Hirsch report

Hirsch report

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The Hirsch report, the commonly referred to name for the report Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, was created by request for the US Department of Energy and published in February 2005.
It examined the time frame for the occurrence of peak oil
Peak oil
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field...

, the necessary mitigating actions, and the likely impacts based on the timeliness of those actions.

The Lead Author, Robert Hirsch
Robert L. Hirsch
Robert L. Hirsch is a former senior energy program adviser for Science Applications International Corporation and is a Senior Energy Advisor at MISI and a consultant in energy, technology, and management. His primary experience is in research, development, and commercial applications...

, published a brief summary of this report in October 2005 for the Atlantic Council.

Introduction


"The peaking of world oil production presents the U.S. and the world with an
unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking."

Projections


A number of industry petroleum geologists, scientists, and economists were listed with their global peak production projection. Later, in 2010, Hirsch developed a projection for global peak production by 2015.
Projected Date Source
2006–2007 Bakhtiari
2007–2009 Simmons
Matthew Simmons
Matthew Roy Simmons was founder and chairman emeritus of Simmons & Company International, and was a prominent advocate of peak oil. Simmons was motivated by the 1973 energy crisis to create an investment banking firm catering to oil companies. In his previous capacity, he served as energy...

After 2007 Skrebowski
Chris Skrebowski
Chris Skrebowski is a well-known commentator on the oil industry and an expert on global oil supply. He is the founding Director of Peak Oil Consulting and consulting editor for Petroleum Review, the magazine of the UK Energy Institute...

Before 2009 Deffeyes
Kenneth S. Deffeyes
Kenneth S. Deffeyes is a geologist who worked with M. King Hubbert, the creator of the Hubbert peak theory, at the Shell Oil Company research laboratory in Houston, Texas. Deffeyes holds a B.S. in petroleum geology from the Colorado School of Mines and a Ph.D. in geology from Princeton University,...

Before 2010 Goodstein
David Goodstein
David L. Goodstein is a U.S. physicist and educator. From 1988 to 2007 he served as Vice-provost of the California Institute of Technology , where he is also a professor of physics and applied physics, as well as the Frank J...

Around 2010 Campbell
Colin Campbell (geologist)
Colin J. Campbell, PhD Oxford, is a retired British petroleum geologist who predicted that oil production would peak by 2007. The consequences of this are uncertain but drastic, due to the world's dependency on fossil fuels for the vast majority of its energy...

After 2010 World Energy Council
World Energy Council
The World Energy Council is a global and inclusive forum for thought-leadership and tangible engagement with headquarters in London. Its mission is 'To promote the sustainable supply and use of energy for the greatest benefit of all people'....

2010–2020 Laherrere
Jean Laherrère
Jean H. Laherrère is a petroleum engineer and consultant, best known as the co-author of an influential 1998 Scientific American article entitled . Laherrère worked for 37 years with Total S.A., a French petroleum company. His work on seismic refraction surveys contributed to the discovery of...

2016 EIA (Nominal)
Energy Information Administration
The U.S. Energy Information Administration is the statistical and analytical agency within the U.S. Department of Energy. EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and...

After 2020 CERA
Cambridge Energy Research Associates
Cambridge Energy Research Associates is a consulting company in the United States that specializes in advising governments and private companies on energy markets, geopolitics, industry trends, and strategy...

2025 or later Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...


Mitigation


Operating under the assumption that existing services must be sustained, the Hirsch report considered the effects of the following mitigation strategies as part of the "crash program":
  1. Fuel efficient transportation,
  2. Heavy oil/Oil sands,
  3. Coal liquefaction,
  4. Enhanced oil recovery,
  5. Gas-to-liquids.

Conclusions


The report came to the following conclusions:
  • World oil peaking is going to happen, and will likely be abrupt.
    • World production of conventional oil will reach a maximum and decline thereafter.
    • Some forecasters project peaking within a decade; others contend it will occur later.
    • Peaking will happen, but the timing is uncertain.
  • Oil peaking will adversely affect global economies, particularly the U.S.
    • Over the past century the U.S. economy has been shaped by the availability of low-cost oil.
    • The economic loss to the United States could be measured on a trillion-dollar scale.
    • Aggressive fuel efficiency and substitute fuel production could provide substantial mitigation.
  • Oil peaking presents a unique challenge.
    • Without massive mitigation, the problem will be pervasive and long-term.
    • Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary.
    • Oil peaking will be abrupt and revolutionary.
  • The problem is liquid fuels for transportation.
    • The lifetimes of transportation equipment are measured in decades.
    • Rapid changeover in transportation equipment is inherently impossible.
    • Motor vehicles, aircraft, trains, and ships have no ready alternative to liquid fuels.
  • Mitigation efforts will require substantial time.
    • Waiting until production peaks would leave the world with a liquid fuel deficit for 20 years.
    • Initiating a crash program 10 years before peaking leaves a liquid fuels shortfall of a decade.
    • Initiating a crash program 20 years before peaking could avoid a world liquid fuels shortfall.
  • Both supply and demand will require attention.
    • Sustained high oil prices will cause forced demand reduction (recession and unemployment).
    • Production of large amounts of substitute liquid fuels can and must be provided.
    • The production of substitute liquid fuels is technically and economically feasible.
  • It is a matter of risk management.
    • The peaking of world oil production is a classic risk management problem
    • Mitigation efforts earlier than required may be premature, if peaking is long delayed.
    • On the other hand, if peaking is soon, failure to initiate mitigation could be extremely damaging.
  • Government intervention will be required.
    • The economic and social implications of oil peaking would otherwise be chaotic.
    • Expediency may require major changes to existing administrative and regulatory procedures.
  • Economic upheaval is not inevitable.
    • Without mitigation, the peaking of world oil production will cause major economic upheaval.
    • Given enough lead-time, the problems are soluble with existing technologies.
    • New technologies will help, but on a longer time scale.
  • More information is needed.
    • Effective action to combat peaking requires better understanding of the issues.
    • Risks and possible benefits of possible mitigation actions need to be examined.

