Oh, Canada! -- Natural Gas and the Future of Tar Sands Production
Posted by Dave Cohen on June 20, 2006 - 3:19pm
Topic: Supply/Production
Tags: alberta, exports, mackenzie valley pipeline, natural gas, oil sands, tar sands [list all tags]
The "missing link" to the Uppsala paper (pdf) has been corrected.
I was investigating sour gas and it turned out that about 30% of the gas produced in the Western Canada Sedimentary Basin (WCSB) is sour. As things do, one thing led to another and I found that this gas can be "sweetened" and used although it contains H2S (hydrogen sulfide), which is toxic at levels as low 10 ppm (parts per million). However, the real path and story became natural gas usage to carry out production of the tar sands.
There turns out to be a worrisome supply issue. Here are some claims made about tar sand production going forward.
Predictions for Tar Sands Oil Production
Figure 1 -- Click to Enlarge
However, tar sands production of approximately 1.0/mbd in 2005 also used 0.72/bcf (billion cubic feet) of natural gas as I read in this brief press release.
According to the NEB's [National Energy Board of Canada] 2006 oil sands Energy Market Assessment, the amount of gas used in oil sands production will rise to 2.1 billion cubic feet a day in 2015 from about 700 million cubic feet last year....This story is about why I don't believe Bill."We don't see any issues on gas availability," said Bill Wall, oil technical specialist for the NEB.
The NEB's Assessment of Natural Gas Usage
Figure 2 -- Click to Enlarge
So, the main questions arising from this are
- What is the state of Canada's natural gas production?
- Do future projections support such a large increase in natural gas usage to support tar sands production?
- Are there are alternatives to using natural gas?
But first, we must discuss how and why natural gas is necessary for producing the tar sands. The newest most efficient in situ method for tar sands recovery uses Steam Assisted Gravity Drainage [SAGD]. As this important paper A Crash Program Scenario for the Canadian Oil Sands Industry by Bengt Söderbergh, Fredrik Robelius and Kjell Aleklett (Uppsala Hydrocarbon Depletion Study Group) tells us:
Natural gas-fired facilities generate steam [for SAGD] and provide process heat for bitumen recovery, extraction and upgrading. Further, natural gas also provides a source of hydrogen used in hydroprocessing and hydrocracking as part of the upgrading process.... Although there is considerable variation between individual projects, an industry rule of thumb is that it takes 1000 cubic feet of natural gas to produce one barrel of bitumen. The demand for mining recovery is a more modest 250 cubic feet per barrel. Current natural gas demand for upgrader hydrogen amounts to approximately 400 standard cubic feet per barrel. Future hydrogen additions for upgrading into higher quality SCO [synthetic crude oil], may reach another 250 cubic feet per barrel. In addition to this, if no coke burning is taking place, yet another 80 standard cubic feet of barrel for upgrader fuel is to be added. Therefore, a future barrel of in situ produced high quality SCO may require more than 1700 standard cubic feet of natural gas....This paper (henceforth, referred to as Uppsala) is the source of Figure 1 and subsequent graphs and information below. It is important to note that in Figure 1, the Uppsala "crash program" estimate is higher than the others, including that of the NEB and CAPP (Canadian Association of Petroleum Producers). However, it turns out that CAPP has just released a new report Canadian Crude Oil Production and Supply Forecast 2006 - 2020 (May 2006) that reflects or even exceeds the Uppsala scenario for tar sands production. Therein we find the following graph.
CAPP Canadian Oil Production
Figure 3 -- Click to Enlarge
In the fine print, we find that 2005 tar sands production was 0.99/mbd with an expected rise to 1.26/mbd in 2006. Tar sands production is expected to rise to 3.5/mbd by 2015 and 4.0/mbd by 2020. Since these numbers are in line with the Uppsala "crash program", their projections gain some credibility. You can find a summary of the CAPP report if you don't want to wade through the whole thing.
Has Canadian Natural Gas Production Peaked?
