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Alberta oil sands on 60 Minutes
Posted by Yankee on January 22, 2006 - 9:36pm
Did anyone else happen to catch the 60 Minutes piece on the Alberta oil sands? What most struck me about it is that the situation in Alberta seems to be a microcosm of many problems we've discussed with respect to peak oil. Namely:
- The technology required to mine the sands and convert it into refined oil is expensive and the whole operation has a fairly low EROEI.
- Lack of appropriately trained labor force, coupled with the fact that Fort McMurray, Alberta is not a particularly desirable place to live
- Environmental disaster (although at least Canadian law says requires that old mines are refilled and trees are replanted)
- Geopolitical factors: Namely, China is in a desperate competition with the US for these resources, and politicians are suggesting that Canada should use the oil sands to gain leverage in their trade disputes with the US
Another interesting aspect of the story was the appearance of T. Boone Pickens. At the beginning of the segment, the interview has Pickens looking like he's betting the farm on the oil sands:
"We're managing $5 billion here. And, about 10 percent of it is in the oil sands. So, it's the largest single investment we have," Pickens says.I was surprised to hear this, since as we know, Pickens has gone on record predicting that gas prices are going to remain at all time highs, and the reason for that is because of a shortage of world supply. Only at the end of the CBS piece does Pickens mention the end of cheap oil:And if oil sands are the answer for investors, does Pickens think the oil sands are the answer for the United States?
"Oh, I think so," he says.
Does Pickens think the days of cheap oil are gone?Unfortunately, the implications of this statement were far overshadowed by CBS's portrayal of the oil sands as the greatest energy source ever known to man. Indeed, they even ask, "Will the availability of an enormous supply of secure oil right next door mean America will have little incentive to reduce its dependence on oil?""They're gone," he says. "From what we knew as cheap oil, when I pumped gasoline in Ray Smith's Sinclair station on Hinkley Street in Holdenvale, Oklahoma, 11 cents a gallon, that's gone."
Will we ever again see $1.50 a gallon? "We won't ever see $1.50 a gallon. No, that's gone," says Pickens.
The answer, of course, is yes. According to CBS, it is inevitable:
But unless the Chinese go back to bicycles and Americans trash their SUVs, there will be buyers — for oil anywhere, no matter how it’s found or mined. Right now, Canada has become the land of opportunity for oilmen. They will tell you there is little else on the horizon.
“Data always beats theories. 'Look at data three times and then come to a conclusion,' versus 'coming to a conclusion and searching for
some data.' The former will win every time.”
—Matthew Simmons, ASPO-USA conference, Boston, MA, October 26, 2006
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I assume Suncor and others have done this - would just like to see the numbers....
But if you look at the bigger picture, Canada has trees, and natural gas, and water and tar sands. The US has people and art, and bombs. I guess one could plausibly make that conclusion.
I have been wondering if Canada breaks up that we might not acquire some extra states. If Quebec goes out, the possibility of the provinces going their own way, possibly in blocs like the Atlatnic Maritimes is possible. We might get Alberta as the 51st or 52nd state.
That is more likely (and not very likely I think) than our invading Canada. The American people would not go for it. We will go through a great deal of economic adjustment instead of doing something incredibly mean spirited and greedy.
It may not even be viewed as a bad thing when/if the time comes - US protects canada militarily in exchange for resource flow. I think there was a conservative think tank put out a piece in 2005 implying that NAFTA was the groundwork for an economic/military/resource conglomerate (I'll try and find the link)
I dont think there will ever be a 'battle', but in truth Ive never really researched it. I did try to look at [LATOC www.lifeaftertheoilcrash.net] but couldnt find any details.
p.s. Canadians (probably due to more degree cooling days) actually consume more oil per capita than americans...
Canadians do use more energy per capita than Americans. That is the last table I saw just before Christmas.
But we agree that it will not be a military action.
NAFTA does work, mostly, for our benefit. It does help integration of the economies and we can get a great deal from Canada. But with rising transportation costs in the future, that makes good sense for them too.
On this university campus nearly every building has NO insulation! The new buildings have about 2". The home standards changed in 1991 and were upped from 4 to 6" in the walls. My father was doing that for custom homes in the late 1960's. We have an industry that only adopts whatever standards we can get the government to pass.
