Energy

Declining Domestic Refining Capacity in Australia

Australia’s Oil Vulnerability – The Key Trends

Yesterday I looked at Australia’s decline in oil self-sufficiency, a trend that is set to continue into the future. Today, it’s time to look at another significant trend likely to affect Australia’s oil vulnerability: the decline in domestic refining capacity.

2. Declining Domestic Refining Capacity in Australia

The majority of Australia’s refining capacity is located close to the major consumption markets on the east coast. Crude oil feedstock for these refineries comes in part from domestic oil produced in the Bass Strait, but mostly from increasing quantities of imports.

Australia’s six refineries are small compared to the larger, more efficient refineries being established in the Asian region, resulting in increased competitive pressures on refining operations in Australia. This competitive disadvantage has resulted in the decision by some operators to close certain facilities and convert them to oil product import terminals.

Australian Refineries

Figure 1: Liquid fuel infrastructure in Australia.

Shell shut down the Clyde refinery, located near Sydney, in late 2012 and sold its Geelong refinery to Vitol in 2014. Additional planned closures of Australian refineries include Caltex’s Kurnell refinery by mid-2014 and BPs Bulwer Island refinery in mid-2015. Once the closures are complete, Australia will be left with only four refineries, equating to a reduction in domestic refining capacity of 42 per cent since 2011. Any further rationalisation of domestic refinery capacity will further increase the proportion of refined products sourced from overseas.

Concerns have been raised that the reduction in Australia’s domestic refinery capacity could negatively impact on domestic energy security. A report from Australian Strategic Policy Institute (ASPI) contends that closure of domestic refineries removes Australia’s ‘capacity to divert oil exports to domestic consumption in the event of a disruption.’ The NRMA’s latest report on Australia’s Liquid Fuel Security also suggests that Australia would ‘no longer have any liquid fuel supplies that could be considered secure, and … would lose the option to resurrect some or all of [its] local liquid fuel supply chain as part of a solution to a crisis.’

The Age queried:

‘With dwindling refining capacity, how would Australia cope if petrol supplies were suddenly cut off by a war, natural disaster or other catastrophe?’

In 2012, Department of Resources, Energy and Tourism (DRET) commissioned the National Energy Security Assessment (NESA) Competitive Pressures on Domestic Refining report to consider the energy security implications of having less refineries operating in Australia. It concluded that despite the closures, ‘supply chain diversity and flexibility is retained which provides continued security of supply. Only in the unlikely scenario of no refining sector coupled with a failure of physical oil markets does Australia lose the flexibility to redirect and refine some crude oil.’

Similarly, the House of Representatives 2013 report on Australia’s oil refinery industry suggests that ‘the changes in domestic refining capacity to date will not impact on Australia meeting its liquid fuel requirements. There are reliable, mature and highly diversified international fuel supply chains, which provide Australia with economic security.’ The Daily Reckoning Australia asked:

‘Would you be paranoid for arguing that a country should not trust its energy security to foreign trade?’

 

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Australia’s Declining Oil Self Sufficiency

Australia’s Oil Vulnerability – The Key Trends

As the world enters the Peak Oil era, it’s important to identify some of the trends which contribute to Australia’s oil vulnerability. Significant risks to Australia’s liquid fuel security currently exist and it is possible to identify future trends which will see this fuel security decline even further.

Let’s take a look at what some of the current oil vulnerabilities are for Australia and then examine what this could mean in the future, when oil depletion begins in earnest.

1. Australia’s Declining Oil Self Sufficiency

In absolute terms, Australia is largely self‑sufficient in the coal and gas needed to provide energy to its economy and society. However, the same cannot be said for oil and petroleum products which account for 34 per cent of total energy consumed in Australia and 97 per cent of the vital transportation sector.

Australia’s oil production peaked in the year 2000 and has declined overall since then (figure 1). Liquid fuels production will continue to decline because production from new domestic projects has not been able to offset declines from currently producing fields.

4-1

Figure 1: Actual (blue) and predicted (red) Australian crude oil production

While Australia’s oil production is already in decline, national consumption has risen steadily by around 20 per cent over the past decade. Australia is a net importer of both crude oil and petroleum products (Figure 2) and the trend towards increasing net imports is set to continue in the coming decades.

Australia oil_production_consumption

Figure 2: Australia’s total oil production and consumption (1992-2014)

Net imports currently account for about 60 per cent of Australia’s consumption, however Australia’s oil self-sufficiency is actually far less than the remaining 40 per cent would suggest. The Carnarvon Basin off Northwest Australia accounts for 72 per cent of total Australian liquids production. Most of this bounty is exported due to the lack of regional refining capacity, the proximity to Asian markets and the ability to demand premium prices for the light, sweet grade of oil produced in the region. Subsequently, the country’s North and Northwest regions completely rely on imports of refined liquid fuel products.