The answer is "yes" according to diverse sources. Here in Canadian natural gas reserves continue to fall despite record drilling activity, we find that the Canadian Association of Petroleum Producers records falling proven reserves. Canada's NEB, in agreement with Uppsala, put the peak figure at 16.8/bcfd in their latest report.The profile for Canadian natural gas production appears to have flattened and is expected to remain around 476.0 million m3/d (16.80 Bcf/d) through 2006. As Canadian conventional gas production declines, this may be offset by increases in natural gas from coal (NGC) production. Natural gas from coal, which is also known as coal bed methane, may become a significant contributor to Canadian gas supply in the longer term.For further confirmation, look at the Canadian natural gas country brief from the EIA. Regarding reserves, here's the big picture from Uppsala.By 2006, natural gas demand is expected to grow in Canada and the U.S. to approximately 1 980.7 million m3/d (69.92 Bcf/d) from approximately 1 950.7 million m3/d (68.86 Bcf/d) in 2004, an increase of 1.5 percent.
In Canada the most significant growth in demand for natural gas is from oil sands operations, which could reach 28.6 million m3/d (1.01 Bcf/d) by the fourth quarter of 2006, an increase of 8.3 million m3/d (0.29 Bcf/d) over 2004.
Canadian Gas Reserves 2005
Figure 4 -- Click to Enlarge
This brings us to North America's Arctic natural gas and especially the Mackenzie Delta, which is supposed to be an important new source of natural gas to the Alberta region supplying as much as 1.2/bcfd. The three main fields in this region facing the Beaufort Sea, Taglu, Parson's Lake and Niglintgak, contain about 5.8/tcf (trillion cubic feet) of proven reserves and "undiscovered" reserves may be as high as 62/tcf.
The Mackenzie Valley Pipeline
Figure 5 -- Click to Enlarge
As you can see, the end point of this pipeline is Alberta and the reserves numbers are reflected in Figure 4. However, there are now the usual problems with the construction of the pipeline. No doubt the project will be completed but we can expect the usual delays, cost overruns and other logistical difficulties.
Future Availability of Natural Gas for the Tar Sands
As the expression goes, a good picture is worth a 1000 words. Here it is, from Uppsala.
Available Canadian Natural Gas for Other Consumption
Figure 6 -- Click to Enlarge
Eyeballing the graph, we find that by 2018, Canadian natural gas production will be about 14/bcfd and consumption is projected to go something like this--numbers approximate, of course!
- Exports to the US -- 7.5/bcfd
- Canadian power demand -- 2.2/bcfd
- Tar Sands production -- 3.1/bcfd
- Other Consumption -- 1.2/bcfd
That covers it all, the whole shooting match, which is 14/bcfd. Incredibly, tar sands production is higher than internal Canadian electrical power demand and this leaves a paltry 1.2/bcfd for all other Canadian usage, which would include any industry, agriculture or manufacturing there that uses natural gas. Clearly, this is not going to work. Even if the MacKenzie pipeline comes online successfully in the 2010/2011 timeframe as projected and all the gas transported from the Arctic is used for tar sands production and finally, we assume the WCSB 2005 contribution of 1.1/bcfd (which is almost certainly very generous), there would still be a 0.8/bcfd shortfall of natural gas supply for tar sands production in the year 2018. Something's got to give.
Recall that Uppsala bases its projections on its "crash program forecast" which in terms of tar sands production is equivalent to the latest CAPP longterm forecast of May 2006.
[editor's note, by Dave] Tar sands natural gas usage will reach 1.01/bcfd by the 4th quarter of 2006 from 0.72/bcfd in 2005. According to the CAPP production data, there will be an increase of 0.225/mbd of oil production from 2005 to 2006 accompanied by an increase of 0.29/bcfd of natural gas required for that new production, an astonishing 29% increase in just one year. This is related to increased use of SAGD for in situ bitumen extraction.
Unfortunately, the NEB report only covers the short-term out to the end of this year, so at present I do not know their longer term projections. But we know this much...
Canadian gas produced from the WCSB contributes almost 98 percent of the total gas produced in Canada and will remain the mainstay for the outlook period. Alberta, British Columbia and Saskatchewan contribute roughly 80, 16 and 4 percent, respectively, to the production from the WCSB, while natural gas from offshore Nova Scotia provides most of the remaining production.Regarding Issue #2, I would say "no kidding!" Where's the extra gas going to come from in the longer term? LNG (liquified natural gas) imports? How are you going to get them to Alberta, which is geographically in the middle of nowhere? Natural gas from coal (NGC) [as described by the NEB], also known as coal bed methane (CBM)? A potential source that is almost completely undeveloped in Canada.Issue 1: Canadians are facing high and volatile natural gas prices over the outlook period. Although high gas prices have benefited Canadian economic growth, higher energy costs present a challenge for consumers and the industrial sector.