Energy is so cheap that nobody cares yet.
Come on - taxes on my house are over 2x what it costs for natural gas, hydro and phone. The car is similar - purchase, maintaince and insurance dwarfing fuel costs.
In the case of my 1991 Chevy Sprint (around 60 mpg US) it cost more for brake and exhaust repair than gas!
"Green" friends live in nice neighbourhoods with good "community" but pay for it with old houses that have no insulation to speak of.
We sure see a lot more trucks / SUV'ish things on the roads in Michigan than here although I see enough mini-vans and that ilk to make me puke. Cars choking the streets and surburbia out the wazoo is the way we've gone too. Howver, unlike friends in the USA, up here you don't pick neighbourhoods because they are safe or because the schools are not going to have the roof collapse in winter.
Going into a different threat.
I want to believe in the book Fire and Ice and that we are diverging from the USA. Frankly the USA scares the @#$#@$ out of me. The government is disconnected from the people and US moderates / progressives I know are getting pretty scared of the way their country is going - but it doesn't seem to stop. There should have been riots over Robberts nomination to the court and I see that Alito will likely walk right in without a sacrifical Dem in the way.
My only consolidation is that you're destroying your own country now with the mountain top removal for coal; having the polluters in charge of the EPA etc etc - except that we're also getting the mercury in the air ...
There are very progressive factions within the USA - but I've pretty well given up on them. With thousands of white collar jobs now going overseas where PHDs are a dime-a-dozen you're not going to have a middle class much longer. It's a great place if you're rich or have a marketable skill.
The USA dream that I grew up in during the 60's is dead, gone and burried. The fangs are bare now, the blood is dripping - nobody harbours illusions about what the country is about except perhaps our Regressive Conservative party up here.
I work in construction and we are introducing styrofoam block construction that was developed in Canada with an R rating of 40 - well above the required 18 and very good.
I do find it funny that in colleges the ratio of liberals to conservatives for professors is about 9 to 1, while in the military for officers it is flipped and is 7 to 1 or 6 to 1.
America is not dead yet.
Everyone from the Cheney-ites on down consider it all to be a Mad Max future. What an intense failure of the imagination.
Let me extend the line of my original question a bit: There have been a lot of steps taken in recent years towards establishing systemic and operational integration between the US and Canada with regard to military matters. However, though I don't recall details offhand, I remember that some months back there were many voices in Canada (including across most of the Establishment political spectrum) who issued strong protests about certain aggressive steps the US was pressing for with regard to this integration.
I guess my question is this: What role, if any, are ruling elements in the US envisioning for this military integration as a possible means for facilitating an eventual takeover of Canada?
I called Cheney but he was taking a nap. Rumsfeld is out of town but will get back to me then I'll post here what I learn...
((seriously, no one can answer your question and the few that would have true insight into it, wouldnt be posting here...(or anywhere))
be more than happy to join Montana.
The talk gets louder when Quebec starts making independence noises.
BTW-on that 60 Minutes segment, I heard hot water mentioned twice, but never heard how they planned to heat the water (say with NG).
Also, I know that Canada just ended a fight to limit the amount of gas used to create the synfuels.
And this on who will be "paying a premium" for the chance to refine this stuff:
EnCana drops plan to process oilsands at Valero refinery
Last Updated Thu, 15 Dec 2005 16:57:08 EST
CBC News
EnCana Corp. and Valero Energy Corporation announced Thursday they have dropped a plan to process heavy crude oil from Western Canada oilsands at Valero's refinery in Lima, Ohio.
Abritrary lines that must be temporary.
BioRegions of Energy and Arable land/potable water will form first.
Or lack of energy delivered from above-say the New Orleans Gulf Coast.
I mentioned Canada because Canada actually has a spelled out way for the Provinces to secede.
A favorite book of mine and combined with Jane Jacobs'
Cities and the Wealth of Nations (that our cities are in transactions of decline)
and James Kunstler's-
"In The Geography of Nowhere I argued that the post-war enterprise of building suburbia as a replacement for towns and cities in the United States was a self destructive act. I argued that the living arrangement Americans now think of as normal suburban sprawl - is bankrupting us economically, socially, ecologically, and spiritually. I identified the physical setting itself - the cartoon landscape of car-clogged highways, strip malls, tract houses, franchise fry pits, parking lots, junked cities, and ravaged countryside - as not merely the symptom of a troubled culture but in many ways the primary cause of our troubles."
