Peak Coal - Coming Soon? (The Oil Drum)

[jpak]

http://europe.theoildrum.com/node/2396

The general consensus view on coal supplies has long been that we have hundreds of years of the stuff left, and that oil and gas depletion are the pressing concerns. However, dissenting voices are emerging. Canadian geologist David Hughes recently claimed that "peak coal looks like it's occurred in the Lower 48 (US states)", and the consensus position on coal is also called into serious question by the Coal: Resources and Future Production report soon to be released by the Energy Watch Group in Germany. I present a summary of its findings here.

Reserves

The report highlights that the "proved reserves at year end" published in the most recent BP Statistical Review of World Energy in June 2006 are stated as being for year end 2005, but are actually based on the latest World Energy Council (WEC) assessments, which contain data for the end of 2002.

So our best figures on this are actually over four years old. And our worst figures? Well, some haven’t been updated in 15 years (China) and some in up to 40 years (Vietnam, Afghanistan).

But really the key message in the global data lies in the rate at which reserves estimates have been revised downwards. At Peak Oilers well know, conventional wisdom has it that reserves will increase as more exploration takes place and prices rise. Yet, in truth, estimates for global coal resources have been consistently revised down, and by almost 60% over the past 25 years, from 10 trillion tons hce (hard coal equivalent) in 1980 to around 4.2 trillion tons hce in 2005. Certain countries (including Germany and the UK) have been revised down by over 90% in this period. The UK reported proved recoverable reserves of 145bn tons in WEC 1980, but these were continually revised downwards to reach only 0.22bn tons by the latest report. Cumulative UK production in this period amounted to only approx 1.8bn tons.

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[Vulture]

1. Read the comments attached to the article

There is a lot of good info in the comments people wrote in response to the article, the upshot being that "peak coal" is likely nowhere in sight and that the analysis did not give an accurate perspective of the situation.


As an aside on reserve numbers, in many mining industries (at least the ones I am familiar with) they are routinely under-reported. There is little at risk by doing so (after all, you still have the product to sell whether you announce it ahead of time or not) and there is some upside in that the very perception of constricted supply can drive market prices up, increasing the value of the asset. Also, being very conservative allows for upward revision later if you want to bump the stock price. It is interesting that in Nevada, with the world's second most prolific gold fields after South Africa, nominally off-reserve gold production accounts for almost half of the total output.