Issue 2: For oil sands producers, high and volatile natural gas prices have added uncertainty to the cost of their operations. Consequently, suitable alternatives for natural gas are being investigated by oil sands producers and they will make investment decisions based on the overall economics of their operations.
Development of the resource is at an early stage with the production in 2004 at 4.3 million m3/d (0.15 Bcf/d) or less than 1 percent of Canadian gas output.But, most importantly, why would Canadians put up with this politically unacceptable situation in which their scarce natural gas resources are either 1) exported to America or 2) used to produce synthetic crude oil which is then mostly exported to other countries to their detriment and for the profit of corporations like Suncor Energy? To me, the future scenario is completely untenable, both logistically and politically. It is a fantasy world for those who espouse it.
Alternatives to Using Natural Gas?
Uppsala summarizes the alternatives to using natural gas.There are alternatives to natural gas as hydrogen source as well as energy source. However, alternative hydrogen sources, predominantly partial oxidation gasification of coal or oil sands residues have low efficiency, negative environmental impacts and a more complicated process for purification of hydrogen. (Alberta Chamber of Resources, 2003)The first alternative, which uses coal or involves a kind of "bootstrapping" of the operation is obviously costly and has low efficiency. The viable alternative is to build a nuclear power plant there. Jerome a Paris at Daily Kos reported on this back in the fall of 2005 in Big oil getting desperate: Making oil with nuclear energy.Coal combustion in advanced boilers or gasification of residue bitumen, is an option to replace natural gas for energy although greenhouse gas emissions would increase significantly. However, nuclear energy is another possible source of electricity and steam.
French oil giant Total SA, amid rising oil and natural-gas prices, is considering building a nuclear power plant to extract ultraheavy oil from the vast oil-sand fields of western Canada....Unfortunately, my brief searches have not turned up much information about Total's plan--it seems to be moribund for now. Quoting from this Rigzone article, "The extraction process is so labor intensive and requires so much heat, in order to extract the oil from the tar sand that 'Total briefly floated the idea of building a nuclear-power plant' in Fort Mc Murray". So, for right now, the idea seems dead. Also, I suppose it would be possible in theory to provide the required energy with wind, solar, and the rest ... just kidding! -- this would probably require most of Saskatchewan.At the same time, prices of natural gas -- which oil-sands producers have relied on to produce the steam and electricity needed to push the viscous oil out of the ground -- have risen 45% in the past year. That is prompting Total, which holds permits on large fields in Alberta that contain oil sands, to consider building its own nuclear plant and using the energy produced to get the job done....
In conclusion, I do not see where the extra natural gas is going to come from to scale up tar sands production to levels forseen by agencies like CAPP. From the supply side, the logistics (pipelines) and the political side, there are major obstacles at every turn. This will be especially true as more natural gas is required to produce a barrel of oil using the in situ SAGD method. I recommend great skepticism toward claims that this miracle resource will replace a large part declining conventional oil from existing fields. And I haven't even mentioned the water problems. Oh, wait, that's the Canadian Chamber of Commerce knocking at my door.... Gotta run.
A few images:
Steam Assisted Gravity Drainage (SAGD)
Cyclic Steam Stimulation (CSS)
Toe to Heel Air Injection (THAI)
src: oilsands.infomine.com
Terrific job! Kudos! So the key question is how many in Canada are Peakoil aware, who will then logically seek to hoard their resources for future generations? Going environmentally and energetically broke so Americans can continue their Energy Fiesta makes no sense. Mexico and Canada's withdrawal from NAFTA energy export rules is only a matter of time, unless the US strongarms them. But this did not work on Mexico and Presidente' Lazaro Cardenas in the 1930s, therefore we should not expect it to work in this century either. See my earlier postings from yesterday for details. The upcoming Mexico elections could be a key turning point in Westexas & Khebab's export depletion theory to the US-- I expect Mexico to turn Hugo Chavez-style.