These three books form a foundation of sorts for my studies.
I'm now looking to the "Nine Nations" and their Capitol's and Second Cities for verification of trend.
Tyson's Corner becomes a new node, farther out, linking the outstretched veins with rings or beltways.
This can only work with cheap energy. And the center must remain vital. If only for geographic shortest route from Point A to Point B.
Here's a nice place to start
the most likely triggers for the break up are-
Energy, either lack of or hoarding.
Food, same as above.
Natural Disaster, one too many to handle.
Or a combo of the above.
I believe that collapse is already upon us. And has been for at least
5 years. With Kuwait's announcement, we're depleting at over 10% per year.
And of course there's Gaia and the fact that 7 Giga Tonnes CO2 must be removed from human annual output by 2020 or sooner as
Antarctica (rising seas) and the Amazon (biomass dieoff, end of CO2 sink) continue to deteriorate.
Peace, James
Current oil use worldwide: 84mbl/day. Projected for 2015: 105mbl/day.
Current oil sands production: 1mbl/day. Projected for 2015: 3mbl/day.
This is going to "solve our problem"???
And I don't recall that they even mentioned that, most of the year, they have to use massive quantities of natural gas to melt the crap enough to be able to scoop it out of the ground. And natural gas is running down quickly in North America.
By the way, those giant trucks ("toys") use over 100 gallons of diesel fuel per hour. Not good for yer EROEI...
This 60 Minutes piece qualifies as just more "don't worry" propaganda. Occasionally they do somewhat better, but they still serve the "powers that be" as much as the rest of them.
EROI only makes sense at a societal level, not an individual company. Which explains why no one is pounding on Charlie Hall and Cutler Clevelands door to fund EROI research....
Net energy is all that matters. So if they can ramp up to 3mbd and the EROEI is 3:1, then really they are only producing a net of 2mbd...
Why ?
Case 1 : EROEI of oil is around 20-30, and stays so (I doubt it). Then our problem will be to replace it with an equivalent or better energy source : coal, nuclear, solar or wind and to replace it in every sector of activity (ie switching to electricity for most energy consumer).
Case 2 : EROEI of oil is now 20 but decreases. Even with a flat extraction curve for the next 10 years as the Hubbert curve predicts, the decreasing EROEI will make less and less oil available for consumption (even if this would be only 1mbd/year) which will increase competition drastically.
So EROEI is an issue.
If I build a plant that's powered 100% by solar and wind, and it cooks tar sands into usable oil, or produces some other useful energy product via a completely different process, does it matter if the EROEI is lousy, or even if it's less than one? The energy input is not constrained in the long run by the finite nature of fossil or nuclear fuels, so if it takes 100 BTU's to produce only 10 BTU's of an energy product that's in a form the market values much more than the electricity I consumed to produce it, it still makes economic sense. (And since we're not up against a severe energy crunch yet, this is why batteries, which surely have a truly horrendous EROEI, sell in the bazillions.)
My point is that we have to look at ERO(non-renewable)EI to reach any meaningful conclusions. In many cases this is what people are talking about, as in burning vast amounts of NG to cook the oil out of the tar sands, even if they're not saying so explicitly. They're clearly making the assumption that we'll only ever run that process via burning NG, and such assumptions ("we'll always perform task X via method Y") are where a lot of predictions go off the tracks.
So the tar sands have x years worth of energy, plus all that we are gonna get from that nice global warming they will produce, while the deserts of NAmerica have y billion years of nicely contained fusion energy that could do the opposite re CO2. Storage? Think of zinc and carbon, not just hydrogen (with a nod to Engineer-Poet at Ergosphere)
Besides, who wants to dig frozen mucky sand in Canada if they can bask in the SW sunshine?
Meanwhile, I look out my window and see a mile long train of coal going down the throat of a monster stinker of a power plant grinding out juice to run teenagers hair blowers. THAT'S here right now, are we happy?
