Cumulative Oil Consumption by the Human Race
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Transcript of Cumulative Oil Consumption by the Human Race
1
J. David HughesGeological Survey of Canada
GEOLOGICAL SURVEY OF CANADACALGARY
COMMISSION GÉOLOGIQUE DU CANADACALGARY
Sponsored byThe City of North Vancouver
Greater Vancouver Regional DistrictCapilano College Global Stewardship Program
November 26-27, 2006
Peak Oil and the Future of Energy
- Patterns of Energy Consumption and Production:
Points to be covered:
- Magnitude and Distribution of Remaining Energy Reserves and Resources:- Implications for security of energy supply
- Where does Canada Stand in All This?
- Some thoughts on the way forward: Challenges and Changes for a Sustainable Energy Future
- Forecasts - always arguable and debatable: -“economists vs. geologists”-“geologists vs. geologists”-“optimists vs. pessimists”
- History - what actually happened “Hindsight”
2
0
2000
4000
6000
8000
10000
Mill
ion
Tonn
es O
il Eq
uiva
lent
1965 1970 1975 1980 1985 1990 1995 2000 2005Year
0
2000
4000
6000
8000
10000
Mill
ion
Tonn
es O
il Eq
uiva
lent
1965 1970 1975 1980 1985 1990 1995 2000 2005Year
Asia PacificAfricaMiddle EastFormer Soviet UnionEuropeS. & Cent. AmericaNorth America
World Primary Energy Consumption: 1965-2005By Region By Fuel
151%
218%
292%
93%600%
439%787%
62%
350%87%
91%
(data from BP Statistical Review of World Energy, 2006)
173% increase in WorldConsumption 1965-2005;
2005 increase = 2.7%
Highest growth in 2005 = Asia Pacific 5.8%; Coal 5.0%
Coal
Gas
Oil
NuclearHydro
World Energy Consumption 1990-2030 in Three Economic Cases (EIA, 2006)
0
100
200
300
400
500
600
700
800
900
1990 1995 2000 2005 2010 2015 2020 2025 2030Year
Qua
drill
ion
Btu
High Economic CaseReference Economic CaseLow Economic Case
+40%
+85%
+60%
ForecastsHistory
(History: BP Statistical Review of World Energy, 2006;Forecast: Energy Information Administration International Energy Outlook, 2006)
Projections(2005-2030)
3
0
100
200
300
400
500
600
700
800
Qua
drill
ion
Btu
2003 2008 2013 2018 2023 2028Year
By Fuel
Gas +92%
(data from Energy Information Administration International Energy Outlook, June, 2006)
Hydro/Renewables +91%
0
100
200
300
400
500
600
700
800Q
uadr
illio
n B
tu
2003 2008 2013 2018 2023 2028Year
By Economic Development
Non-OECD Countries +121%(82% of 2006 World Population)
OECD Countries +32%(18% of 2006 World
Population)
Forecast Growth In World Energy Consumption, 2003-2030(EIA, 2006, Reference Economic Case)
72% increase in WorldConsumption (2.0%/year)
Oil +48%
Coal +95%Nuclear +31%
43%
56%
- Hydrocarbons provided 88% of the world’s primary energy in 2005
Summary
- Forecasts suggest that 86.5% of a greatly expanded energy demand will continue to be provided by hydrocarbons in 2030
- Most of the balance of energy supply will be provided by large hydro and nuclear – sources with their own environmental problems
- The Question is: IS THIS SUSTAINABLE?
…… Lets look in more detail at oil, gas and coal
4
- The largest source of energy in the world (36.4% of primary energy consumption in 2005)
OIL
- The ultimate fuel for international trade – easily moved by tanker and pipeline
- Highly subject to Geopolitics – the OPEC cartel has three quarters of remaining reserves and the only remaining spare production capacity – terrorism or natural disasters like Hurricanes Katrina and Rita can cause extreme price volatility
- Alternatives to oil have seen similar price spikes over the past several years (natural gas, coal and uranium)
0
10
20
30
40
50
60
70
80
90
100
Cum
ulat
ive
Con
sum
ptio
n as
Per
cent
age
of T
otal
Con
sum
ed
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000Year
Cumulative Oil Consumption by the Human Race as a Percentage of Total Consumption through Yearend 2005
(Source of data: BP Statistical Review of World Energy, 2006)
1% 19225% 1946
10% 1958
20% 1968
30% 1974
40% 1979
50% 1984
60% 1989
70% 1993
80% 1998
90% 2002
50% of the OILConsumed by the
Human RaceUsed Since 198490% of the OIL
Consumed by theHuman Race
Used Since 1958
1085 Billion barrels
Consum
ed
5
0
10
20
30
40
50
60
70
80
90
Mill
ion
Barr
els p
er D
ay
1965 1970 1975 1980 1985 1990 1995 2000 2005Year
Consumption
Former Soviet UnionOPECNon-OPEC
0
10
20
30
40
50
60
70
80
90M
illio
n Ba
rrel
s per
Day
1965 1970 1975 1980 1985 1990 1995 2000 2005Year
Production
Former Soviet UnionOPECNon-OPEC
World Oil Production and Consumption 1965-2005
F.S.U.14%
Non-OPEC164%
F.S.U.144%
OPEC135%
Non-OPEC182%
(data from BP Statistical Review of World Energy, 2006)
164% increaseup 1.3% 2005
over 2004
OPEC 488%
84%
11%
5%
44%
42%
14%
Forecast World Oil Consumption 2003-2030in Three Economic Cases (EIA, 2006)
020406080
100120140160180200220240260280
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Year
Qua
drill
ion
Btu
High Economic CaseReference Economic CaseLow Economic Case
+29%
+71%
+48%
(data from Energy Information Administration International Energy Outlook, June, 2006)
Projections
6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Perc
enta
ge S
hare
of R
emai
ning
Wor
ld O
il R
eser
ves
1980 1985 1990 1995 2000 2005Year
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
Billi
on B
arre
ls
1980 1985 1990 1995 2000 2005Year
World Conventional Oil and Oil Sands* Reserves 1980-2005
(data from BP Statistical Review of World Energy, 2006)
OPE
CN
on-OPE
C
65%75.2%
23%14.6%
12%
10.2%
SaudiArabia
Iraq
IranFormer Soviet Union
Other Non-OPEC
Former Soviet Union
Non-OPEC
OPECKuwait
United Arab EmiratesOther OPEC
Other North AmericaU.S.A.
* Includes Oil Sands Reserves “Under Development”
0
100
200
300
400
500
600
700
800
Bill
ion
Bar
rels
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004Year
ImplicationSome of the422 Gbbl or
113% increasein reported
reserves overthe period may
be spurious
Reserves inflatedby 285 Gbblsor 69% over
five-year periodin 1984-1988
without majornew discoveriesQUOTA WARS
(data from BP Statistical Review of World Energy, 2006)
These Countries also Produced 181.6 Billion Barrels over the Period
Oil Reserve Reporting in Selected OPEC Countries, 1980-2005,Representing 88% of 2005 OPEC Reserves and 66% of World Reserves
Saudi Arabia
Venezuela
Kuwait
Iraq
Iran
United Arab Emirates
7
0
10
20
30
40
50
60
70
80
90Y
ears
of P
rodu
ctio
n at
Cur
rent
Rat
es
OPEC Non-OPEC F.S.U. Total World
World Oil Reserve to Production Ratio in Years IncludingOil Sands* and Possibly Spurious post-1984 OPEC Reserves
1990199119921993199419951996199719981999200020012002200320042005
(data from BP Statistical Review of World Energy, 2006)* Includes Oil Sands Reserves “Under Development”
The Growing Gap between Production and Discovery of Regular Conventional Oil (1930-2050)
0
10
20
30
40
50
60
1930 1950 1970 1990 2010 2030 2050Year
Bill
ion
Bar
rels
per
Yea
r Past DiscoveryFuture DiscoveryProduction
Past discoveries have been backdated with revisionsfrom ExxonMobil (2002) to reflect “Reserve Growth”
(from Campbell, personal communication, September 2006)
World Discoveries Peak in 1965
Productionhas ExceededDiscoveriessince 1984
8
WHEN?- Debatable, because of the variables,
World Oil Production Peak
BUT IT IS HIGHLYLIKELY TO HAPPEN
DEPENDS ON:
- ULTIMATE RECOVERABLE RESERVES - a function of:- Mother Nature’s Endowment (total discovered and
undiscovered resources)- Technology and Price (determines economics)- Reserve Appreciation (Growth) in known pools (through
more drilling, better technology and higher prices)
- RATE OF CONSUMPTION - a function of:- Price (controls economic growth and
encourages/discourages conservation)- Infrastructure for production- Depletion rates of producing pools
-70
-60
-50
-40
-30
-20
-10
0
Perc
enta
ge B
elow
Pea
k Pr
oduc
tion
Liby
a 19
70U
SA 1
970
Oth
er M
iddl
e Ea
st 1
970
Ven
ezue
la 1
970
Kuw
ait 1
972
Iran
197
4R
oman
ia 1
977
Indo
nesi
a 19
77Tr
inid
ad &
Tob
ago
1978
Iraq
197
9Br
unei
197
9Tu
nisi
a 19
80Pe
ru 1
982
Cam
eroo
n 19
85O
ther
Eur
ope
& E
uras
ia 1
986
Rus
sian
Fed
erat
ion
1987
Oth
er A
sia
Paci
fic 1
993
Egyp
t 199
3Sy
ria
1995
Gab
on 1
996
Arg
entin
a 19
98U
nite
d K
ingd
om 1
999
Col
ombi
a 19
99U
zbek
ista
n 19
99R
ep. o
f Con
go 1
999
Aus
tral
ia 2
000
Om
an 2
001
Nor
way
200
1Y
emen
200
2O
ther
S. &
C. A
mer
ica
2003
Turk
men
ista
n 20
03V
ietn
am 2
004
Indi
a 20
04M
alay
sia
2004
Den
mar
k 20
04O
ther
Afr
ica
2004
Mex
ico
2004
Can
ada
2004
Country
Year of Peak Production and Percentage 2005 Production is below Peak
20 Countries Peak Since 1995
13 Countries PeakSince 2000
= OPEC Countries
(data from B.P. StatisticalReview of World Energy, 2006)
63% of 2005Production was from Countries Past Peak
9
0
5
10
15
20
25
30
35
Bill
ion
barr
els
per
yea
r
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050Year
Campell's 2006 Hydrocarbon Liquids Production and Forecast 1930-2050
Natural Gas Liquids Peak 2030Polar Oil Peak 2030Deep Water Oil Peak 2011Heavy Oil Peak 2030Other Peak 2004Russia Peak 1987Middle East Gulf Peak 2005Europe Peak 2000US 48 P k 1970
Combined LiquidsPeak 2010
(89 MMbbls/day)
(C.J.Campbell, personal communication, September, 2006)
EIA Projections (Oct 2005):2004 – 82.5 MMbbls/day2005 – 83.6 MMbbls/day2006 – 85.4 MMbbls/day
0
5000
10000
15000
20000
25000
30000
35000
Tho
usan
d B
arre
ls p
er D
ay
OPECProduction 4Q
2002
OPEC SurplusCapacity 4Q
2002
OPECProduction
August 2006
OPEC SurplusCapacity
August 2006
OPEC's Production plus Surplus Capacity December 2002 versus August 2006
Other LiquidsIraqVenezuelaUAESaudi ArabiaQatarNigeriaLibya Kuwait Iran Indonesia Algeria
(Data from U.S. Energy Information Administration, 2003 and September, 2006)
6.3 MMbbls/day
28.4 MMbbls/day
34.08 MMbbls/day
~1.45 MMbbls/day
10
Published Estimates of Conventional World Oil Ultimate Recovery
0 0.5 1 1.5 2 2.5 3 3.5 4Trillions of Barrels
USGS 5% 2000USGS Mean 2000USGS 95% 2000Campbell 1995Masters 1994Campbell 1992Bookout 1989Masters 1987Martin 1984Nehring 1982Halbouty 1981Meyerhoff 1979Nehring 1978Nelson 1977Folinsbee 1976Adams & Kirby 1975Linden 1973Moody 1972Moody 1970Shell 1968Weeks 1959MacNaughton 1953Weeks 1948Pratt 1942
Source: USGS and Colin Campbell
(from Wood, USGS, 2000)
Consensus Estimate~2000 Gigabarrels
Which USGS estimate to believe?