At crunch time, expect Canadian eco-terrorists and detrito-terrorists to constantly disable energy flows south. If people are rioting now because energy blackouts prevent them from watching World Cup Soccer, just imagine the violence when Canadians start freezing.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Matthew Simmons, in his interview with Jim Puplova, called the entire process "turning gold into lead." He said the synfuel crude was low quality. (www.netcastdaily.com)
The rather pathetic and alarming potential that oil companies may use nukes to extract oil indicates the lengths the powers that be will go to in order to continue the parasitedigm.
Also, good post, Bob Shaw in Phx,AZ.
The upcoming political contractions will accelerate the undoing of any polity we may see remaining in the world. As the oil producing countries realise that it is not in their interest to continue funding a parasite like the US through currency reserves and unfavorable trading terms. Eventually they will shift their focus inward and will no longer worry about the world's largest consumer market. The corporations who have been shifting their manufacturing facilities offshore for the past 25 years will complete the process and move even their corporate headquarters overseas to more amenable countries -- a process that has already started with much of corporate wealth being offshored for tax breaks. It is only a matter of time before the dollar collapses due to a shift to PetroEuros and PetroRoubles.
We will find ourselves friendless in this cold cruel world with either our hands out, begging for the oil and gas we took for granted, or we will have our weapons pointed, demanding that our "friends" provide us what we want.
My guess is we will use the latter technique. More lives squandered. More energy wasted. More time sifting through our fingers as we continue the parasitedigm.
I hope the Canadians wise up and stop the foolish destruction of their environment designed to fuel our silly lifestyle. But, greed is an international trait and the chances that humans will see the continued track as a dead-end are slim to none. Having just read a very good history of the Spanish Flu, I see that cronyism, greed, political machinations, ego, a tenacious clinging to the old ways even in the face of new understandings, all contributed to the horror of that epidemic, and so it will this crisis.
How can we hope to wise up when there are no stacks of bodies to the ceiling in every corridor of today's hospitals, no steam shovels digging mass graves in Philadelphia, no people collapsing in the streets, and even then the people in power in 1918 did not heed the experts of the time? How can we expect change when cheap oil still reigns?
The countdown is on. We are witnessing a grand and disturbing confluence of events, all destined to result in a reduction of the human population. Anyone with a basic understanding of our pyramidical economic and physical infrastructure realizes that if enough blocks at the base are pulled out, the entire edifice will collapse like so many cans of peas at the market.
God help us.
As a rule of thumb, nuclear heat in the reactor costs $0.50/mmBTU compared to $7 to $15/mmBTU for wholesale gas at Henry Hub (Canadian prices might be lower.)
One problem is that turning nuclear heat into steam requires (so far) rather expensive water. One would have to have secondary heat exchangers but extensive water treatment of the feedwater would be needed since these schemes are one way trips for the steam. Figure maybe $1/gallon for water treatment.
Nuclear process heat has been attempted - Midlands plant in Michigan was to make electricity and supply process steam to an adjacent Dow Chemical plant. Bad building foundations killed that idea and lead to abandonment.
The proton sources (hydrogen) would still need to be methane for the next 20 years at least unless one used expensive electrolysis.
As to Canadian export gas, here in California we're major buyers. I've been telling any one who would listen that our current sources are peaked and depleting but the California Energy Commission seems in denial. Canadian gas also fuels Washington and Oregon and feeds a number of combined cycle plants in those states.
A nuclear plant lasts a long time and produces a LOT of steam (process lots of tar), steam can not travel far cost effectively (a few miles at most). Tar sands need to be brought to the reactor. A reactor will process major quantities of tar sands in 40 or so years.
IMHO, the nuke will consume the tar sands in the neighborhood in a decade or so and the cost of bringing the tar sands to the reactor will climb and eat into the economics.
The only economic reactor would be a electricity producer with "minimal" steam by-product.
It makes more sense to build reactors elsewhere, burn less NG to make electricity and use that NG in Alberta instead.
The real issue with nuclear as I see it is the long lead time and the significant R&D expenses needed to develop the technology. I feel that oil companies still don't have the confidence the prices will stay at such heights in the next couple of decades, needed to justify those investments. NG or coal/coke boilers will be the fuel of choice until their inadequate supply becomes apparent.