Question is, where do we put our marbles. We have to look over the whole playing field, not just a little bit of it.
I don't think that many people on TOD are very happy about full-out development of the tar sands, for lots of reasons.
On my long boring car trip today I thought up the way to do it. Put all the money that now goes into soft drinks into solar, and in an eyeblink we get lots fewer too fat people, lots less diabetes and rotten teeth, and lots more solar derived fuel, however they figure the best way to get it.
Then all we have to do is put back the nice light rail that used to go from my little hamlet to the great metropolis, and I will be able to quit risking everybody else's life by driving, sit back and read my laptop like god intended me to do.
As for growth, no way we gonna be able to do it. Shrink is the word! Shrink back to the days I remember when the population of US was 140E6 skinny hard working farm folks.
"Back when there were about half as many humans, before Intel made the first integrated chip (1974), when mainframe computers about as powerful as modern wristwatches... [eight years later]... the american people turned their back on truth, embraced illusion, and postponed the (then small) sacrifice. Thus was humanity and this planet betrayed."
Shrink we will, by hook or by crook :-((
My reason? All forms of renewable energy have a certain energy input associated with their manufacture, installation, and maintenance. While much of these energy inputs are one-time initial inputs, they can be annualized over the anticipated service life of the operation. currently, the energy inputs for renewable energy systems are in the form of fossil fuel. Now, if you use renewables to product liquid fuel from tar sands but have a very low overall EROEI, then there could be some point at which the fossil fuel energy inputs to the renewable part of the system itself begins to exceed the liquid fuel energy output of the tar sand production. When that happens, the whole renewable + tar sand production operation, taken as a whole, will result in LESS fossil fuel being available than if the operation had never been built in the first place.
To my mind, this brings up an interesting related point. And that is: is the EROEI for renewables such as solar, wind, and wave power, sufficiently high such that enough of their energy output can be diverted to the manufacture, installation, and maintenance of succeeding generations of additional solar, wind, and wave power systems? Or to put it another way: can renewable systems be self-replicating with positive growth if they had to rely solely on their own energy output? While I suspect the answer is YES, what I haven't a clue about is how big of a YES that is.
A final observation. It seems to me that we are going through a tremendously strenous effort to produce liquid fuels, mostly for vehicular transportation. We need to take a closer look at the validity of the underlying assumptions regarding this whole costly and inefficient chain going from low-grade fossil fuels (e.g., tars sands, coal, oil shale) to high-grade fossil fuels (gasoline) to be burned in an internal combustion engine to move a rolling vehicle. I'm not smart enough to know what the answer is, but I get the impression that we are increasingly just spinning our wheels.
I think transportation (of all types) powered by electric or hydrogen generated from alternative sources should be our long term focus. Liquid fuels will always have a portability advantage, but eventually I think it will be easier to just put up more wind and solar than burn corn or oil sands. There will be a balance that will take time as people start to re-evaluate all their $$$ assumptions on cost of production.
I have stated previously on TOD that until the loop gets closed on some renewable liquid fuels you can't really calculate EROEI. As Joule states above if you have enough positive EROEI from renewables to liberate tar sands why not just use the energy direct?
The answer, as everyone focused in on, is because we need liquid transportation fuel. Well, what is the true EROEI on biodiesel, ethanol, methane, etc., made from all sources, in the abscence of oil or NG? I know we need fertilizer, liquid fuel, electricity, and equipment just to make the feed stocks. But Monsanto, ADM and Cargill are working hard to make all the components from renewables. Sometime in the future someone is going to use biodiesel/ethanol energy to make some enriched organic fertilizer to make the next crop and start a closed loop cycle.
Clearly it will be the same or higher cost as petroleum at the start but what happens after multiple cycles? Does the cost (and EROEI) stay the same, go up or go down? I can't answer that and I don't think it can be calculated now. The point is, this type of liquid fuel might have a very positive EROEI but still be of limited quantity. In my opinion people too often interchange energy efficiency (EROEI) with generating abundant energy. They are not the same thing.