Presently, only 17 per cent of the feedstock used in domestic refineries comes from domestic crude oil, down from 37 per cent a decade ago. Figure 3 illustrates just how little of Australia’s indigenous crude oil is refined into products that meet the end needs of Australia’s citizens and industries.

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Figure 3: Australian liquid fuels supply and usage.

The Australia Senate noted in 2007 that:

‘Australia’s self-sufficiency in oil is expected to decline into the long term as reserves are depleted and because of rising demand.’

 

What’s Really Up With This Business in Libya?

It seems like the world has turned upside down since the beginning of the year. I’m trying to make sense of it all, so I plan to spend a bit of time over the next few weeks discussing the big events; what may have led to them and what might be the outcome. First up….let’s talk about Libya.

When the West decided to intervene in Libya my first thought was, “Of course…Libya has oil”. After all, plenty of humanitarian crises are occurring in other parts of the world and yet they are left alone to sort their own problems out. Oil makes Libya a special case.

However, from politicians and talking heads on TV I was hearing that this was not about oil, because Libya only has about two per cent of the world’s oil production. They claim that they were going into Libya because they had learned their lesson in the 90’s and didn’t want another Kosovo on their hands. Two percent is supposedly nothing in the global oil supply….a mere blip, which the global economy could care less about.

And yet, Libya is a big deal. Why is it that a potential loss of only two per cent of the world’s oil production is cause for expending huge amounts of money launching air strikes against Col Gaddafi’s regime? (With warheads containing depleted uranium no less…. but that’s a whole other story)

When we look at the percentage of European oil imports that come from Libya, the story becomes a lot clearer. More than half a dozen European nations rely on Libyan oil for more than 10 per cent of their oil imports. This then is one obvious reason for the West’s intervention in Libya. Industrialised economies cannot afford to lose access to 10-23 per cent of their oil imports.

Source

But given the relatively small quantity of oil passing from Libya to North America, why is the US so heavily involved? Is it just a matter of the US helping out its NATO allies or is there more to this than meets the eye?

Dr. Paul Craig Roberts, former assistant secretary of US Treasury provides some insight on the revolution in Libya in a recent interview. He states:

In my opinion, what this is about is to eliminate China from the Mediterranean.  China has extensive energy investments and construction investments in Libya.  They are looking to Africa as a future energy source.

The US is countering this by organizing the United States African Command (USAC), which Qaddafi refused to join.

[…]

In my opinion, what is going on is comparable to what the US and Britain did to Japan in the 1930s. When they cut Japan off from oil, from rubber, from minerals like ore; that was the origin of World War II in the pacific. And now the Americans and the British are doing the same thing to China.

The geopolitics of oil is a very interesting subject and occurs very much outside of the spotlight of the mainstream media. It is my opinion that the great world powers are fully aware of the oil shortages upon our doorstep and are manoeuvering to control access to the remaining deposits of conventional oil. What concerns me is how this might play out. What we are now seeing in Libya could be the beginnings of the 21st century’s first great war.

The other interesting story surrounding Libyan oil is that Saudi Arabia pledged to raise production to offset the decline from Libya, and yet Saudi Arabian production remains flat. Could this be an indication that the kingdom actually no longer has the spare capacity to meet the global demand for oil? From the Daily Reckoning:

For better or worse, most of the “spare capacity” burden falls on Saudi Arabia. Saudi princes claim to be able to goose production from 9 million barrels a day to 12 at the drop of a hat.

Never mind that they’ve never done anything like that before, even when oil ran up from $25 to $147 a barrel between 2003-08. The official line – and, therefore, the oil market – still believes it’s true.

Bottom line: “Saudi Arabia can’t make the shortfall from Libyan supplies,” says commodities investing legend and Vancouver veteran Jim Rogers. “They’ve said in the past that they can increase production, but they can’t.”

To me, this is just one more indication that we are very close to, or past the peak in global oil production. If a loss of two per cent of the world’s oil supply cannot be made up by OPEC’s ‘swing producer’, and is cause for military posturing, then surely we are in a desperate place indeed.

What we hear from the media is that this latest run up in prices at the fuel pump is simply a result of speculators and freaked out investors, coupled with typical Easter long weekend price hikes. What they are missing is that the end of cheap oil is here. We have now entered a world of highly volatile liquid fuel prices, and just about anything could happen. Oil production can no longer keep pace with demand and desperate times call for desperate measures. Hold onto your hats, we could be in for a wild ride.