I don't see the political will and leadership for such enterprises, and I even doubt that we will have the resources for them.
It is the only option that:
- Is technologically possible. All you need is a uniform designed battery-electric vehicle capable of up to 20 miles of range. (yes) It can be driven short distances off of batteries but is best utilized when driven to an access point (think a monorail like on ramp) and then driven off of direct current. (also possible) While on the rail portion, all vehicles are controlled automatically via computers with programs directing each vehicles movement allowing following distances of maybe an inch or two (also possible)
- Not dependent on liquid fuels. No part of dual mode requires gasoline/ethanol or diesel/biodiesel. All energy arrives via electricity during charging or direct operation. You could attach a liquid-powered generator for extra range tho.
- Solves congestion issues. Even if we made H2 super duper easily, you still have the problem of congestion. By using computer controlled rail movements, you can dramatically increase capacity and speeds and instantaneously load balance without any human interference.
- Can be built today. The infrastructure is not beyond our capabilities. The steel can be procured. Ditto for the electronics and battery equip. No exotic materials are required. Since most tracking would be elevated, limited land acquisition costs are also a plus.
- Can be powered by anything. Electricity is the only source of energy the system uses. As it stands now, our best alternative fuel prospects produce just that. Why worry about biofuels and their pathetic efficencies or Hydrogen and its complex infrastructure needs when you can generate the electrons and use them directly. Plus as our electrical generation mix changes, more fossil fueled now, more renewable later we dont have to reinvent the system. Heck it would even give us several decades to really figure out fusion.
- Can serve private transportation AND public transportation needs simultaneously. A dual mode system would be used by privately owned cars and minibusses that would take advantage of the flexibility. Plus, attaching offline "stations" at strategic points, you could also run totally automated cars that never leave the rails as peoplemovers. This system also opens up new rental possiblities much like airport luggage cart rentals whereby you pick up a cart at any given rental station, use it and deposit it at any other station.
Those are just some of the things I can come up with. Unfortunately you will need governmental buy in and I just dont see that happening anywhere.Great summary. I have always thought that this could be the best solution available now, if only if we had the political will. The costs will probably be in the trillions, but when you look at the benefits, any price will not look that high.
I just want to add one other major advantage that again could allow the idea to be the way forward: compliance with existing infrastructure and scalability. It is not needed the whole thing to be builded at once. We can easily start with local government funded pilot projects in some cities, where existing highways are added rails, being utilised by plug-in hybrids (again startup subsidised by govt). Many competing designs will yield the best possible solution and with time the technology will evolve, pulling forward the battery technology as well. Thus the transition will not be that expensive and can be almost seemingless.
Streetcars serving as circulators and feeding Light or Rapid (subway type) Rail will work well without any technology developments issues. Add bicycles & shoe leather. Much of suburbia will likely be abandoned in any case. No great loss since it was not built to last, takes tyoo much to heat, cool and service (postal, police cannot walk or bicycle due to ultra low densities, plumbers & UPS deliveries take lots of fuel getting around).
It will take decades to get the technological & logistic issues out of some new gadgetbahn. Lets build what works, and workd well today !
Unfortunately this is very unlikely because of the contraints of battery technology. Virtually every battery (except Iron-Nickel) batteris have a short lifespan of about 5 to 7 years. Second Hybrid have all but been proven that they are less efficient than similar sized Internal-Combustion (IC) Engines only powered vehicles. The extra weight and power train conversion (mech-to-electricity-to-mech) outweights the gains of the hybrid (braking losses, idleing losses). Like using NG to extract oil from tar-sands, it would more efficient to build vehicles will less engine power, and make them burn fuel more efficiently (such as Direct Gas Injected IC Engines).
Finally the issue with electric distribute becomes an issue with plugin type vehicles. As the costs of NG and other fuels becomes more expensive (or if supply declines), more and more people and business will use electricity. Demand for electricity will likely rise putting even more stress on a national grid that is already near the breaking point.
All but proven where, exactly?