The average viewer at home is left wondering:
How much oil are we talking about in the grand scheme? Exactly how will this be helping us in 100 years? Does this mean SUVs are ok? Really no more $1.50 gas? can't we just pressure OPEC? Isn't Global Warming happening anyway? What's the difference if we do a little more emissions?
It's all he said/she said anyway...pass the cheetos.
However, year over year, total oil production in Canada is basically flat--increasing oil production from tar sands is just going to offset the declines from conventional production. On a net energy basis, Canada is actually going backwards year over year.
Also, they are talking about three mbpd from tar sands in 10 years. If the world peaked in 2005, we should probably expect to see about a 4% annual decline rate. At least initially, we will probably be losing about three mbpd crude + condensate per year.
I had the chance to talk to Boone Pickens at the Simmons/Kunstler event in Dallas. Boone thinks that we are definitely at the 50% mark worldwide.
but, he doesn't seem to have an apocolyptic vision or worry regarding peak oil.
WHY?
Now he's an elder statesman...
Will
Billionaires keep at it for the brain chemicals, long afer theyve made more than they or their families could spend in 3 lifetimes. We all compete in various ways like this. T Boone is just doing what makes him feel good. If he went out and drove a bicycle and grew sweet potatoes he might be good at it but he would seek some stimulation and proof that hes smarter and richer than most pretty quick.
This mechanism is at the core of the demand side of peak oil. Dopamine activation, unlike opiates, is not satisfied or quenched. Having more doesnt stop the desire for dopamine. Which is why one of the ultimate solutions for peak oil is to find ways for us to get our relative fitness dopamine sustainably...A long shot but possible. (there are of course other brain chemicals involved, but that is the big one in todays society)
But there is more truth than that in your comments tls. Need is not the main driver, you are right. Perhaps we are mostly like caged animals, seeking whatever irrational outlets we can. Perhaps that blinkers us, too.
http://www.cbsnews.com/stories/2006/01/20/60minutes/main1225184.shtml
You can watch it there also
As Profits Soar, Companies Pay U.S. Less for Gas Rights
http://www.nytimes.com/2006/01/23/politics/23leases.html?ei=5094&en=01638062a5dc8e2b&hp=& ;ex=1138078800&partner=homepage&pagewanted=print
The oil sands look like a very rich, pliable kind of topsoil. Why doesn't oil come out when squeezed?
"Well, because it's not warm enough. If you add this to hot water you'll start the separation process and you'll see the oil come to the top of the water and you'll see sand drop to the bottom," George says.
Contrast with Bubba's description:
In addition, tar sands require a lot of other energy resources to extract and upgrade them. Natural gas has been the fuel of choice for most of these energy needs as well as to use in hydrogenating the bitumen in the upgrading process. The forecasted need for natural gas collides head on with a forecast of limited future supply for this vital resource. There may be a way around this conundrum, but right now it is considered an impediment to future growth of tar sands development.
60 Minutes interviewed someone that said that refined tar sands crude is preferred by customers to other crude oil.
Asked if the processed oil is as good as that pumped in Saudi Arabia, Mather says, "Absolutely as good as. In fact, it even trades as a, at a premium because it's high quality crude oil."
Bubba feels differently:
To turn this bitumen into usable energy and transportation fuel it has to be heavily refined and upgraded, but that is doable. However, as you might imagine, this bitumen is not a very valued product by most oil refiners. Consequently, it sells at a heavy discount ($20/bbl ?) to light, sweet crude.
http://beastsbelly.blogspot.com/2005/08/tar-sands-will-save-us.html
To me, the new news in the 60 Minutes piece is the discussion of potential recoverable oil at lower levels being some 8 times the 775 bb normally claimed.
Nobody think the oil sands is the answer to PO. However, it is shaping up to be, as Boone implied, the most incredible natural resource find in history. It is far more significant to investors than it is to global energy issues.
http://www.engineerlive.com/international-oil-and-gas-engineer/production-processing/13702/investment-boost-for-oil-sands-and-coal-gasification-projects.thtml
We've inherited a steam production model whose best-by date looks to be pretty near.
.75MCF of gas = 1/8th boe
+
1/15 bbl diesel for transport
Realized selling price = $78.06cdn/bbl
Purchased energy input = $5.80cdn/bbl
1 bbl of production consumes 1/13th boe