0
10
20
30
40
50
60
70
80
1930 1950 1970 1990 2010 2030
Gb
Past DiscoveryFuture DiscoveryUSGS F95USGS MeanUSGS F5
(from Campbell et al, 2005)
Future discoveryRates for the
EIA’s ReferenceCase Forecast
Campbell’s (2005) Estimate of Future Discovery Ratesgiven USGS P5, P50 and P95 estimates
11
0
20000
40000
60000
80000
100000
120000
140000O
il Pr
oduc
tion
(tho
usan
d ba
rrel
s per
day
)
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070
Year
Forecast of World Peak Oil Production Using EIA Methodology Assuming USGS (2000) P50 Ultimate Recoverable of 3003 Billion Barrels and 1.4%
Yearly Growth in Consumption
History
(Source of data: BP Statistical Review of World Energy, 2006; Wood, USGS, 2000; EIA IEO, 2006)
EIA (2006) Reference CaseGrowth in Consumption
Forecast
EIA (2005) reference forecast to 2030
Implication
EIA forecast peak – 2040(P50 - 82% consumed)
>20 Years
Assumptions:Ultimate Recoverable 3 Trillion barrels
2018 – 50% Consumed
93% of all oil consumed on Earthhas been consumed since 1950
10 Year R/P Decline
0
20
40
60
80
100
120
140
Mill
ion
barr
els p
er D
ay
2003 2008 2013 2018 2023 2028Year
Consumption
0
20
40
60
80
100
120
140
Mill
ion
barr
els
per
Day
2003 2008 2013 2018 2023 2028Year
ProductionUnconventionalNon-OECDOECDOPEC
OECD -7%
OPEC +43%
Non-OECD +67%
Unconventional +539%
OECD +23%(18% of 2006 Population)
Non-OECD +84%(82% of 2006 Population)
EIA World Oil Production and Consumption Forecast 2003-2030(Reference Economic Case)
(data from Energy Information Administration International Energy Outlook, June, 2006)
Range of Peak Productionestimates of Duncan,
Laherrere, Campbell, Bakhtiari,Ivanhoe, Deffeyes and others
48% increase1.4%/year
61%51%
12
00.5
11.5
2
2.53
3.5
1970 1975 1980 1985 1990 1995 20000
0.20.40.60.8
11.21.41.6
1969 1974 1979 1984 1989 1994 19990
0.20.40.60.8
11.21.41.61.8
1949 1957 1965 1973 1981 1989 1997
0
0.1
0.2
0.3
0.4
0.5
0.6
1975 1979 1983 1987 1991 1995 19990
0.1
0.2
0.3
0.4
0.5
1986 1989 1992 1995 1998 20010
0.1
0.2
0.3
0.4
0.5
0.6
1986 1989 1992 1995 1998 2001
PeakAt 42%Produced
PeakAt 47%Produced
PeakAt 42%Produced
PeakAt 30%Produced
PeakAt 45%Produced
PeakAt 50%Produced
Mill
ion
Bar
rels
per
Day
Somotlar, Russia Romashkino, Russia Prudhoe Bay, Alaska
Forties, United Kingdom Oseberg, Norway Gullfaks, Norway
Peaking Profiles of Giant and Super Giant Fields at 30-50%of Total Production Suggests Peaking of World Production at82% of Ultimate Recoverable Consumed is Wishful Thinking
Year(data from Simmons, “The Saudi Arabia Oil Miracle”, February, 2004)
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Year of Peak Production
Ivanhoe 1997Edwards 1997
IEA WEO 1998USGS Magoon 1999
Campbell 1999Bartlett 2000
EIA USGS P50 2000*USGS P50 2000USGS P95 2000Laherrere 2000Campbell 2001
Duncan 2001Deffeyes 2001
Smith 2002Nemesis 2002
Laherrere 2002Laherrere 2003Bakhtiari 2004Campbell 2004Deffeyes 2005
Campbell 2005Campbell 2006
(Source Bentley, 2002; Wood, USGS, 2000;*EIA IEO, 2006, reference case demand growthof 1.4%/year and USGS P50 2000 estimate and peaking at World R/P of 10 years; Oil and Gas Journal, 2004; and others)
Post 1997 Estimates of the Time of Peak World Oil Production
ConsensusPeak 2010
AssumingSymmetrical Peak
Based onUSGS 2000
UltimateRecoverableP50 and P95
EstimatesPeak at 82% of Ultimate Recoverable Consumed
Includes Non-Conventional Oil
13
01234
1965 1975 1985 1995 2005
Year
Canada
01234
1965 1975 1985 1995 2005
Year
Mexico
0
5
10
15
20
1965 1975 1985 1995 2005
Year
U.S.A.
North American Oil Consumption and Movements: 1965-2005
Production(down 40%from Peak)
Net Imports(67% of 2005consumption)
(data from BP Statistical Review of World Energy, 2006)
Peak1970
Consumption(up 79%)
Mill
ion
Bar
rels
per
Day
Consumption up 555%Consumption up 101%
Net Exports
Net Exports
Production(up 231%)
Production(up 938%)
0
5
10
15
20
25
30
35
40
45
50
Yea
rs o
f Pro
duct
ion
at C
urre
nt R
ates
U.S.A. Canada Mexico North America
North America Reserve to Production Ratio in Years Including Oil Sands* 1990-2005
1990199119921993199419951996199719981999200020012002200320042005
(data from BP Statistical Review of World Energy, 2006)* Includes Oil Sands Reserves “Under Development”
14
0
500
1000
1500
2000
2500
3000
Tho
usan
d ba
rrel
s pe
r D
ay
1985
/07
1987
/07
1989
/07
1991
/07
1993
/07
1995
/07
1997
/07
1999
/07
2001
/07
2003
/07
Month
Liquids ProductionPentanes PlusCondensateBitumenSyntheticMedium and LightHeavy
0
500
1000
1500
2000
2500
3000
Tho
usan
d ba
rrel
s pe
r D
ay
1985
/07
1987
/07
1989
/07
1991
/07
1993
/07
1995
/07
1997
/07
1999
/07
2001
/07
2003
/07
Month
Crude Imports
Canadian Oil Production and Imports 1985-2005(12 month centered moving average)
(data from Statistics Canada, October, 2005)
Imports up 226%Production up 59%
0
200
400
600
800
1000
1200
1400
1600
1800
Thou
sand
bar
rels
per
Day
1985 1988 1991 1994 1997 2000 2003
Year
Crude Imports
0
200
400
600
800
1000
1200
1400
1600
1800
Thou
sand
bar
rels
per
Day
1985 1988 1991 1994 1997 2000 2003
Year
Total Exports
Imports up 226%Exports offset
by Imports
Net Exports
Exports up245%
Canadian Oil Imports and Exports 1985-2005
(data from Statistics Canada, October, 2005, and BP Statistical Review of World Energy, 2005)
15
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8M
illio
n B
arre
ls p
er D
ay
2000 2003 2006 2009 2012 2015 2018 2021 2024Year
Supply Push Scenario
Eastern Canada
WCSB Condensate
WCSB Conventional Heavy
WCSB Conventional Light
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2000 2003 2006 2009 2012 2015 2018 2021 2024Year
Techno-Vert Scenario
Canada Scenarios of Oil Production Excluding Oil Sands (NEB, 2003)
Peak 2006 Peak 2005
(data from National Energy Board, July, 2003)
- The Oil Sands cannot significantly offset declines in world production because of the lead times and capital investment required. Massive expansions in the Oil Sands and Venezuelan Orinoco extra-heavy oil belt could increase combined production from 1.74 million barrels per day at present to as much as six million barrels per day by 2025, which is only 5% of EIA forecast World Demand in 2025.
Yes, But We’ve Got theOIL SANDS – More Oil than Saudi Arabia!
(1CERI report 2003)
- Oil from the oil sands is very energy intensive – Forecast four- to five-fold growth to 2025 will require between 1.6 and 2.3 bcf/day of natural gas, which is approximately equivalent to the planned maximum capacity of the MacKenzie Valley pipeline of 1.9 bcf/day, or about one-fifth of forecast Canadian domestic consumption.
- Expansion of capacity is limited by natural gas supply and natural gas price, which could destroy economics if there are shortfalls in supply, barring widespread application of non-thermal processes, or switching to alternative fuels.
- Expansion of capacity is limited by water supply (1need average of 1-2 barrels of make-up water for every barrel of oil, depending on recovery method and technology), let alone future expansion unless technologies to reduce water consumption and/or further recycle water can be employed.