Three scenarios

  • Waiting until world oil production peaks before taking crash program action leaves the world with a significant liquid fuel deficit for more than two decades.

  • Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.

  • Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.

Applicability beyond the US, critical remarks


The Hirsch Report urges a crash program of new technologies and changes in manners and attitudes in the US and as well implying more research and development. The report cites a peaking crude oil supply as the main reason for immediate action.

During the significant oil price rise through 2007, a theme among several industry observers was that the price rise was only partially due to a limit in crude oil availability (peak oil
Peak oil
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field...

). For example, an article by Jad Mouawad cited an unusual number of fires and other outages among U.S. refineries in the summer of 2007 which disrupted supply. However, a lack of refining capacity would only seem to explain high gasoline prices not high crude oil prices. Indeed, if the refineries were unable to process available crude oil then there should be a crude oil glut that would reduce crude prices on international crude oil markets. Then again, sharp changes in crude oil prices can also be due to stock market volatility and fear over the security of future supplies, or on the other hand an anticipation by investors of a rise in the value of crude oil once refining capacity picks up again.

As for the global usefulness of the Hirsch conclusions, as of 2004 the US share of global oil consumption was about 26%, while the share of population was only 4.3%, Europe took 11% of global oil while having a population of about 6.8%. An average car in Germany uses about 8.1 l
L
Ł or ł, described in English as L with stroke, is a letter of the Polish, Kashubian, Sorbian, Łacinka , Łatynka , Wilamowicean, Navajo, Dene Suline, Inupiaq, Zuni, Hupa, and Dogrib alphabets, several proposed alphabets for the Venetian language, and the ISO 11940 romanization of the Thai alphabet...

iter per 100 km, the US consumption 16.2 L. In US terms 1 gallon delivers 44 miles in Germany but only 22 in the States.

So far a part of the changes ultimately requested by Hirsch for the US have been already implemented in Europe (and cum grano salis
Grain of salt
a grain of salt, in modern English, is an idiom which means to view something with skepticism, or to not take it literally. It derives from the Latin phrase, grano salis....

in Asia) . The difference had been much smaller at the start of the 70s. Europe adapted more after the various oil shocks and enhanced the changes by introducing much higher taxes on gasoline . The differences now are not only a lack of energy saving technologies, in car building and usage, and passive insulation of buildings in the US . The traditional significant differences in the setup and density of settlements, share of suburbs, use of public transport and consumer behavior have been widening . Taking this into account, a peak oil shock as outlined by Hirsch will have a much more severe outcome in the US compared to other parts of the world, especially Europe .

See also

  • Energy conservation
    Energy conservation
    Energy conservation refers to efforts made to reduce energy consumption. Energy conservation can be achieved through increased efficient energy use, in conjunction with decreased energy consumption and/or reduced consumption from conventional energy sources...

  • Energy crisis
    Energy crisis
    An energy crisis is any great bottleneck in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place, particularly those that supply national electricity grids or serve as fuel for vehicles...

  • Marion King Hubbert, and the Hubbert curve
    Hubbert curve
    The Hubbert curve is an approximation of the production rate of a resource over time. It is a symmetric logistic distribution curve, often confused with the "normal" gaussian function. It first appeared in "Nuclear Energy and the Fossil Fuels," geophysicist M...

    .
  • Peak Oil
    Peak oil
    Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field...

  • Association for the Study of Peak Oil and Gas
    Association for the Study of Peak Oil and Gas
    The Association for the Study of Peak Oil and Gas, or ASPO, is a network of scientists, affiliated with a wide array of global institutions and universities, whose goal is to attempt to determine the date and impact of the peak and decline of the world’s production of oil and gas, due to resource...

  • Olduvai theory
    Olduvai theory
    The Olduvai theory states that industrial civilization will have a lifetime of less than or equal to 100 years . The theory provides a quantitative basis of the transient-pulse theory of modern civilization...


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