Which Matters Most? The Size of the Tap or the Tank?
22 Jun, 2009 11:19 pm
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Reduce text sizeEnergy optimists are fond of citing very large numbers for worldwide fossil fuel resources such as oil and natural gas. But they conveniently leave out the critical variable. How fast can we actually produce these resources?
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To respond by saying that we have a huge amount of oil and natural gas left in the ground misses the point. The key issue is how fast that remaining underground inventory can be extracted and turned into usable fuel. In other words, it is the size of the tap that matters more than the size of the tank.
Four central factors determine the rate at which oil and natural gas can be brought to the surface and processed: 1) the characteristics of the reservoir, 2) the size and efficiency of the infrastructure including trained personnel, 3) the availability of external inputs such as energy and water used to process the raw product, and 4) the ability to dispose of associated wastes.
Most experts now acknowledge that the easy-to-get oil and natural gas have largely been found. The hard-to-extract resources are what's left to exploit. Let's take three cases that illustrate the situation we now find ourselves in.
The Canadian tar sands have been touted as North America's answer to Saudi Arabia. With a current estimate of 172 billion barrels of reserves, it seems that they might be just that. But a closer look reveals obstacles that are likely to prevent the tar sands from ever reaching production rates close to that of Saudi Arabia, i.e., near 9 million barrels per day. First, oil from tar sands, unlike Saudi conventional oil, must be extracted from the sand to which it adheres. This is accomplished with huge amounts of water and heat. Approximately 6 tons of sand yield one barrel of oil.
Once separated from the sand, the residue remaining is not crude oil, but bitumen. It must be further processed by adding hydrogen which comes primarily from stripping the element from natural gas. This process also requires large amounts of energy.
The water used for separating the bitumen from the sand must be discharged to waste lagoons, which currently make up some of the largest man-made lakes in the world.
The tar sands produce about 1.3 million barrels of oil per day. They consume about one-quarter of Alberta's water supply to do so. Increasing production to 3 million barrels per day--which is already being projected--will require far more water and far more natural gas. Natural gas is in decline in Canada though more may become available if pipelines are brought from Alaska or the MacKenzie Delta in Canada's Northwest Territories, both of which have large natural gas resources. Alternatively, nuclear power plants could be built to provide the needed heat and hydrogen (through electrolysis of water).
Whatever path is chosen, huge investments would be called for, so financing becomes yet another bottleneck. Yes, the presumed reserves in the tar sands do rival those of Saudi Arabia, but it's not clear that they will ever be produced at so voluminous a rate.
Oil shale is another often touted major new source of oil. The resource estimates run up to 2.9 trillion barrels in place worldwide with 750 billion barrels in the United States alone. The total is more than twice all the known oil reserves in the world today. But as of yet, there is no commercial production. Methods tried so far require enormous amounts of energy to cook the shale to extract the hydrocarbons. What is extracted is not oil, but kerogen, an immature form of oil which must be further heated and then combined with hydrogen to get something equivalent to what we call crude oil. The source of the hydrogen? Either natural gas or electrolysis of water. Water is another key ingredient in the process, not primarily for its hydrogen content, but rather for other processing tasks. On the Colorado plateau, however, where the lion's share of the world's oil shale is found, there is precious little water to spare.
So tenuous is the future of oil shale that even the ever optimistic U. S. Energy Information Administration believes it will only contribute 140,000 barrels per day of production by 2030 out of a total expected U. S. daily consumption of 22.8 million barrels of liquid fuels.
Finally, there is natural gas from shale. There are huge resources in the shale layers of the Earth under the United States. And recently, drillers have had exceptional success using hydraulic fracturing to increase well flow from these shales. This has been a key advance in making this resource economical to produce. But, while the flow rates are high, they only persist at high rates for a year or two and then fall down to a very marginal level. That means that drillers will have to drill furiously both to replace depleting shale gas wells and add additional capacity if the aim is to grow the rate of production.
These requirements suggest several bottlenecks. Will there be enough drilling equipment and trained personnel to keep up with the ever-increasing rate of drilling needed to grow supplies from shale fields? Will pollution related to hydraulic fracturing limit how much of the resource can be exploited? And, will the necessary financing be available both to create the drilling and production infrastructure and to train the needed personnel?
(The other unknown for new oil and natural gas deposits, especially the unconventional ones discussed above, is whether prices will be sufficient to exploit a significant portion of the estimated resources. At $10 or $13 a thousand cubic feet, a huge amount of shale gas might be available. But not at $4. Similarly, at $100 a barrel, oil from tar sands and from shale, might loom considerably larger than at $50. But this is a size of the tank question and takes us away from our focus on the size of the tap.)
Just because the difficulties I've outlined above are many and challenging doesn't mean they can't be overcome. Anything is possible. But the optimists' case rests on the following premises: We will develop the necessary technology and somehow find or construct the means for the necessary ancillary resources (such as water and nuclear power) to exploit these unconventional sources of hydrocarbons. We will do this sufficiently soon to make up for the decline of conventional oil and natural gas supplies. And, we will do it at prices that won't derail the world economy. In addition, the financing will be there, and the facilities will get built in time to avert any extreme discontinuities in energy supplies. And finally, there won't be any side-effects that are sufficiently large--water pollution, for example--to prevent these developments.
Should we bet the entire future of the global economy on these premises just because the presumed size of the tank (read: resource) is so large? Or should we focus on prudent alternatives that don't depend on so many interlocking developments and that could be deployed now based on current technology?
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Add to Newsvine| [1] | Comment by Chris Rhodes - 23 Jun, 2009 10:03 am Mainly it's a rate of flow (rate of recovery; rate of conversion) problem. Even if Richard Pike (CEO of the Royal Society of Chemistry) is right that there may be about 2.4 trillion barrels worth of crude oil to be recovered (i.e. twice as much as most other estimates give), if it can't be produced fast enough there will be a supply/demand gap. If oil production has indeed peaked (as many think) or is about to, then this restriction on supply is inevitable. Then we will be forced to modify our oil-dependent behaviour. I note that the EU is looking seriously at algae as a means for making biofuel, and there is a report to the effect that within 10 - 15 years this will become a commercial proposition. |
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| [2] | Comment by Nicholas - 23 Jun, 2009 10:47 am Well tar sand is not the answer to Canadian ever needed fuel supply. As it is costly and yet more research and development provision are needed to turn this sand into economical fuel resource. The major bottel neck in this whole project is of water. Drinking water resources are already coping with competition with industry growing demand. But alternative solution can be found by sewerage water. Yet another problem of purifying it. Too many ideas are discussed but yet to be agreed upon by all stakeholders. I am busy at the moment with my cisco certifications. Will pay visit on further development on this story. |
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| [3] | Comment by Bruce Pile - 28 Jun, 2009 12:30 am It is not only the flowrate that is more important than how much is there, it is also the stage of the recovery cycle that is more important than how much is there. People seem to turn a blind eye to the whole EROEI (Energy Returned On Energy Invested) thing, but if you dare look at the inescapable math of this, you see how vastly different the last half of oil's recovery is going to be from the first half. So much of that half that's left doesn't really matter! You can see this in the figures I have in my investing blog posts "The Coming Mystery Of The Missing Barrels Of Oil" and "The Alternative Energy No One Is Thinking About". View these charts only if you can stand a good scare. |
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