- Expansion of bitumen export capacity may also be limited by projected shortfalls of condensate/light crude diluent for blending which are forecast to occur in the 2004-2006 timeframe (National Energy Board, 2003), requiring other alternatives such as synthetic crude or conventional light oil.
16
10 Km
Current Developments are Already on aMassive Scale Let Alone Quadrupiling Production
0
0.5
1
1.5
2
2.5
3
3.5
4
2000 2003 2006 2009 2012 2015 2018 2021 2024Year
Techno-Vert ScenarioOil Sands In SituOil Sands MiningEastern CanadaWCSB CondensateWCSB HeavyWCSB Light
0
0.5
1
1.5
2
2.5
3
3.5
4
Mill
ion
Bar
rels
per
Day
2000 2003 2006 2009 2012 2015 2018 2021 2024Year
Supply Push Scenario
Canada Scenarios of Oil Production Including Oil Sands (NEB, 2003)
(data from National Energy Board, July, 2003)
Oil Sands2000-2025
+400%
Oil Sands2000-2025
+330%
In Situ +285%
Mining +503%
3.1% of EIA forecast 2025 World demand
In Situ +252%
Mining +400%
17
0
2
4
6
8
10
12
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029Year
Mill
ion
Bar
rels
per
Day
Central and South America Africa Middle East Asia OECD Europe Other North America United States
9.7% of forecast 2030 World Oil Consumption
(data from Energy Information Administration, International Energy Outlook, June, 2006)
Canada +350%
South and Central America (mainly Venezuela) +360%
Overall Growth2003-2030 +539%
EIA World Unconventional Oil Production Forecast 2003-2030(Reference Economic Case, 2006) – includes Biodiesel, Ethanol,
Coal-to-liquids, Gas-to-liquids, Oil sands, Extra Heavy Oil and Oil shale
Asia +950%
United States +650%
SAIC / MISI(from Hirsh et al, 2005)
Hirsh et al, 2005
18
"Old" Con
ventio
nal Oil
"New" C
onve
ntional
Oil
Heavy
Oil
Extra H
eavy
Oil
Gas to
Liquids
Tar San
ds
Coal L
iquefacti
on
Biodies
el
Ethanol
Shale
Oil
Biodies
el
Ethanol
Source
Energy Profit Ratio for Liquid Hydrocarbons
Ene
rgy
Ret
urn
onE
nerg
y In
vest
ed
High
Low
EnergySource
(EROEI > 1)
EnergySink
(EROEI < 1)
Increasing Energy Input
(biodiesel, ethanol from University of MinnesotaProceedings of National Academy of Sciences
July, 2006, and Pimentel and Patzek, 2005,Nat Resources Research (Vol. 14:1, 65-76))
Universityof Minnesota
Pimenteland Patzek
In P
lace
Res
ourc
es
Oil Shale Oil Sands Heavy Oil,EnhancedRecovery
Light Oil,PrimaryRecovery
Energy Profit Ratio versus In Place Oil Resources(Energy Return on Energy Invested)
Energy Profit (EROEI > 1)
Energy Sink (EROEI < 1)
The Issue is Not Resources – its Deliverability – How FastCan These Resources be Converted into Supply in theFace of Growing Demand?, and at What Cost? We arenot running out of OIL – there will be oil in 100 millionyears - it just won’t be recoverable at an Energy Profit
19
- The third largest source of energy in the world after oil and coal (23.5% of primary energy consumption in 2005)
GAS
- Largely landlocked when it comes to international trade, unlike oil and coal –6.9% of World consumption (6.7 Tcf) was moved by Liquefied Natural Gas (LNG) in 2005
- Natural Gas is difficult to store by comparison to Oil and Coal (approximately 3.2 Tcf of “working” storage in the U.S. or 50 days of U.S. Supply) - North America is a Continental gas market- about 2.9% of North American (ie. U.S.A.) consumption was moved as LNG in 2005
- LNG entails an energy loss of between 15 and 30% for liquefaction, transportation and regasification, as LNG must be cooled to –165 degrees Celsius for movement by ship, with attendant greenhouse gas emissions
- LNG is subject to Geopolitics as three-quarters of remaining natural gas reserves are located in the Former Soviet Union and the Middle East, as well as the NIMBY syndrome in locating new receiving terminals in North America because of perceived dangers by the general public
0
50
100
150
200
250
Billi
on c
ubic
feet
per
Day
1970 1975 1980 1985 1990 1995 2000 2005Year
0
50
100
150
200
250
Billi
on c
ubic
feet
per
Day
1970 1975 1980 1985 1990 1995 2000 2005Year
Asia PacificAfricaMiddle EastFormer Soviet UnionEuropeS. & Cent. AmericaNorth America
World Gas Production and Consumption: 1970-2005Production Consumption
15%
2220%
1389%
311%
191% 671%
12%
(data from BP Statistical Review of World Energy, 2006)
5167%
606%363%
219%
1419%
2527%
168% increase in Consumptionup 2.3% 2005 over 2004
20
Forecast World Gas Consumption 2003-2030in Three Economic Cases (EIA, 2006)
020406080
100120140160180200220240
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Year
Qua
drill
ion
Btu
High Economic CaseReference Economic CaseLow Economic Case
+67%
+120%
+92%
(data from Energy Information Administration International Energy Outlook, June, 2006)
Projections
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Perc
enta
ge o
f Rem
aini
ng R
eser
ves
1980 1983 1986 1989 1992 1995 1998 2001 2004Year
0
1000
2000
3000
4000
5000
6000
7000
Tri
llion
Cub
ic F
eet
1980 1983 1986 1989 1992 1995 1998 2001 2004Year
World Gas Reserves: 1980-2005
(data from BP Statistical Review of World Energy, 2006)
Middle East
FormerSoviet Union
AfricaAsia Pacific
S. & C. AmericaEurope
North America
FormerSoviet Union
Middle East
Asia Pacific
AfricaEurope
S. & C. AmericaNorth America
29%
38%
40%
32%
4%12%
21
0
20
40
60
80
100
120Y
ears
of P
rodu
ctio
n at
Cur
rent
Rat
es
North America Europe Rest of World Total World
World Natural Gas Reserve to Production Ratio in Years1990-2005
1990199119921993199419951996199719981999200020012002200320042005
(data from BP Statistical Review of World Energy, 2006)
0
5
10
15
20
25
Bill
ion
barr
els
per
yea
r
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050Year
Campell's 2006 Gas Production and Forecast 1930-2050
Unconventional GasConventional Gas
Peak/PlateauConventional Gas
2025
(C.J.Campbell, personal communication, September, 2006)
Peak of All Gas2045
22
0
10
20
30
40
50
60B
illio
n ba
rrel
s pe
r y
ear
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050Year
Campell's 2006 Total Hydrocarbon Production and Forecast 1930-2050
Unconventional GasGas Peak/Plateau 2025Natural Gas Liquids Peak 2030Polar Oil Peak 2030Deep Water Oil Peak 2011Heavy Oil Peak 2030Other Peak 2004Russia Peak 1987Middle East Gulf Peak 2005Europe Peak 2000US-48 Peak 1970
Total HydrocarbonPeak 2010
(C.J.Campbell, personal communication, September, 2006)
Liquids Peak 2010
0
10
20
30
40
50
60
70
Bill
ion
cubi
c fe
et p
er D
ay
1985 1990 1995 2000 2005
Year
United States
05
101520
Bill
ion
cubi
c fe
et p
er D
ay
1985 1990 1995 2000 2005
Year
Canada
Exports
Consumption
North American Gas Production and Movements: 1985-2005
(data from BP Statistical Review of World Energy, 2006)
Total Consumption
Imports
Production
Canada: 121% increase inProduction 1985-2005;Production down 1.3%
since 2002
51%
PeakProduction
2001
PeakProduction
2002
23
0
10
20
30
40
50
60
70
80Y
ears
of P
rodu
ctio
n at
Cur
rent
Rat
es
U.S.A. Canada Mexico North America
North America Natural Gas Reserve to Production Ratio in Years 1990-2005
1990199119921993199419951996199719981999200020012002200320042005
(data from BP Statistical Review of World Energy, 2006)
63%
24%
13%
CONSUMED
PROVENRESERVES(9.4 years)
RESOURCES(4.9 years)
15%
8%
77%
PROVENRESERVES(9.4 years)RESOURCES
(4.9 years)HOPED FOR:
UNDISCOVEREDRESOURCES
(46.9 years)
Canada’s Remaining Discovered and Undiscovered ConventionalMarketable Natural Gas Resources According to NEB (2006)Estimates including Lifetime assuming 2005 Production Rates
Discovered ResourcesRemaining Discovered
and Undiscovered Resources(Resource estimates from National Energy Board, March, 2006, Report 2006-A, as at December 31, 2004;
2004 Proven Reserves from CAPP, 2006; 2005 Production from Statistics Canada, 2006)