Self-Sufficiency and Resilience – Plans upon Returning to Australia

 

Back in January of this year I wrote a post about Self Sufficiency, Independence and Lifestyle Planning . In it, I explained how I wanted to become less reliant on the current industrial system and to take more control of my own life. I’ve achieved a lot since then, but knowing that we were moving back to Australia in less than a year meant that I put off some changes. Now that we are only about 10 weeks away from returning home, I thought it would be worthwhile revisiting that post; to envisage what I want our new lifestyle to look like and to outline some goals for the next few years.

1. Getting off the Economic Grid

In 2010 I finally paid off the last of my mortgages. Now that I’m no longer paying any interest, my cashflow is healthy and I’m saving a large percentage of my after-tax income. Knowing that we have to buy a car and appliances when we get back, my priority now is to save for those big-ticket items. The last thing I want to do is go into debt to buy depreciating assets.

Upon return to Australia, my income drops but Brendan will be back at work so it should even out. We don’t relish the thought of both being back to full-time work, but at least in the short-term we see that it is necessary. We both have secure jobs for the moment, so we plan to use this opportunity to save like crazy. Comparative to the rest of the world, the Australian economy looks reasonably healthy at present. But in this globally connected world I can see that a number of potential crises could impact Australia quite heavily within the decade. I still think the biggest risks come from the Australian Housing Bubble and the reliance of the Australian economy on China. I anticipate that any crisis in the European and American economies (looking more and more likely) will result in rapidly rising interest rates in Australia. Australian homeowners are already struggling with their mortgages while the cash rate is 4.5%. How will they cope if it increases to 9%? 

Holding cash in an economic environment like this just makes so much sense to me. We are using the current ‘recovery’ to prepare for the hard times we predict will come as the global debt bubble unravels.

2. Reducing Energy Dependence

Cheap energy will not last forever and my family and friends in Australia are already seeing rising prices, especially on the electricity bill. There are a few lifestyle decisions we’ve made which should help us to reduce our energy dependence once we are back in Australia.

Firstly, we are renting a detached townhouse just a 15 minute walk to the city centre. It has any excellent walk score which was really important to me. My daily commute to work will be about 4km each way, so I’ll easily be able to do that by bicycle and Brendan will be able to do the same to his work. By carefully choosing where we wanted to live we can reduce our dependence on a car. We will still buy one car, but I anticipate that it will remain in the garage for much of the time. Removing the requirement to buy a second car also saves us a lot of money.

In selecting what car to buy, we have been referring to the Green Vehicle Guide. It’s an excellent website which rates Australian vehicles based on greenhouse and air pollution emissions. It also provides statistics on how much fuel each vehicle consumes. We are very keen to find a fuel efficient, second-hand car.

We’ll also be using the Government’s energy rating guide when shopping for energy-efficient appliances. Our new home is centrally heated with natural gas and we are hoping that the smaller size will reduce our heating expenses. Otherwise, we plan to rug up in order to avoid using too much energy to heat our living space.

3. Improving Food and Water Security

My first priority once we’ve settled into our new home it to begin stockpiling some food and water for emergencies. Knowing that we can sit out a short distruption to services is very comforting. I would never want to put myself in the position where I had to rush off to the shops in a time of emergency to stock up on food and water. It also makes good economic sense to stock up on more than you need. Food is increasing in cost faster than just about any investment right now and certainly faster than the rate of inflation. When things are on sale, we’ll simply stock up and we’ll buy in bulk every six months or so.

I’ve already identified a food co-op not too far from my house where we can buy bulk-goods without all the packaging you get in the supermarket. It also looks like they stock fresh fruit and vegetables.

We don’t have a lot of room for it, but we intend growing some of our own food. The courtyard we have is not very big, but we’ve been surprised how much we’ve been able to grow in our small courtyard in California. Of course, the climate in California is much more condusive to growing food all year round than Canberra, but I’m sure we’ll learn as we go along.

4. Building Community

It’s important to me to get involved in the community when we get home. We feel like we’ve been in limbo for the last three years, but once we are back in Australia I hope we feel a bit more settled. We already have a lot of friends in Canberra, but I’m very keen to meet more like-minded people as well.

I’m especially excited about checking out SEE-change, the local Canberra community for creating a sustainable future.

I finally feel like things are falling into place. I’m now at the point where I can visualise our new life back in Australia and I’m even starting to get a little excited about the move.

