A Geologist Talks Peak Oil & Canada

I'm always on the lookout for articles like the one below.

I know that we have a choice to either stay with a major focus on using the oilsands to drive our economy or invest instead in cleaner and more sustainable forms of energy. Eventually we (and our descendants) will be left with depleted supplies of fossil fuels. It's up to us now to decide on how fast we want this to occur. It's obvious to me that the faster we extract oil from the oilsands, the faster we'll use it up, or rather the faster the United States will use it up. What's the rush? It's not going anywhere sitting in the ground, except for maybe up in value.

I like to focus on solutions. The problem is that our economy is driven by the destruction/development of the oil sands. The development of oilsands is causing massive greenhouse gas emissions (in turn contributing to global warming), illnesses due to pollution, ecological degradation, and is attached to other unresolved issues.

The solution starts with ending government subsidies for the most profitable substance in the world. Instead of offering the oil companies incentives to invest in the oilsands (they need our tax money to help them operate?!?) Our government - the one we elected to represent us* - should instead invest that money in renewable energy technologies. Jobs will be created. We will be able to work in wind, geothermal & solar technologies. Our economy will shift away from being resource based and instead Canada will develop sustainable green energy & export that energy technology. We have to act now though; other countries are already doing this and realizing great profits. Their citizens are healthier. Their economies are stable and sustainable. Why hasn't Canada done this? Because our government lacks the political will.

* (due to our dysfunctional first past the post electoral system, our government doesn't actually represent the majority of this country. That's a post for another day though... ;-)

Back to the article...

David Hughes on Canada's Oil and Natural Gas

Here are some excerpts from this interview. Read the whole transcript here.

DH: I am Dave Hughes. I work for the Geological Survey of Canada. I have been there for 31 years. I've worked on energy for my entire career, and I've been concerned about the whole global supply issue, and Canadian and North American supply issues, for more than 10 years...

...DH: Really, all you have to do is look at the last 10 years at what's happened. Even take it back 15 years to 1990. In 1990, we had a gas production probably of around 14 Bcf a day, and we had an overall decline rate of about 13%. So, if you didn't drill a well, gas production would drop by 13%. Going forward to 2004, the overall decline rate on a slightly higher production is now 20%. But, even more important, it's the initial productivity of the gas wells. Back in 1996, the average gas well - when it came on production - it came on production at about 600 Mcf per day. The average gas well, today, is around 200 Mcf/day - a little bit better than that.

JD: That's a thousand cubic feet.

DH: Thousand cubic feet. So, we have to drill 2-3 wells to get the initial productivity of a well that was drilled back in 1996. And you can see it in the overall drilling rates. In 1996, we drilled 4,000 successful gas wells. The price of gas spiked in 2001 - we drilled 11,000 gas wells. We've had about a 10% increase in productivity by drilling three times as many wells. 2003: even though we drilled 14,000 wells, gas production fell by about 3%. So, it basically hit a peak in 2001, maintained that plateau till mid-2002, declined 3% in 2003. We're now drilling nearly 16,000 gas wells per year, as of 2005, and production is about what it was back in 2002... We have to drill more and more wells each year - hopefully to stay flat - but, eventually, even to hold declines, to relatively small, incremental levels...

JD: Turning to the tar sands, the oil sands. Can you explain what kind of oil is extracted from the tar sands?

DH: I like to talk about the food chain when it comes to oil - conventional and unconventional. When we drill an oil well - really, this is a comment on energy return on investment - so, how much energy do we spend developing the resource versus the energy that we get back from the resource that we recovered? And when we drilled a vertical well in Saudi Arabia back in the 1950s, the energy that it took us to drill that well versus the energy in the 20 thousand barrels a day that we got back, was 100:1, or greater... If you look at oil sands - again, they're very low-grade oil, they require upgrading to turn it into synthetic crude, which is something that can actually be used - I think the ratio is something like two tonnes of oil sand for one barrel of oil - that's moved by trucks (hydrocarbons, diesel fuel). It's upgraded with natural gas, water. So, the energy input for tar sands is on the order of two to one. So, we burn a barrel to get two - with all of the greenhouse gas implications of doing that. So, as we move down the food chain, from 1950’s Saudi Arabia to oil sands in 2006, we're committing more and more hydrocarbon consumption, just to get hydrocarbons. And you can see the greenhouse gas implications of doing that. How much can the oil sands can grow? ...by my calculations, if we spend $90 billion (which is on the table right now), we may be able to get the oil sands to 2 million to 2.5 million barrels per day. And, again, that's going to keep Canadians in oil. It's going to result in a huge increase in greenhouse gas emissions. And, if you fire up GoogleEarth and go north of Fort McMurray and have a look at the surface - environmental impact of those oil sands - we're going to have a major ecological issue for those 2.5 million barrels per day of oil, a lot of which will be exported to our neighbors to the South...

JD: What do you think of Canada being trumpeted as having more reserves than - or, at least, being equivalent to the new Saudi Arabia?

DH: I think it's very misleading. I don't question that the reserves are there. The whole issue is how fast can you convert them to supply. And that's the whole problem with oil sands: it takes a long time to build the infrastructure, and to grow deliverability, compared to drilling a 1950 well in Saudi Arabia. So, it's a deliverability issue, not a resource issue. There's a study done at Uppsala University in Sweden on the oil sands, the implications of a crash program - if you didn't worry about natural gas limitations, water limitations, environmental impact limitations - how fast - or, the whole inflation situation that's happening in Fort McMurray because of all the development. If we didn't worry about any of that, and said, how much could we get if we just went flat out, and their analysis was that the oil sands would peak in 2038 at about five million barrels per day. And that's, again, significant, but the forecast [global] demand at that time is over 120 million barrels a day. So, compared to what the world needs, it's still a small part. And, the other thing about that analysis is, by 2050, all of the surface mineable oil sands will be gone, so we'll be left just with what we may, or may not, be able to recover from the in-situ [resources].

JD: The greenhouse gas situation in terms of Canada and Canadian politics is not exactly clear cut, but it does seem to have taken a - it does seem to be heading in the direction of being less worried about it. What light can you shed on that picture?

Can you comment on the greenhouse gas situation in Canadian politics?

DH: Canada has been a bit of a bad offender when you look at greenhouse gas emissions growth. Since 1990, Kyoto was supposed to get us down to 6% below 1990 by 2012, I believe. What's actually happened is we're now about 30 odd percent above 1990 levels, which requires a horrific decrease in greenhouse gas emissions. The Liberals said we were going to do it, but if you look at what happened, greenhouse gas emissions just kept rising. The Conservatives are backing off on Kyoto. In a way, I sort of agree with them. I can't see [with] people committed to business as usual, how we're going to get a cut of 36% by 2012. I see a lot of inertia. I don't see things happening - in fact, I can see things getting worse with the developments at Fort McMurray. So, they might have been realistic in assuming that we can't meet those targets. What really disturbs me is we're looking around the world to try to maintain business as usual without realising that we have an oil problem, a natural gas problem. There are things that we could and should be doing to reduce our consumption of those resources, as opposed to desperately trying to find more to keep business as usual going. I think we have to kind of wake up and smell the roses, and start doing those things. And that's the only way we're going to manage the greenhouse gas problem, or the long-term energy sustainability problem...

That's a lot to read, but well worth the time.

Final thought goes to Folke Günther:

"After 1850, the human population changed from using a flow (sun and its derivatives) to using a storage (fossil fuels). This is reflected in the population growth curve. When speaking of a change from a store to a flow, (renewable energy sources), you also have to invent a new (logistic) economy, since our current economy is adapted to the energy extraction from a storage."