24
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
Res
erve
s (T
cf)
1996 1998 2000 2002 2004Year
0123456789
1011121314151617
Prod
uctio
n (b
cf/d
ay)
1996 1998 2000 2002 2004
Year
0
2000
4000
6000
8000
10000
12000
14000
16000
Num
ber
of G
as W
ells
Dri
lled
1996 1998 2000 2002 2004Year
Canada’s Exploration Treadmill – more and more drillingto find less and less gas
(Drilling Statistics: Canadian Association of Petroleum Producers;Marketable Production: Statistics Canada; Remaining Reserves: Canadian Association of Petroleum Producers)
Wells Drilled Production Reserves
2005 Estimated
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
MM
cf/d
ay
2001 2005 2009 2013 2017 2021 2025Year
Techno-Vert Scenario
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
MM
cf/d
ay
2001 2005 2009 2013 2017 2021 2025Year
Supply Push Scenario
WCSB Solution WCSB Existing Gas WCSB Additions Sable
NEB, July, 2003, Deliverability Scenarios from Existing Gas Sources
Peak 2001 Peak 2001
25
Annual Canadian Marketable Natural Gas Production by Month January 1991 - July 2006
(12 month centered moving average)
3.5
4
4.5
5
5.5
6
6.5
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Month
Tri
llion
cub
ic fe
et p
er Y
ear
(Source of data Statistics Canada, October, 2006)
GrowthDecline/
StagnationPeak/
Plateau
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
MM
cf/d
ay
2001 2005 2009 2013 2017 2021 2025Year
Supply Push Scenario
WCSB Solution WCSB Non-Associated WCSB AdditionsSable Newfoundland PanukeMackenzie NS Offshore BC OffshoreLNG Imports NB LNG Imports Quebec
NEB, July, 2003, Deliverability Scenarios from Existingand Proposed Conventional Gas Sources
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
MM
cf/d
ay
2001 2005 2009 2013 2017 2021 2025Year
Techno-Vert Scenario
Peak 2001 Peak 2001
26
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000M
Mcf
/day
2001 2005 2009 2013 2017 2021 2025Year
Supply Push Scenario
WCSB Solution WCSB Non-Associated WCSB AdditionsSable Newfoundland PanukeMackenzie NS Offshore BC OffshoreLNG Imports NB LNG Imports Quebec CBM
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
MM
cf/d
ay2001 2005 2009 2013 2017 2021 2025
Year
Techno-Vert Scenario
NEB, July, 2003, Deliverability Scenarios from Existingand Proposed Conventional Gas Sources Including Coalbed Methane
CBM
CBM
Peak 2010 Peak 2015
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Tri
llion
Cub
ic F
eet p
er Y
ear
1997 1999 2001 2003Year
U.S. Coalbed Methane Production
ColoradoNew MexicoAlabamaOther States
New MexicoPeak 1997
ColoradoPeak – Plateau
2002 - 2004
Other States Peak 2003
65%
of U
.S. C
BM
Pro
duct
ion
(Source of data Energy Information Administration, 2006; National Energy Board, July, 2003)
8.5% of U.S. Production16 Tcf recovered to date
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Tri
llion
Cub
ic F
eet p
er Y
ear
2003 2007 2011 2015 2019 2023Year
NEB Canadian CBM Production Scenarios
Supply-Push - 11.8 Tcf by 2025Techno-Vert - 19.5 Tcf by 2025
23% of Canadian production
Actual Coalbed Methane Production in the U.S. 1997-2004 Comparedto NEB Coalbed Methane Production Scenarios 2003-2025
AlabamaPeak 1998
We areHere
27
0
2000
4000
6000
8000
10000
12000
MM
cf/d
ay2002 2006 2010 2014 2018 2022
Year
Techno-Vert Scenario
0
2000
4000
6000
8000
10000
12000
MM
cf/d
ay
2002 2006 2010 2014 2018 2022Year
Supply Push Scenario
(data from National Energy Board, July, 2003)
53% growth in domesticconsumption 2002-2025
53% growth in domesticconsumption 2002-2025
NEB, 2003, Canadian Domestic Natural Gas DemandScenarios by Sector, 2002-2025
Industrial
ElectricityResidentialCommercialOther
Industrial
ElectricityResidentialCommercial
Other
+343%2002-2025
+200%2002-202523%
16%
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
Tri
llion
Cub
ic F
eet/Y
ear
1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
Electric PowerResidentialCommercialGas Production/DeliveryIndustrial
-16.8%
-22.2%Demand Destruction
Due to Price
-2.9%
U.S. Gas Consumption by Sector, 1997-2005
(data from Energy Information Administration, 2006)
Overall Decline-3.4% 1997-2005
-4.5%
+42.6%Due to Major Capacity Expansion
Peak Consumption 2000
28
0
5
10
15
20
25
30T
rilli
on c
ubic
feet
per
yea
r_
2005 2010 2015 2020 2025 2030Year
U.S. Natural Gas Supply Forecast by Source 2005-2030(Energy Information Administration)
Lower 48 - Onshore
Canada Imports
Liquefied NaturalGas +580%
Lower 48Production
Up 9.5%2005-2014
Lower 48Production
Declines 1.5%2014-2024
(data from Energy Information Administration Annual Energy Outlook, 2006)
24.9 Tcf
Supply Peaks at 26.5 Tcf15% Total Growthfrom 2005-2030
Lower 48 - Offshore
Alaska
16
17
18
19
20
Tri
llion
Cub
ic F
eet p
er Y
ear
1993 1995 1997 1999 2001 2003 2005Year
U.S. Dry Gas Production1993-2005
(data from U.S. Energy Information Administration, April, 2006)
2014 EIA Forecast
0
5000
10000
15000
20000
25000
30000
Num
ber
of S
ucce
ssfu
l Gas
Wel
ls D
rille
d
1993 1995 1997 1999 2001 2003 2005Year
U.S. Gas Wells Drilled1993-2005
The U.S. Gas Exploration Treadmill
ProductionPeak
July 2001
29
0
1
2
3
4
5
6
7
8
9
Tcf/Y
ear
2005 2008 2011 2014 2017 2020 2023
Year
Techno-Vert Scenario
0
1
2
3
4
5
6
7
8
9Tc
f/Yea
r
2005 2008 2011 2014 2017 2020 2023Year
Supply Push Scenario
(data from National Energy Board, July, 2003,and EIA Annual Energy Outlook, 2006)
Shortfall
Net Available for Exports
Domestic Consumption
Total ForecastDomestic Production
Requirement:Domestic Demand
Plus ForecastEIA Exports
Canadian Shortfalls in Gas Supply Given Domestic Production Scenariosand Forecast EIA (AEO 2006) Reference U.S. Import Requirements
Note: Forecast Canadian LNG Imports areExcluded from Domestic Production
1.1 TcfNet Available for Exports
Domestic Consumption
Total ForecastDomestic Production
0
5
10
15
20
25
30
35
Tcf/Y
ear
2005 2009 2013 2017 2021 2025Year
Supply Push Scenario
Liquefied Natural GasCanada ShortfallCanada ImportsAlaskaLower 48
(data from Energy Information AdministrationAnnual Energy Outlook, 2006, and National Energy Board, July, 2003)
0
5
10
15
20
25
30
35
Tcf/Y
ear
2005 2009 2013 2017 2021 2025Year
Techno-Vert Scenario
Liquefied Natural GasCanada ImportsAlaskaLower 48
4.1
Tcf(
15.6
%)
U.S. Supply with Canadian Imports and Shortfalls Given NEB, 2003, SupplyScenarios and EIA (2006) Reference Case Supply Scenario
LiquefiedNatural Gas
Canada
Lower 48Production
Lower 48Production
Canada
Shortfall
LiquefiedNatural Gas
5.2
Tcf(
19.7
%)
Alaska Alaska
30
17.5
18
18.5
19
19.5
20Tr
illio
n cu
bic
feet
/Yea
r
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Month
U.S. Annual Dry Gas Production Rate by Month January1993 - June 2006 (centered 12 month moving average)
(Data from Energy Information Administration, September, 2006; Forecast from EIA Annual Energy Outlook, 2006)
Growth 1.1%/Year
Peak July 2001EIA 2014Forecast
Decline1.7%/Year
Down7.6%
LowestLevelSinceJuly1993
0
5
10
15
20
25
30
35
Tcf/Y
ear
2005 2009 2013 2017 2021 2025Year
Techno-Vert Scenario
Liquefied Natural GasU.S. ShortfallCanada ImportsAlaskaLower 48
(data from Energy Information AdministrationAnnual Energy Outlook, 2006, and National Energy Board, July, 2003)
10 T
cf(3
7.6%
)
U.S. Supply with Canadian Imports and Shortfalls Given NEB, 2003, SupplyScenarios and EIA Reference Case Supply Scenario with
1.5% Yearly Decline in Lower 48 Production
Alaska
LiquefiedNatural Gas
U.S. Shortfall
0
5
10
15
20
25
30
35
Tcf/Y
ear
2005 2009 2013 2017 2021 2025Year
Supply Push Scenario
Liquefied Natural GasCanada ShortfallU.S. ShortfallCanada ImportsAlaskaLower 48
1.5% YEARLY DECLINEin Lower 48 Production
Canada
LiquefiedNatural Gas
11.1
Tcf
(41.