Photo by : jef safi

Weekend Without Oil

If you prefer to walk or bike instead of using a car, enjoy being outside, use reusable bags, avoid plastic bottles, eat meat sparingly or not at all, research makeup and cosmetic products for safety, carry a refillable water bottle, and generally avoid buying crap you don’t need and using the stuff you do have as long as it is useful, then you are well on your way to successfully completing the Weekend Without Oil challenge.

Call to Action

On August 21st and 22nd, commit to these 11 actions!

  1. Walk or ride your bike: Avoid using cars and if you must, always try to carpool. Transportation accounts for 40 percent of our petroleum consumption and is easily one of the biggest areas we need to improve upon.
  2. Enjoy the outdoors: Avoid buying new sporting equipment, since oil makes up nearly 25% of rubber. Footballs or basketballs, for example, can last for many years and used equipment is often just as good and will reduce demand for oil needed to make new rubber.
  3. Use reusable bags: Avoid disposable plastic. Plastic bags are a huge waste for very little benefit. Nearly 10 percent of U.S. oil consumption, approximately 2 million barrels a day, is used to make plastic products alone.
  4. Be conscious about what you eat that weekend: You can reduce oil demand by changing your diet to eat less meat, more local foods that require less transportation and organic food, which doesn’t use petro-based fertilizers.
  5. Don’t buy new make-up that weekend: The majority of cosmetics are petroleum-based, including lip gloss, face powder, nail polish, and more. So avoid buying new make-up products this weekend and research the brands when you purchase in the future.
  6. Drink tap water: Avoid beverages bottled in disposable plastic, they make up nearly 1.5 million tons of plastic waste per year, so get a reusable bottle and fill it up.
  7. Make your electronic gadgets last: Avoid buying new electronics. Electronics take a lot of oil to produce and the gadgets you already have can last much longer than the rate at which new ones are released.
  8. Go to the movies or stream them on Hulu: Avoid buying new DVDs/Blu-Rays, as oil is a key ingredient in their production, packaging and shipping.
  9. Skip buying new clothes that weekend: Swap clothes with friends or check out the local vintage store. The less new clothes you buy the less oil is used in the manufacturing process and transportation.
  10. Head to your local library or read online: Avoid using a printer and buying printed material including daily newspapers. Printing doesn’t just waste paper, nearly 100,000 gallons of ink each day is used on daily newspapers alone.
  11. Spread the word! Get 3 friends to sign the pledge and help raise awareness on ways they can help reduce their dependence on oil-related products.

Who’s in?

Photo by: identity chris is

More content now on Facebook

 

I’m finding lately that I’m doing more reading than writing, and I’m not updating this blog as often as I’d like. I do however, have lots of great links to share and this blog just doesn’t seem to be the right platform for it. I’ve therefore decided to create a new Facebook page. Here’s what it’s about:

Energy depletion, environmental destruction and economic crises are the biggest three issues of our time and they are converging to a point where the next two decades are unlikely to be anything like the last.Here I’ll discuss the great challenges we can expect to experience over the coming decades and provide links to relevant news articles which discuss these issues. I’ll also link to people and organisations doing the good work of moving us towards a more resilient, sustainable and just society.

If you are on Facebook and would like to receive daily links please ‘Like’ this new page. I’d love to create a parallel community over there.

Becoming A Good Human 

What’s your Walk Score?

I’ve lived in quite a few different places in my life. Some places I’ve loved living, and some I couldn’t wait to get away from. The same goes when visiting cities here in the US. I’ve been to a lot of them, but only a few are memorable and enjoyable to visit. What I found interesting was that the places I really connected with all had one thing in common. They were all walkable neighborhoods.

What makes a neighborhood walkable?

  • A center: Walkable neighborhoods have a center, whether it’s a main street or a public space.
  • People: Enough people for businesses to flourish and for public transit to run frequently.
  • Mixed income, mixed use: Affordable housing located near businesses.
  • Parks and public space: Plenty of public places to gather and play.
  • Pedestrian design: Buildings are close to the street, parking lots are relegated to the back.
  • Schools and workplaces: Close enough that most residents can walk from their homes.
  • Complete streets: Streets designed for bicyclists, pedestrians, and transit.

© Urban Advantage and Roma Design

Walk Score is a fantastic website where you can check how walkable your location is. Walk Score is officially supported in the United States, Canada, the U.K., Australia, and New Zealand. At the moment however it seems most accurate in the US, because it doesn’t seem to pick up on transit options in Australia.

