hopefully no more than 2° – will inevitably occur.

Simple. Maybe that's the problem.

Anyways guys, you have to do what you can to get your MP to reject the infrastructure bill outright. Tweet, blog, hack, protest, sign, email, everything. If it goes through, the whole world suffers.

[biffvernon]

Absolutely.

Were the world’s governments to regulate the wellhead rather than just the tailpipe, logistically the task would be a thousand times easier

Of course we read that her on PS a few years ago.

[emordnilap]

Rising global demand for energy over the next two decades is at odds with the fight against climate change

That's a startling statement - considering who said it: Bob Dudley, BP chief executive. Yet:

Fossil fuels are projected to provide the majority of the world’s energy needs, meeting two-thirds of the increase in energy demand out of 2035,” Dudley said. “However, the mix will shift. Renewables and unconventional fossil fuels will take a larger share

So, acknowledge an uncomfortable truth in one breath and decide to do nothing about it in the next. All fossil energy companies need to be wound down immediately.

Source

[PS_RalphW]

BP has declining reserves of both oil and gas, like all the major oil companies. 20 years ago BP spent a lot of money pretending to go 'Beyond Petroleum' before doing a complete U turn under Lord Brown (spit).

They are a corporation who (like all the others) will say whatever they want to maximise profits. Given that they face contraction of their core business due to physical limits, they may as well extract as much positive PR as they can by pretending to face stranded assets as a result of political interference, or environmental constraints, to hide the economic reality that they are slowly going broke.

[vtsnowedin]

BP has declining reserves of both oil and gas, like all the major oil companies. 20 years ago BP spent a lot of money pretending to go 'Beyond Petroleum' before doing a complete U turn under Lord Brown (spit).

They are a corporation who (like all the others) will say whatever they want to maximise profits. Given that they face contraction of their core business due to physical limits, they may as well extract as much positive PR as they can by pretending to face stranded assets as a result of political interference, or environmental constraints, to hide the economic reality that they are slowly going broke.

I don't know why they would spend money on PR if they are in decline. After all you need PR when you want to move into new areas with wells pipelines and refineries etc. But I suspect that BP will make as much profit on the last barrel they extract and deliver as they did on the first.
One question: If world extraction of fossil fuels is suddenly reduced to one third of present levels as proposed above, how many of the present seven billion people will die before adequate renewable substitutes are available to sustain the remaining population?
I expect the answer to that question is the answer to Emerdnilap's question.

[PS_RalphW]

The question is indeed how to keep people alive without fossil fuels, and of course the answer is we cannot feed 7 billion without them.

So then the humane strategy is to minimise deaths.

Which if these strategies ends up with more premature deaths ?

1. Put massive taxation on fossil fuel extraction, used to fund not fully economic renewable energy sources, energy conservation measures, organic/permaculture measures etc., leading to a rapid economic and food production collapse, and 5 billion dead, a degraded environment and 2 billion people living a nearly pre-industrial lifestyle.

2. Cut taxes to maximise extraction of remaining fossil fuels, promote high yield GM crops and highly intensive agriculture, expand coal to liquids and other high cost liquid fuels, leading to slow economic growth, sustaining population growth to 9 billion, before a combination of rapid fossil fuel decline, habitat collapse, climate change, total economic collapse etc. etc. causes mass starvation , 8.5billion dead, and a more less hunter gatherer level of lifestyle for the survivors.


(of course I answer my own question) This was the plot of one episode of the original star trek series.