8%)
U.S. ShortfallCanada
Alaska
1.5% YEARLY DECLINEin Lower 48 Production
Alaska
31
- IMPLICATIONS – If supply and demand forecasts are to be believed, there appear to be serious supply shortfalls in Continental natural gas coming – Canada is unlikely to be able to fill the supply gap
FUTURE OUTLOOK:
- SOLUTIONS - probably involve a portfolio of options:
- LNG – already factored into existing forecasts; GEOPOLITICAL + NIMBY IMPLICATIONS
- Unconventional Gas - already factored into existing forecasts in a big way
- Fuel Switching – to oil or coal – capacity quite limited without new capital investment
- Destroy Demand – move gas intensive industries offshore (fertilizer and petrochemical plants) -this is already happening; GEOPOLITICAL IMPLICATIONS
- Conservation and Efficiency
LNG Logistics- Production = $US .50-$1.00/mcf- Liquefaction = $US .80-$1.00/mcf
- Shipping = $US .50-$1.45/mcf- Receiving = $US .24-$.40/mcf- TOTAL = $US 2.04-$3.85/mcf
(U.S. 2005 Imports priced at $US 5.72-$7.44/mcf)(1Reimer, Freeport LNG, 2003; EIA November, 2005)
OPERATING COSTS (FREEPORT, TEXAS1):
32
0
0.4
0.8
1.2
1.6
2
2.4T
rilli
on c
ubic
feet
per
Yea
r
Indon
esia
Mala
ysiaQata
r
Algeria
Australi
a
Trinida
d & T
obag
o
Nigeria
OmanBru
neiUAE
Egypt
USALibya
Producers
0
0.4
0.8
1.2
1.6
2
2.4
Tri
llion
cub
ic fe
et p
er Y
ear
Japan
South K
oreaSpa
inUSA
Franc
e
Taiwan
India
Turkey
Belgium
Italy
Portug
al
Puerto R
ico UKGree
ce
Dominica
n Rep
ublic
ConsumersTotal = 6.67 Tcf
LNG Producers and Consumers in 2005
(data from BP Statistical Review of World Energy, 2006)
Producers Consumers
COVERING PROJECTED U.S. SHORTFALLS OF 4-11 TCF/YEAR WITH LNG WOULD REQUIRE NEARLY DOUBLING TO TRIPLING THE WORLD’S PRESENT LNG CAPACITY (the U.S. will also be in competition with many other countries for LNG supplies). EXPANSION OF NORTH AMERICAN LNG CAPACITY TO 11 TCF/YEAR WOULD REQUIRE ON THE ORDER OF:
LNG Logistics
- 200 New 3bcf capacity LNG Tankers- 30 New 1bcf/day North America-based receiving terminals- 56 New Foreign-based 200 bcf/year liquefaction trains- Capital investment in the order of $US100-200 Billion- Time to Build Total Capacity = 10-20+ Years - OVERCOMING THE NIMBY SYNDROME IN LOCATING
NEW TERMINALS- ACCEPTING THE GEOPOLITICAL IMPLICATIONS
OF DEPENDENCY ON OFFSHORE SUPPLY SOURCES
33
(8.3 bcf/d)
(14.55 bcf/d)
(2.61 bcf/d)
(3.1 bcf/d)
(2.6 bcf/d)
(26.97 bcf/d)
(5.835 bcf/d)
Total = 63.965 bcf/d
Cancelled Terminals-Cheniere LNG, Brownsville, TX-Cheniere LNG, Pinto Island, AL-Fairwinds LNG, Harpswell, ME
-Hope Island LNG, ME-Humbolt Bay LNG, Eureka, CA-Mare Island LNG, Vallejo, CA
-Navy Homeport LNG, Mobile, AL-NJ Energy Bridge, Belmar, NJ
-Ormond Beach LNG, CA-Radio Island LNG, NC
-Tampa LNG, Tampa, FL-Tijuana Energy Center, Tijuana, MX
-Offshore Shell Gulf Landing, LA-Pearl Crossing ExxonMobil, GOM
Southern Offshore Crystal Energy, CA
Category 4 and 5 Hurricanes in the Gulf of Mexicoare becoming an increasing Risk for Oil and Gas
Production and Delivery Systems(Few platforms can withstand Category 4 Hurricanes)
34
Power Dissipation Index of Hurricanes versusSea Surface Temperature 1940-2010
(from Kerry Emanuel (Nature, Vol. 436/4, Aug. 2005)
0
2
4
6
8
10
12
14
16
18
20
2000 2005 2010 2015 2020 2025Year
Num
ber
of T
erm
inal
s
Balanced CaseReactive CaseLow Sensitivity Case
Available Receiving Terminals
Maximum 9 NewTerminals by 2025
0
10
20
30
40
50
2005 2008 2011 2014 2017 2020 2023Year
Bill
ion
cubi
c fe
et p
er D
ay
Flat1.5%/year decline3%/year decline
(data from National Petroleum Council 2003; supply gap based on Energy Information Administration,Annual Energy Outlook 2006 forecasts and National Energy Board 2003 Supply Push scenario for Canada)
Supply Gap with Different Lower-48 Production Scenarios
LNG Supply Forecasts of U.S. National PetroleumCouncil (September, 2003) versus Requirement Scenarios
-3%
-1.5%
Flat
Low Sensitivity
ReactiveBalanced
35
"Old" Con
ventio
nal Gas
"New" C
onve
ntional
Gas
Impo
rted LNG
Tight G
as
Coalbed
Meth
ane
Coal G
asific
ation
Shale
Gas
Gas Hyd
rates
(so f
ar)
Compr
essed
Hyd
roge
n
Liquid Hyd
roge
n
Source
Energy Profit Ratio for Natural Gas and Alternatives
Ene
rgy
Ret
urn
onE
nerg
y In
vest
ed
High
Low
EnergySource
(EROEI > 1)
EnergySink
(EROEI < 1)
Increasing Energy Input
In P
lace
Res
ourc
es
Shale Gas Coalbed Methane Tight Gas Conventional Gas
Energy Profit Ratio versus In Place Gas Resources(Energy Return on Energy Invested)
Energy Profit (EROEI > 1)
Energy Sink (EROEI < 1)
As with Oil, the Issue is Not Resources – its Deliverability– GAS resources with a low EROEI tend to produce at
much lower rates and have a vastProportion of their in place resources that will
never be recoverable (ie. Energy Sinks)
36
- Two-thirds of the world’s remaining hydrocarbon energy
COAL- 27.8% of the world’s primary energy consumption in 2005 – second only to OIL – Projected by EIA to be fastest growing fuel through 2030
- Used for electricity generation (more so than any other fuel), primary heat and in the steel industry
- Lowest cost heat source: $0.84-$3.00US/gigajoule versus $9.52US/gigajoule for gas and $9.69US/gigajoule for oil
- Double the carbon footprint of gas using conventional technology –with advanced “clean coal” technologies the carbon footprint can be reduced almost to that of gas (but costs $$$)
- Fastest growing hydrocarbon fuel source: consumption has grown 23% since yearend 2001 (5.0% in 2005)
0
500
1000
1500
2000
2500
3000
1981 1985 1989 1993 1997 2001 2005
Year
Consumption
0
500
1000
1500
2000
2500
3000
Mill
ion
tonn
es o
il eq
uiva
lent
19811985 19891993 1997 2001 2005Year
Production
Asia PacificAfricaMiddle EastF.S.U.EuropeS. & C. AmericaNorth America
World Coal Production and Consumption: 1981-2005
233%
82%
-51%
-36%
27%
(data from BP Statistical Review of World Energy, 2006)
222%
79%-45%
-26%
42%
World Consumption up 23% (1.1%/year)
61% increase in Consumptionup 5.0% 2005 over 2004
Worldwide CoalConsumption has Increased by 23% since 2001
52% increase in Productionup 5.2% 2005 over 2004
37
Forecast World Coal Consumption 2003-2030 in Three Economic Cases (EIA, 2006)
020406080
100120140160180200220240
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Year
Qua
drill
ion
Btu
High Economic CaseReference Economic CaseLow Economic Case
+66%
+131%
+95%
(data from Energy Information Administration International Energy Outlook, June, 2006)
Projections
Consumption in 2005
Oil41%
Gas 27%
Coal32%
(data from BP Statistical Review of World Energy, 2006)
Remaining Reservesby Energy Content
Coal59%
Oil22%
Gas 19%
World Hydrocarbon Consumption in 2005Versus Remaining Hydrocarbon Energy Reserves
By Energy Content
38
0
1000
2000
3000
4000
5000
6000
7000
8000E
xajo
ules
NorthAmerica
S. & C.America
Europe FormerSovietUnion
MiddleEast
Africa AsiaPacific
Region
World Remaining Recoverable Hydrocarbon Reserves by Energy Content (2005)
CoalGasOil
(data from BP Statistical Review of World Energy, 2006)
0
1
2
3
4
5
6
7
8
9
10
US
Dol
lars
per
Gig
ajou
le
Hydrocarbon Fuel Type
Price of Hydrocarbons per Gigajoule in 2005
Mine Mouth SubbituminousCoal @ $14.00 US/tonneU.S. Domestic BituminousCoal @ $50.00 US/tonneExport Thermal Coal @$83.00 US/tonneNatural Gas @ $10.00 US/mcf
Oil @ $60.00 US/bbl Oil$9.69/Gj
Gas$9.52/Gj
ExportThermal
Coal$3/Gj
Mine MouthSubbituminousCoal $0.84/Gj
DomesticBituminous
Coal $1.82/Gj
39
Energy Content in Recoverable Remaining Ultimate Potential of Hydrocarbons in Alberta (in exajoules)
Coal682 billion tons
13,633 EJ86%
Crude Oil5 billion bbls
32.5 EJ0.2%
Crude Bitumen311.5 billion bbls
2121.6 EJ13%
Natural Gas94 Tcf92.4 EJ0.6%
(data from Alberta Energy and Utilities Board, 2003)
- Availability of reliable electricity defines our modern civilization
ELECTRICITY
- Electricity in essence cannot be stored in bulk – it must be generated on demand
- We convert hydrocarbons to electricity at an energy penalty of from 30 to 70%
- Electricity is transmitted to points of use with losses depending on transmission distance – IT IS NOT A WORLD TRADABLE COMMODITY
40
0
1000
2000
3000
4000
5000
Tera
wat
t-ho
urs
1990 1992 1994 1996 1998 2000 2002 2004Year
North America
MexicoCanadaUSA
0
5000
10000
15000
20000
Tera
wat
t-ho
urs
1990 1993 1996 1999 2002 2005Year
World
Asia PacificAfricaMiddle EastFormer Soviet UnionEuropeS. &. C. AmericaNorth America
Generation of Electricity: 1990-2005
(data from BP Statistical Review of World Energy, 2006)
143%
-19%
30%
87%
34%
33%
23%
90%
68%
53% increase in Consumptionup 4.0% 2005 over 2004
34% increase in Consumptionup 2.3% 2005 over 2004
149%
Forecast World Electricity Consumption 2003-2025 in Three Economic Cases (EIA, 2006)
0
4000
8000
12000
16000
20000
24000
28000
32000
36000
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Year
Ter
awat
t-ho
urs
High Economic CaseReference Economic CaseLow Economic Case
+73%
+138%
+104%
(data from Energy Information Administration International Energy Outlook, June, 2006)
Projections
41
Forecast World Electricity Generation by Fuel 2003-2030 (Reference Case EIA 2006)
0
50
100
150
200
250
300
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Year
Qua
drill
ion
Btu
(data from Energy Information Administration International Energy Outlook, June, 2006)
MarketShare
Oil +50%
Natural Gas +116%
Coal +84%
Hydro/Renewables +94%
Nuclear +31%18.1%
16.2%
40.9%
18.6%6.2%
19.4%
11.7%
41.5%
22.2%
6.2%
81% Growth 2003-2030
0
1000
2000
3000
4000
5000
6000
Ter
awat
t Hou
rs
2005 2010 2015 2020 2025 2030Year
RenewablesNuclearPetroleumGasCoal
Coal +59%
Gas +24%
Nuclear +12%Renewables +48%
41% totalincrease
2005-2030
Forecast U.S. Electricity Generation by Fuel Type 2005-2030(EIA Annual Energy Outlook, 2006, Reference Economic Case)
(data from Energy Information Administration Annual Energy Outlook, 2006)
58%
15%
16%
9%
42
0
200
400
600
800
1000
1200
Ter
awat
t Hou
rs
2000 2003 2006 2009 2012 2015 2018 2021 2024Year
Supply Push Scenario
RenewablesNatural GasOilOrimulsionCoalNuclearHydro
0
200
400
600
800
1000
1200
Ter
awat
t Hou
rs
2000 2003 2006 2009 2012 2015 2018 2021 2024Year
Techno-Vert Scenario
RenewablesNatural GasOilOrimulsionCoalNuclearHydro
Canadian Electricity Generation Scenarios by Fuel, 2000-2025
(data from National Energy Board, July, 2003)
19.3%
61.3%
42%
421%
18.6%
98.3%
1%
274%
644%
52.4% totalincrease
2002-2025
50.6% totalincrease
2002-2025
Implementation Times and Other ConsiderationsFor New Electricity Infrastructure
VERYHIGH
HIGH -VERYHIGH
MOD-HIGHLOW-MOD
Capital Cost
6-10+5-12+5-7+1-2+Time to startup
(years)
VERY LOW2
VERY LOW1
MOD(now)LOW(future)
LOWEnvironmental Footprint
VERYLOW
VERYLOW
LOWVERYHIGH
Fuel Cost
HYDRONUCLEARCOALGASFACTOR
1 If the as yet unsolved problem of waste disposal is not considered2 If the environmental costs of flooding river valleys, siltation
and ecosystem impacts are not considered
43
GasCoalNuclearWindOther
1998-2005 – 236 Gwatts 2006-2015 – 95 Gwatts
GAS
GAS
COAL
WIND
North American Generating Capacity ExpansionBy Fuel (1998-2015)
(data from National Electricity Reliability Council, October, 2006)
Total Expansion 331 Gwatts or ~30%
THERE IS A DISCONNECT BETWEEN WORLD OIL RESERVESAND FORECAST OIL CONSUMPTION:
Implications for Sustainability - OIL
- World Oil Production could peak in the 2008-2012 timeframe (consensus) – even the Optimist’s Reference Case says 2018 if peak symmetrical or 2040 if peak at 82% of Ultimate Recoverable Conventional Oil consumed.