I’ve determined the walk scores of some of the places I’ve lived over the years. Not surprisingly, the places I hated living were ‘Car Dependent’ (Walk-score between 0-49). The places I’ve loved to live have been classed as ‘Very Walkable’ (Walk-score between 70-89).

I’ll certainly be checking the walk score of any potential rental properties when we start looking in Canberra next year.

Photo by: Daniel*1977

Peak Oil, Sustainability and Economic Collapse – Oil Zenith resources

I’ve just been made aware of this new website which offers a collection of some of the best resources on the web about peak oil, sustainability and economic collapse. I’ve already included some of these links in my resources list, but this website is something else altogether. I think I could get lost in there for days. Check it out –>

Oil Zenith

Thoughts from the Energy Forum

Last week I went to DC to attend an Energy Forum. I was very excited to go, to hopefully meet some contacts and talk with like-minded people. My experience was….interesting.

I think I expected too much. I figured people would have a clue about why we were all really there. Unfortunately most people in attendance were fairly clueless about the realities of our energy situation. To be fair, they were probably there to learn something, but mostly they were attending because their organisation has mandated energy reductions and they wanted to learn about ways to do that. Industry was there with a variety of ‘ways to fix it’, but really I got a sense that they were getting on board because renewable energy was the ‘next big thing’. They were there to make money, not to build a more resilient future. I don’t know why I am surprised.

Only one speaker mentioned Peak Oil, but he obviously completely misunderstands what Peak Oil really means. He got it so wrong. I’m not exactly sure where he was getting his information but he couldn’t even explain the concept of Peak Oil correctly, let alone discuss the risks in a meaningful way. He basically dismissed the idea that there was anything to worry about. I was frustrated that this was the information attendees were receiving. I broached this with a few people during the break and most people I spoke to thought he didn’t know what he was talking about, so perhaps there were more people aware of what’s really going on.

Thankfully, at the end of the second day, one of the speakers hit the nail on the head. He basically said that while it was great that people were implementing energy efficiency programs and renewable energy projects, no-one was really addressing the real risks. He was fairly blunt and provocative which was great.

I guess what surprised me the most is that I now feel like I know more about this stuff than even so-called ‘experts’. It’s good that I’m at a point where I feel confident in the knowledge I have, but now it feels somewhat lonely with not many people to really talk to about all this stuff. Thanks goodness for you all in blogland!!

I’ve come away with pages and pages of notes and some good contacts though. It was certainly a worthwhile experience, but I now have to battle with this feeling that  anything I do to change the system is pointless. I had a few drinks with people on Friday night who asked why I was in DC. I explained that I was there to attend an energy forum and gave them my ‘elevator speech’ about why we need to reduce our energy dependence. You know what they said? “So you’re a greenie now?” Grrrrr!!! People are clueless. They don’t even want to listen. Our civilisation is not going to change in time.

It’s time to start building lifeboats.

Photo by: Abrilon

The Gulf Deepwater Oil Spill

I haven’t written about it until now, becuase it’s been too horrible to think about. I still have no words to articulate how I feel about this massive disaster.

The news out of the Gulf continues to range from grim to grimmer. Recently, it was revealed that the spill has created an undersea plume of oil ten miles long, and that some of the oil has already entered the loop current and is being carried toward Florida. Then the federal government doubled the area of the Gulf that had been closed to fishing. On Friday, the government increased that area again, to forty-eight thousand square miles. President Barack Obama has called the spill a “massive and potentially unprecedented environmental disaster,” a characterization that, if anything, probably understates the case. ~ The New Yorker

I think the pictures say it all.

Here is the feed showing oil gushing from the bottom of the ocean:

http://mfile.akamai.com/97892/live/reflector:46245.asx?bkup=46260

But the following should be an even clearer conclusion from all that has happened, and that is still unfolding: This is what the end of the oil age looks like. The cheap, easy petroleum is gone; from now on, we will pay steadily more and more for what we put in our gas tanks—more not just in dollars, but in lives and health, in a failed foreign policy that spawns foreign wars and military occupations, and in the lost integrity of the biological systems that sustain life on this planet.

The only solution is to do proactively, and sooner, what we will end up doing anyway as a result of resource depletion and economic, environmental, and military ruin: end our dependence on the stuff. Everybody knows we must do this. Even a recent American president (an oil man, it should be noted) admitted that “America is addicted to oil.” Will we let this addiction destroy us, or will we overcome it? Good intentions are not enough. Now is the moment for the President, other elected officials at all levels of government, and ordinary citizens to make this our central priority as a nation. We have hard choices to make, and an enormous amount of work to do. ~ Post Carbon Institute