I've saved this table of well-to-wheel efficiencies for a wide variety of fuel types, with and without the hybrid option. According to the scientists, they all gain from the hybrid technology:
Image, well to wheels efficiencies
http://digg.com/technology/_Hybrid_Cars_Not_Always_More_Fuel_Efficient
What I hate doing is looking up information that is easily accessable via a search engine.
The bottom line is that sticker mileage isn't anywhere near typical results of consumers. Generally the hybrid get better mileage than traditional vehicles because the engines are much smaller. If traditional vehicles where equipped with the same size engines as hybrids, their milage would be better because of the lower vehicle weight (batteries) and without the conversion losses (mech-to-elect-to-mech).
http://www.iangv.org/jaytech/files/Pathways_Part_A.pdf
pathways
The fact that this article is in support of fuel cell and hydrogen and doesn't discuss any of the major issues, leads me to believe this simply a marketing paper, and has no scientific worth.
While I admire your effort to dispute my arguements against hybrids, you need also apply this same effort on questioning hybrids. I believe that if carefully research and understand the issues, you will reach the same conclusions that I have.
Thanks.
http://www.fueleconomy.gov/mpg/MPG.do?action=browseList
It's interesting actually. That previous table shows that a non-hybrid diesel does have higher engine efficiency than a gasoline engine (15.5% efficiency vs. 12.4%), and the gasoline hybrid only touches that non-hybrid diesel efficiency (15.4% vs. 15.5%).
The nice one is the one we can't check in the US market yet, the diesel hybrid (with 18.6% well to wheels efficiency). On the other hand, prototypes of that type do seem to confirm the stellar results:
So you know, when hybrids break the records ...
http://www.greencarcongress.com/2006/01/psa_peugeot_cit.html
I wouldn't recommend relying on a auto manufacturers numbers, as their main objective is to market these cars to groups of people either trying to save money or conviencing themself that they are better for the enviroment. In either case, I believe hybrids do neither.
As I've said many times before, better technology isn't the solution, it simply a path to denial about our future.
For one, people aren't going to simply trade in the SUV for a hybrid. The majority of US american drivers have SUVs and they aren't likely to let go. They'll keep on driving them, until they cant afford to, at which time they won't have money to buy an expensive hybrid. Even if everyone did abandon their gas guzzlers for more efficient cars, the amount of energy to construct them would exceed any savings.
Reduced oil consumption in the West won't lead to a decline in global consumption. The new industrialize nations like China and India will continue to expand their consumption until the system breaks. There are over 2 billion people living in India and China, and every single one of them wants to enjoy the american dream. For every Westerner that wants to conserve there are more than 100 in India and China that want to consume more.
Rather than focus on trying to figure out a way that we all can continue to live our fabulous livestyles on a world with declining energy reserves, you should be focusing on what you can do to prepare you and your family for a permenment energy crisis.
While commercial nuclear power reactors being sold today offer 4400 MW-thermal outputs, submarine reactors come in ~60 MW-th sizes.
Here's is a market for the Russians! They have scrapped their fleets of nuclear subs and I've often thought that they had a missed market opportunity for marine propulsion (high speed transPacific container ships) and in process heat.
One could package a mobile process heat reactor but it would need shielding for operation and defueling capability. Do-able - in fact, done. The US built packaged reactors for field outposts in the '50s. Our Antarctica base had a reactor for many years. More applicable, the Army designed and tested a reactor for powering DEW line radar installations - the infamous SL-1 that pinned an operator to the ceiling with a control rod from an overpower excursion event.
Too bad my employer is so focused on the electric markets - comes from having "Electric" in its name I guess.
Its unlikely that a rail based reactor would be large enough to supply the quantities of steam required. Small HO naval reactors use highly enriched uranium (or plutonium) which isn't permitted in commerical reactors.
Plus, NG is still required to upgrade bitimen to higher quality crude.
I suspect that in the future operations could switch to syngas (CO & H2) for production. A pipeline could be constructed to transport syngas from a gasifier located near coal fields to the tar-sands. However it might be more pratical to just convert the coal to liquid fuels instead of trying to extract oil from tar sands.
Any chance you'll discuss the water situation? My understanding is that they are using too much water to sustain the forcast levels of production, but I'd like to see a more in depth analysis.
I'll second that request. I gather that the water situation is precarious, but don't know much about the details.
Great post Dave, as always.