- OPEC has most of what’s left and could become the dominant oil supplier before the end of the decade, but will need to rapidly expand its production capacity which could be problematic.
- Industrialized countries will be in competition with rapidly growing consumers in the Developing World over a finite supply, with attendant impacts on economic growth due to oil price (which will shape the world oil production profile at peak).
- Even with a four- or five-fold expansion of production from the Oil Sands, Canada will be a small player in World Oil Supply (about 3% of forecast 2025 World Demand with net export capacity of about 1% of forecast 2025 World Demand).
- Supply from Unconventional Oil is unlikely to compensate for the decline in Conventional Oil Production. Unconventional liquids production including biodiesel, ethanol, coal-to-liquids, gas-to-liquids, oil sands and oil shale is forecast to meet less than 10% of 2030 World demand.
44
THERE IS A DISCONNECT BETWEEN NORTH AMERICAN GAS DELIVERABILITY AND FORECAST CONSUMPTION:
Implications for Sustainability - GAS
- Several existing producing areas in North America are in or near decline.
- Higher cost frontier and offshore conventional production and non-conventional production from coalbed methane, tight gas and shale gas likely cannot forestall the declines in conventional production for long and cannot provide for forecast aggressive domestic demand and export growth, unless as-yet-unproven windfalls result from hydrates, coalbed methane, shale gas etc.
- The United States will require between 16 and 42% of projected demand to be met by offshore sources by 2025, depending on the success of the development of non-conventional gas in the U.S. and Canada, the pace of new conventional development in Canada, the realization (or lack thereof) of optimistic supply additions in the U.S., and the development of LNG import capacity in the U.S. and Canada.
- Solutions include conservation/efficiency, LNG imports, (which would mean large investments in new infrastructure), demand destruction, (move intensive fertilizer/petrochemical industries offshore), additional non-conventional gas and fuel switching.
- The North America Electric Reliability Council (NERC, October, 2006) indicates 224 gigawatts of new gas-fired generation was completed in 1998-2005 and forecasts new gas-fired supply growth of 43 gigawatts through 2012 (25% NA gas-fired grid expansion 1998-2012)
Implications for Sustainability - ELECTRICITY
- Electricity generation accounted for 24.3% of U.S. gas consumption in 2005 (EIA, 2006) and is expected to account for 28% in 2020 (EIA, 2006)
- Forecast shortfalls in supply of natural gas could jeopardize future availability of a secure electricity supply unless new supplies can be secured
- Renewable energy - biomass, wind and photovoltaics must be emphasized but will realistically only provide a relatively small incremental supply (eg. Wind represents about 0.5% of Canada’s generating capacity at present).
- Nuclear is limited by capital cost, public perceptions and environmental impact (Waste storage at Yucca Mtn. will cost $US50billion+ to build and will be completely filled with U.S. wastes since the beginning of the Atomic Age). The EIA (2006) forecasts only modest growth in world electricity generation from nuclear through 2030 (31%) with declines thereafter – this translates into a reduction in market share. The EIA AEO 2006 reference economic case indicates only 12% growth in U.S. nuclear capacity through 2030. - Large Hydro is limited by lack of available sites and environmental costs
45
- Two-thirds of World’s remaining hydrocarbon energy (90% of North America’s)
Implications for Sustainability - COAL
- Lowest cost hydrocarbon energy - cost is 9% to 32% that of gas and oil at $US10/mcf and $US60/bbl, but double the carbon footprint of gas with old technologies
- New more efficient utilization technologies, with reduced GHG emissions, are the key to expanded coal use:
- Higher Efficiency Generation new existing technologies can raise thermal efficiency from 32% to 45% with a corresponding reduction in GHG emissions of 30%, but they are expensive (SCPC, IGCC) – expected future improvements in efficiency to 50% (2010) and 60% (2020) (Vision 21 USDOE).ITS HAPPENING – eg. NIEDERAUSSEM 3900 MWATT GERMAN PLANT @ 43.2% EFFICIENCY; VATTENFALL OXYFUEL PILOT IN GERMANY- Petrochemicals from Coal (POLYGENERATION) – gasification, liquefaction,
in situ gasification for deep coal utilization
- Hydrogen from coal (competes with H2 from natural gas @ $4.00US/mcf –China produces 5 Mt of H2/year from coal for fertilizers) or in conjunction with electricity generation (IGCC, ZECA - higher cost)
- “Zero Emission” utilization through CO2 sequestration in coal seams, depleted oil and gas reservoirs and saline aquifers
- Hydrogen is an ENERGY CARRIER not an ENERGY SOURCE
HYDROGENThe Silver Bullet?
- Because of energy losses in production of hydrogen from hydrocarbons or electrolysis, a “Hydrogen Economy” could actually exacerbate the greenhouse gas emission and Global Warming Problem, if hydrogen cannot be generated exclusively from renewable sources (conversion from gas loses 30% and from electolysis 28% (not including the losses from hydrocarbons to electricity – a further 30-70%))
- Hydrogen is largely created from hydrocarbons or electrolysis, each of which can be used directly without the energy conversion losses to hydrogen
- The stock brokers have already figured it out - witness “Hydrogen’s non-future” published in the Financial Post of April 3, 2004, based on BMO Nesbitt Burns analysis of the Hydrogen Economy
46
0
2
4
6
8
10
12
14
0 1 2 3 4 5 6 7 8 9 10Energy Density by Volume (KWh/litre)
Ene
rgy
Den
sity
by
Wei
ght (
KW
h/kg
)
GasolineDiesel
Propane
MethanolNatural Gas@ 25Mpa*
Liquid H2 @ -253C*
H2 Gas @ 25Mpa*
BatteriesLead, Lithium*
Metal Hydride
Energy Density of Hydrogen in ComparisonWith Other Energy Carriers
*Includes Weight of Containment Vessel (data from Dr. Werner Zittel et al, 1996)
World Primary Energy Shares - 1850 to 2100Given Oil and Gas Supply Limitations
Source - World Coal Institute
47
The Last Piece of the Energy Sustainability Puzzle:
POPULATION GROWTHand
ASPIRATIONS OF GROWTH IN ENERGY CONSUMPTION
IN THE DEVELOPING WORLD
0
1
2
3
4
5
6
7
8
9
Ton
nes
Oil
Equ
ival
ent p
er C
apita
Canad
aU.S.
A.Aus
tralia
Sout
h Kor
eaJa
pan
Britain
F.S.U.
Wor
ld Ave
rage
Brazil
China
Indo
nesia
India
Pakist
anBan
glade
sh
Region
Primary Per Capita Energy Consumption of Selected Countries in 2001
14.4% ofWorld Population
48.4% ofWorld Population
(data from BP Statistical Review of World Energy, 2002, and United Nations World Database, 2002)
There is a Great Inequity in Energy Consumption Worldwide
48
0
1000
2000
3000
4000
5000
6000M
illio
n T
onne
s Oil
Equ
ival
ent
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001Year
Industrialized World (excluding F.S.U.)
Hydro Nuclear Coal Gas Oil
0
500
1000
1500
2000
2500
3000
3500
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001
Year
Developing World
Hydro Nuclear Coal Gas Oil
Primary Energy Consumption by Economic Development: 1965-2001
Increase of 467.6% or 72.3 mtoe/year
Increase of 87.2%or 64.9 mtoe/year
(data from BP Statistical Review of World Energy, 2002, and United Nations World Database, 2002)
5.23 Tonnes Oil Equivalent/Person0.96 Billion People
0.65 Tonnes Oil Equivalent/Person4.88 Billion People
59%More
0
200
400
600
800
1000
1200
1400
1600
Mill
ions
of P
eopl
e
1965 1975 1985 1995 2005 2015 2025
Year
Population
0
0.5
1
1.5
2
2.5
Tons
Oil
Equi
vale
nt
1965 1975 1985 1995 2005 2015 2025
Year
Per Capita Consumption
0
500
1000
1500
2000
2500
3000
3500
Mill
ion
Ton
s Oil
Equ
ival
ent
1965 1975 1985 1995 2005 2015 2025
Year
Total Energy Consumption
(Consumption History: BP Statistical Review of World Energy, 2006; Population History and Forecast: United StatesCensus Bureau, 2006; Consumption Forecast: Energy Information Administration World Energy Outlook, June, 2006)
China Population and Energy ConsumptionHistory and Forecasts (1965-2030)
History+83%
Forecast+12%
History+367%
Forecast+92%
History+752%
Forecast+115%
49
0
200
400
600
800
1000
1200
1400
Mill
ion
Tonn
es O
il Eq
uiva
lent
1981 1984 1987 1990 1993 1996 1999 2002Year
HydroNuclearCoalGasOil
0
200
400
600
800
1000
1200
1400M
illio
n To
nnes
Oil
Equi
vale
nt
1981 1984 1987 1990 1993 1996 1999 2002Year
HydroNuclearCoalGasOil
CHINA: The World’s Number 2 Consumer of EnergyPrimary Energy Production and Consumption by Fuel: 1981-2004
Production Consumption
264%
208%
415%
219%
72%
(data from BP Statistical Review of World Energy, 2005)
Coal
OilOil
Coal
415%
Average 8.1%/year growth in Production over the period - up 12.1% 2004 over 2003
Average 9.6%/year growth in Consumption over the period - up 15.1% 2004 over 2003
Deficit 3.2MMbbls/day
AsiaFlu
1980 1983 1986 1989 1992 1995 1998 2001 2004
S u rp lu s-3.5
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
Mill
ion
Bar
rels
per
Day
Year
SurplusDeficit
(data from BP Statistical Review of World Energy, 2006)
2005 Deficit 3.36 MMbbls/day(2005 DEFICIT = 4.1% OF WORLD CONSUMPTION)
48% ofDemand
CHINA’s Oil Production Surplus and Deficit 1980-2005
2005 Consumption up 3.2%2005 Production up 4.2%1996-2005 average consumption up 7.6%/year1996-2005 average production up 1.97%/year
50
0
200
400
600
800
1000
1200
1400
1600M
illio
ns o
f Peo
ple
1965 1975 1985 1995 2005 2015 2025
Year
Population
0
0.1
0.2
0.3
0.4
0.5
0.6
Tons
Oil
Equi
vale
nt
1965 1975 1985 1995 2005 2015 2025
Year
Per Capita Consumption
0
100
200
300
400
500
600
700
800
Mill
ion
Tons
Oil
Equi
vale
nt
1965 1975 1985 1995 2005 2015 2025
Year
Total Energy Consumption
(Consumption History: BP Statistical Review of World Energy, 2006; Population History and Forecast: United StatesCensus Bureau, 2006; Consumption Forecast: Energy Information Administration World Energy Outlook, June, 2006)
India Population and Energy ConsumptionHistory and Forecasts (1965-2030)
History+121%
Forecast+40%
History+231%
Forecast+44%
History+632%
Forecast+102%
1980 1985 1990 1995 2000 20050
0.5
1
1.5
2
2.5
Mill
ion
Bar
rels
per
Day
Year(data from BP Statistical Review of World Energy, 2006)
2006 Imports = 1.7 MMbbls/day(2.0% OF WORLDCONSUMPTION) 69% of
Demand
INDIA’s Oil Production and Imports 1980-2005
2005 Consumption down -3.4%2005 Production down -3.9%1996-2005 average production down -0.23%/year1996-2005 average consumption up 4.7%/year
Imports
Production
51
0
200
400
600
800
1000
1200
1400M
illio
ns o
f Peo
ple
1965 1975 1985 1995 2005 2015 2025
Year
Population
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Tons
Oil
Equi
vale
nt
1965 1975 1985 1995 2005 2015 2025
Year
Per Capita Consumption
0
200
400
600
800
1000
1200
1400
Mill
ion
Ton
s Oil
Equ
ival
ent
1965 1975 1985 1995 2005 2015 2025
Year
Total Energy Consumption
(Consumption History: BP Statistical Review of World Energy, 2006; Population History and Forecast: United StatesCensus Bureau, 2006; Consumption Forecast: Energy Information Administration World Energy Outlook, June, 2006)
Non-OECD-Asia Outside of China and India Population andEnergy Consumption History and Forecasts (1965-2030)
History+128%
Forecast+37%
History+349%
Forecast+58%
History+922%
Forecast+116%
0
200
400
600
800
1000
1200
1400
1600
19651985200520250
200
400
600
800
1000
1200
1400
1600
19651985200520250
200
400
600
800
1000
1200
1400
1600
19651985200520250
200
400
600
800
1000
1200
1400
1600
19651985200520250
200
400
600
800
1000
1200
1400
1600
19651985200520250
200
400
600
800
1000
1200
1400
1600
1965198520052025
HistoryForecast
(United States Bureau of Census, November, 2006)
United States Canada OECD-Europe China India Other-Asia
Population Growth – History and Forecast (1965-2030)Industrialized Developing
Mill
ions
of P
eopl
e
52
0
1
2
3
4
5
6
7
8
9
10
11
12
1965 1985 2005 20250
1
2
3
4
5
6
7
8
9
10
11
12
1965 1985 2005 2025
(United States Bureau of Census, November, 2006; BP Statistical Review of World Energy, 2006; EIA International Energy Outlook, June, 2006)
United States Canada OECD-Europe China India Other-Asia
Per Capita Consumption – History and Forecast (1965-2030)Industrialized Developing
Ton
s Oil
Equ
ival
ent p
er p
erso
n
0
1
2
3
4
5
6
7
8
9
10
11
12
1965 1985 2005 20250
1
2
3
4
5
6
7
8
9
10
11
12
1965 1985 2005 20250
1
2
3
4
5
6
7
8
9
10
11
12
1965 1985 2005 20250
1
2
3
4
5
6
7
8
9
10
11
12
1965 1985 2005 2025
HistoryForecast
0
500
1000
1500
2000
2500
3000
3500
19651985200520250
500
1000
1500
2000
2500
3000
3500
19651985200520250
500
1000
1500
2000
2500
3000
3500
19651985200520250
500
1000
1500
2000
2500
3000
3500
19651985200520250
500
1000
1500
2000
2500
3000
3500
1965198520052025
United States Canada OECD-Europe China India Other-Asia
Total Consumption – History and Forecast (1965-2030)Industrialized Developing
Mill
ion
Ton
s Oil
Equ
ival
ent
(BP Statistical Review of World Energy, 2006; EIA International Energy Outlook, June, 2006)
0
500
1000
1500
2000
2500
3000
3500
1965198520052025
HistoryForecast
53
0
1
2
3
4
5
6
7
8
9
10
Billi
ons o
f Peo
ple
1950 1970 1990 2010 2030 2050
Year
0
0.5
1
1.5
2
2.5
% I
ncre
ase
per
Yea
r
1950 1970 1990 2010 2030
Year
0
10
20
30
40
50
60
70
80
90
Mill
ions
of P
eopl
e In
crea
se p
er Y
ear
1950 1970 1990 2010 2030
Year
(U.S. Bureau of Census, 2005; Hirsch, 2005;Globe and Mail February 17, 2006; Vancouver Sun, July 22, 2006; National Post September 16, 2006)
World Population Increase 1950-2050
Total Population Percentage Increase Net Increase/Year
Motor Vehicles800 million
Motor Vehicles(70 million newVehicles built
in 2005)
Motor Vehicles>5%/year
(U.S.A.240 million;China 200634 million
+20% in 2005)
Trends in Energy Investment for Food Production(The Hydrocarbons We Eat)
Ene
rgy
Inpu
t per
Uni
t of F
ood
Ene
rgy
Out
put 20
10
5
2
1
.5
.2
.1
Loss
Prof
it
.05
.02
Indu
stia
lized
Dev
elop
ing
(Adapted from Science, April 19, 1974)
54
The Way Forward• Business as usual is not a sustainable option – the
ultimate resource potential of oil and gas is arguable but we are definitely dealing with a finite resource - the implication of this is that we are running out of the CHEAP OIL that fueled the rapid growth in per capita consumption and lifestyle of the last century. Production from crude bitumen resources is not scalable to offset declines in conventional production.
• GAS availability in North America is highly correlated with electricity reliability and cost -replacement of declining low-cost conventional gas and meeting future demand growth with higher cost conventional and non-conventional supplies represents an EXTREME CHALLENGE and, even if it is doable, likely means much higher-cost electricity and higher costs for all other gas uses. LNG imports face infrastructure limitations, siting and Geopolitical obstacles which will likely limit LNG’s ability to fill the supply gap. Banking on windfalls from as-yet-unproven hydrates, CBM, shale gas etc. could prove dangerous if the required production levels are not realized.
• The first step is to recognize the problem, and begin making the changes and creating the infrastructure that will be required for transit to a more sustainable energy future
• The most cost-effective approach is energy conservation- reduce consumption on all levels
The Way Forward
• A longer term vision is required than the lifespan of a typical government – THERE IS NO SILVER BULLET – all options must be objectively assessed and deployed as incrementalcontributions to a solution
• A sustainable energy future is not out of reach – but we have to be thinking in the 10-20+ year timeframe to develop the infrastructure for alternatives as well as technologies and incentives to reduce consumption
55
Public Awareness Is Crucial as it Empowers Governments to Take the Long-Term View Required to Implement Solutions
Media coverage of some of these issues is becoming an almost daily occurrence, but there is still much denial
National PostOctober 2, 2004National Post
October 2, 2004
June, 2004June, 2005
August, 2005
September, 2005(released March, 2006)
U.S. Army
Awareness is Rising
“The Army operates in a domestic and world energy situation that is highly uncertain”
“Future availability of customary energy sources is problematic-world petroleum production is nearing its peak”
“The earth’s endowment of natural resources are depleting at an alarming rate-exponentially faster than the biosphere’s ability to
replenish them”“Current energy policies and consumption practices are not
sustainable. They clearly limit and potentially eliminate options for future generations”
“As the Earth’s population swells-competition for finite resources will increase…conservation is ‘...the best path to follow’”
U.S. Army Corps of Engineers (March 14, 2006)
“…disproportionate [U.S.] consumption of energy relative to globalconsumption causes loss of the world’s good will and provides a
context for potential military conflicts…”
56
Awareness is RisingJim Buckee, CEO of Talisman Energy (May 4, 2005):
IEA World Energy Outlook 2006 (November 7, 2006):
Conservation and energy efficiency are the "most important" ways to reduce oil demand
Questioned whether the world will ever be able to produce 90 million barrels a day
“… the energy future we are facing today, based on projections of current trends, is dirty, insecure and
expensive”“Strong policy action is needed to move the world onto a
more sustainable energy path”
Awareness is Rising
“…the World is on the verge of a break point that couldcome before the end of the decade…”
“…there is no quick technology fix to save us fromthe inevitable, at least in the next five to ten years…”
“…only Government has the power and the tools to pushus to a new energy path…Free market forces are not
strong enough to catalyze rapid change in energybecause it takes so much capital”
“What the World needs is rapid change. There has tobe a push from Nations”
Peter Tertzakian, Chief Economist ARC Financial CorpAuthor “A THOUSAND BARRELS A SECOND”
(February 13, 2006):
57
But Denial Runs Deep
“Personally, its always been my dream to have a humongous ecological footprint”
“Bigger house, bigger car, wood-burning fireplace.”
“When the World Wildlife Foundation gives you crap about your ecological footprint …
… Its saying ‘stop living’”
“Al Gore is the new darling of the movement. Don’t knowif they’re liars, or just dumb, or suffer a pathological
sense of self-importance”
“Dunno. Don’t care. But I can’t take them seriously –Neither should you.”
Ian Robinson, Editorial Writer, Calgary Sun, Nov. 5, 2006
• Senior Executive, Dow Chemical, New Orleans, March 17, 2005:Letter to George Bush signed by many concerned industrial representatives included two top priorities on energy security:
- Conservation and Efficiency (in ALL Sectors)- Fuel Diversity: Renewables, Clean Coal, Coal Gasification,
Nuclear
Some of the Smartest Commentson Energy Sustainability I’ve Heard Lately
• Senior Energy Executive on using Gas to Produce and Refine the Oil Sands:Using gas to produce and refine the oil sands is akin “… to turning gold into lead…”
• Dow Canada CEO on gas use for electricity/oil sands:Utilizing Gas for low value uses like electricity generation and oil sands as opposed to high value uses such as petrochemicals is like “…lighting candles with one hundred dollar bills…”
58
- U.S. Vice President Dick Cheney on Conservation:“Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy”
Some of the Other Commentson Energy Sustainability I’ve Heard Lately
- U.S. Energy Bill:- Tax break of $3,150 for buying a hybrid vehicle.- Tax break of $25,000 for buying a Hummer or SUV greater than 3 tons, as long as it is used for business, with write off of all remaining costs over 6 years.
- Oregon State Government “We’re losing revenue on gas taxes because of people buying hybrid vehicles”“We’ll put a GPS system on all vehicles and tax people on how many miles they drive, not how much gas they consume”
- U.S. President George Bush at Rio Summit and later reiterated:“The American way of life in not negotiable”
Is This the Shape of Things to Come?
Gas Station Lineup, South China, August 17, 2005
59
- MOST PROBABLY NOT – Present Global Energy Demand Forecasts are likely to prove to be Unsustainable unless they
are revised sharply downward
Can Energy Supply Meet ForecastWorld Demand?
- The Energy Sustainability Issue will certainly affect us and will profoundly impact our Children and Grand Children,
unless Global proactive actions are taken (SOON)
- The Energy Sustainability Issue may Trump the Global Warming /Environmental Degradation Issue with respect to short term Socio-Economic impact, although both are on the
radar in the near term - Solutions to both Issues have common components (eg.
Conservation, Efficiency, Technology, Alternatives), hence mitigating one issue can help mitigate the other
ENERGY CONSUMPTION CANNOT EXCEED ENERGY SUPPLY
Despite the Proponents of Infinite Growthand the Ability of the Markets and Technology
to Overcome all Obstacles there is OneSupreme Overriding Principle:
Therefore the reality of FINITE nonrenewable energy resources will force a transition to a
sustainable energy future. The Only Question Is:
HOW WILL THIS TRANSITION OCCUR?
60
THE PROBLEM
Aggressive demand growth in the past and forecast in the future
Built mainly on non-renewable energy sources
CONSUMING THE EARTH’S CAPITAL AND ITS INTEREST
THE SOLUTIONRadically Reduced Demand – how to do it?
Supplied mainly by renewable energy sources
LIVING ON THE EARTH’S INTEREST AND PUTTINGSOMETHING IN THE BANK FOR PAST TRANSGRESSIONS
But also by alternative higher value uses of non-renewables
- RENEWABLE ENERGY SOURCES such as wind, photovoltaics, run of stream hydro, tidal power, solar thermal and biomass are EXTREMELY UNLIKELY to fill the hydrocarbon gap if we insist on maintaining our current levels of consumption (let alone increasing them).
SOLUTIONS
- MORE EFFICIENT AND SUSTAINABLE COMMUNITIES:
- The ABSOLUTE FIRST PRIORITY is to reduce energy consumption as much as possible. This requires a crash program through:
- Radically enhanced building codes – R2000+++- Mass Transit as a viable option- Incentives for efficient appliances and heating- Increased densities- Design for local access to consumer requirements- Enabling pedestrian, biking and car pool transport
61
- IMPLEMENT LOW COST OR REVENUE NEUTRAL READJUSTMENTS THAT ENCOURAGE A REDUCTION IN ENERGY CONSUMPTION:
SOLUTIONS
- Reintroduce lower speed limits – this worked in the 1970’s
- Mandate much higher average mileage requirements for the vehicle fleet
- Implement user fees for car travel in downtown areas that are served by public transit (this has worked well in many places in Europe, where per capita energy consumption is half of that in the U.S. and Canada)
- STOP building and widening roads to accommodate ever more traffic – instead reinvest these funds to improve public transit
- LIVING LOCALLY:
SOLUTIONS
- Encourage and nurture the development of LOCALLY GROWN FOOD and LOCAL MANUFACTURE of required commodities in order to minimize long distance transport.
-The INTERNET represents an absolutely unprecedented opportunity to reduce commuting as well as to access World Markets. BROADBAND INTERNET expanded to all rural and suburban communities can ensure the viability of dispersed,more sustainable communities.
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SOLUTIONS-MORE EFFICIENT VEHICLES:
- BOTTOM LINE: Replacing half of the U.S. ground vehicle fleet with hybrid and more efficient vehicles would cost $3.8 Trillion and consume 5.6 billion barrels of oil equivalent energy to build. Even with a crash program implementation it would take 8-10 Years. Yearly savings of 25% of current fuel use would be 3.3 billion barrels.
(vehicle numbers, proportion of fuel consumption and average lifespan from Hirsch, 2005)
0 15000 30000 45000 60000 75000 90000
E n e rg y S a v in g s-1900
-1400
-900
-400
100
600
1100
Gal
lons
of O
il E
quiv
alen
t Ene
rgy
Miles Driven
Energy SavingsEnergy Deficit
(energy for vehicle construction from Savinar/Ruppert, September, 2005)
AnswerApproximately
65000 miles
EnergyRequiredTo Build
How far must a Hybrid Car be Driven before it SavesMore Energy than it took to Build It?
Comparison of Hybrid at 50 mpg with existingVehicle at 20 mpg
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SOLUTIONS-MORE EFFICIENT VEHICLES (continued):
MESSAGE:- Reducing transportation requirements is likely to have a much more immediate impact than replacing the vehicle fleet with hybrids and maintaining existing transportation habits.
- The existing vehicle fleet represents a tremendous amount of embodied energy in its construction that would require a similarexpenditure of energy to replace.
- IDEALLY we need to do both: replace vehicles at the end of their practical lifespan with the most efficient vehicles available ANDreduce transportation requirements as much as possible.
SOLUTIONS- BULK COMMODITY TRANSPORT:
-TRAINS instead of TRUCKS– trains are 3.4 times as efficient in moving
goods than trucks
- SHIPS instead of TRUCKS– ships are 8.7 times as efficient in moving
goods than trucks
- SHIPS, TRAINS and TRUCKS instead of PLANES– ships, trains and trucks are much more efficient in
moving goods than planes(data from U.S. Dept. of Transportation and Canadian Shipowners Association, 2006)
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- WIND, unfortunately, cannot exceed about 20% of the grid as it is intermittent and must therefore be backed up by a (usually) nonrenewable energy supply (wind is 0.5% of Canada’s capacity at present). Also requires proximity of high quality sites to load centres.
SOLUTIONS
- BIOMASS can be used in a highly efficient manner given present technology but realistically represents only a small incremental contribution to current consumption levels (The Energy Profit Ratio of Biomass MUST also be considered – what is the net energy returned after all energy inputs are accounted for?).
-Implement RENEWABLES such as WIND, BIOMASS and PHOTOVOLTAICS to the maximum extent possible:
SOLUTIONS- PHOTOVOLTAICS are also limited by the intermittent nature of the sun and the storage problems if batteries are used. They are optimally suited to residential applications because of their low power intensity but they are expensive. TRUE NET METERING with TIME OF USE PRICING in grid intertie applications CAN RADICALLY IMPROVE THE ECONOMICS OF PV and has been implemented in several States. Generators of PV electricity can “run the meter backwards” obtaining the retail price at the time of the sale (typically during peak load when the price is highest). This not only improves the economics of PV, it reduces peak load and therefore the need to build new large scale fossil fueled generation by utilities.
-Implement RENEWABLES (continued):
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- NONRENEWABLES ALTERNATIVE USE: Remaining fuels should be used for their highest value contribution to society:
SOLUTIONS
- CONSERVE NATURAL GAS used for electricity generation and as a low grade heat source through substitution by renewables, distributed generation with CHP, clean coal technologies, coal gasification, coal-to-liquids, and, if economical, nuclear – for example, ethane extracted from raw natural gas and turned into polyethylene increases its value by a factor of 12, into packaging products by 20, and by upgrading to building materials by a factor of 58 (Dr. Ramachandran, President DOW Canada, June, 2005) . - Implement expansion of alternative oil and gas substitutes including COAL-TO-LIQUIDS (commercially viable at $30-$35/bbl), COAL GASIFICATION, GAS-TO-LIQUIDS and LNG technology (but, as with oil sands, takes many years and $$$ for infrastructure and has a low EROEI).
SOLUTIONS
- Expansion of the VENEZUELA ORINOCO EXTRA HEAVY OIL BELT is also inevitable but must be done with maximum efforts to minimize energy inputs and environmental impacts.
- FORGET HYDROGEN as a major contributor to transportation and distributed generation unless there are major improvements in fuel cell technology (10-20x in cost; 5x in lifetime; 2x in efficiency) as well as in storage technology, and the ability to generate hydrogen from renewable sources.
- Continued expansion of the OIL SANDS is inevitable but must employ technologies that utilize alternatives to natural gas for energy input and minimize environmental impacts including water consumption (but, as noted, takes many years and $$$ for infrastructure and therefore will be a small part of the solution and also has a low EROEI).
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IMPLEMENTING MANY OFTHESE SOLUTIONS (ESPECIALLY
CONSERVATION AND EFFICIENCY)GOING FORWARD IS NOT OPTIONAL
ENERGY CONSUMPTION CANNOTEXCEED ENERGY SUPPLY
MOTHER NATURE WILL TAKE CAREOF THE PROBLEM
BUT UNLESS WE ARE PROACTIVEWE MAY NOT LIKE THE SOLUTION
“…a Lower-Impact Society is the MostImpossible Scenario for Our Future…
…Except for all otherConceivable Scenarios”
Jared Diamond (2005) from his best-seller “Collapse”
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Food per capita
Industrial output
per capitaPollution
Death rate
Birth rate
Resources
Population
212000900
(adapted from Hamblin, 1970)
20001900 2100This could be the Price of an Unsustainable Energy Future
Limits to Growth:Did the Club of Rome have a Point?
Or…Will Technology and Forward Thinking
Come to the Rescue?
Thank you
Contact Coordinates:Dave Hughes
dhughes @ nrcan.gc.ca403 292-7117