The Oil Drum

This is 3rd in a series of 5 guest posts by Professor Charles Hall of the SUNY College of Environmental Science and Forestry describing the energy statistic, "EROI" for various fuels. As has been discussed often on this site, net energy analysis is a vitally important concept - just as we primarily care about our take home pay which is our salary minus the taxes, we should care about our 'take home' energy, which is what is left after energy costs have been accounted for. As important as it is, this measure is not easy to quantify, as: a)data is almost always measured in $ as opposed to energy terms, b) parsing non-energy inputs (and outputs) into energy terms is difficult, and c) analysis boundaries (including environmental impacts) are very disparate. As such, there is not (has not yet been) a consistent formula for EROI applied to all energy studies that has led to policymakers and analysts speaking the same language in useful ways. The lead paper in this months Royal Academy of Sweden's journal AMBIO will be about such an EROI framework, and we will link to it when it comes online.

Professor Hall has been working in this area for over 30 years. Below are net energy analysis from Hall's group on the unconventional oil sources from tar sands and oil shaletwo resources that theoretically are enormous in energy scale, but practically are limited by flow rates, costs, and externalities. Just how limited is the subject of todays two-part informative post is below the fold. Remember, any specific numerical help via referenced literature, personal experience or knowledge to better inform Dr. Hall and his students would be appreciated.

This is a guest post by Hans Noeldner.

OK, Oil Drummers, it's quiz question time.

Would it make sense to extract crude oil from asphalt? The process for extracting it from tar sands is, after all, very energy- and capital-intensive, not to mention the horrific environmental impact. Meanwhile Earth would be much improved if we-the-people replaced many of our biologically dead highways and parking lots with useful things like forests, wetlands, farms, gardens, and user-friendly habitation for homo pedestrianus. This would give us a lot of torn-up asphalt from which we could harvest energy…

Anyway, here are the quiz questions:

(1) On average, how many barrels of petroleum are there in a ton of asphalt? (Apparently there is about one barrel of oil in two tons of tar sands.)

(2) How many barrels of petroleum are used to asphalt binder per year in the USA? What about other binders like black liquor from papermaking?

(3) Considering highways and parking lots only, what is the total amount of asphalt binder in the USA?

(4) Is a significant percentage of this binder lost (via leaching and evaporation) as asphalt breaks down?

(5) Can the binders used in asphalt be cracked (or whatever) to make the usual range of refined petroleum products – particularly gasoline and diesel?

In her new book The Shock Doctrine: The Rise of Disaster Capitalism, Canadian writer Naomi Klein uses the example of public sector dismantling in both New Orleans and Iraq as an illustration of Milton Friedman's idea that crisis presents an opportunity to push a pre-existing agenda and achieve sweeping change. This is both an important point and a timely warning, as the developing international credit crunch is arguably approaching a critical phase. The inability to roll over short term commercial paper, often backed by dubious loans, is presenting an enormous challenge to a banking system short of cash. The coming economic upheaval could be sufficient to precipitate far-reaching socio-political changes on a global scale.

On the energy front, CIBC World Markets claims that Canada has 50-70% of the investable oil reserves in the world, for oil majors increasingly shut out of producing regions. However, those reserves suffer from a shortage of pipeline capacity for both inputs and output. Saskatchewan decides against 'clean coal' on cost grounds, but continues to maintain a low royalty, low tax regime for natural resources. In the meantime, the Canadian wind industry is being consolidated in fewer and fewer hands, and there is strong resistance to uranium mining in rural Ontario.

As for environmental news, Holland is developing a 200 year plan for climate change, but with the assumption that sea-levels will rise very little despite evidence of rapid change in Greenland's icesheets. There is considerable concern over the potential for warming to activate microbial oxidation of the organic matter of the arctic tundra, which could ignite a devastating spiral of positive feedback.

Naomi Klein: The Shock Doctrine

In one of his most influential essays, Friedman articulated contemporary capitalism's core tactical nostrum, what I have come to understand as "the shock doctrine". He observed that "only a crisis - actual or perceived - produces real change". When that crisis occurs, the actions taken depend on the ideas that are lying around. Some people stockpile canned goods and water in preparation for major disasters; Friedmanites stockpile free-market ideas. And once a crisis has struck, the University of Chicago professor was convinced that it was crucial to act swiftly, to impose rapid and irreversible change before the crisis-racked society slipped back into the "tyranny of the status quo". A variation on Machiavelli's advice that "injuries" should be inflicted "all at once", this is one of Friedman's most lasting legacies....

....I started researching the free market's dependence on the power of shock four years ago, during the early days of the occupation of Iraq. I reported from Baghdad on Washington's failed attempts to follow "shock and awe" with shock therapy - mass privatisation, complete free trade, a 15% flat tax, a dramatically downsized government. Afterwards I travelled to Sri Lanka, several months after the devastating 2004 tsunami, and witnessed another version of the same manoeuvre: foreign investors and international lenders had teamed up to use the atmosphere of panic to hand the entire beautiful coastline over to entrepreneurs who quickly built large resorts, blocking hundreds of thousands of fishing people from rebuilding their villages. By the time Hurricane Katrina hit New Orleans, it was clear that this was now the preferred method of advancing corporate goals: using moments of collective trauma to engage in radical social and economic engineering.

This is part 2 of a guest post by Chris Nelder. It was originally written for Friday's Energy and Capital.

This is a continuation of my previous article (Tar Sands: The Oil Junkie's Last Fix, Part 1) on the challenges facing the Canadian tar sands, in which we looked at the cost and financing issues. Today we look at water, energy, labour and the environment.

This post reflects collaboration between Don, also known as 1observer, and myself. Don is an arms-length investor in Petrobank Energy and Resources Ltd., the company that patented THAI. Otherwise, he has no ties with the company. This post is based on an analysis of publicly available documents. I want to thank Don for all of his hard work that went into this.

1. What is toe to heel air injection technology?

Toe to heel air injection (THAI) is a new method of extracting oil from heavy oil deposits which may have significant advantages over existing methods. The method was developed by Malcolm Greaves of the University of Bath and has been patented by Petrobank. According to the Petrobank website:

This is a guest post by Chris Nelder. It was originally written for Friday's Energy and Capital. Part II will be available next Friday.

For this week's article, I collaborated with energy journalist Roel Mayer, a freelance writer on earth, energy and economy, based in Canada. Roel is a keen observer on energy, and the Canadian tar sands in particular, so he was a natural research partner for this short study on the state of oil production from tar sands.

He was also the one who coined "The Law of Receding Horizons." For those who missed my previous articles on receding horizons, it is a simple concept: as the cost of energy rises, the cost of everything else made with energy (like building materials) also rises. So an energy project which was expected to be profitable when energy costs were x amount higher than today, turns out to still be uneconomical when you get there.

_{Shallow oil sand deposits in open pit mining: yes, this was a boreal forest from time immemorial.}

I was planning on writing a little more on technology, or rather the lack of development thereof, but thought I would begin by commenting on the Tar Sands issue a little more. I noted that in Robert’s post on the API call where he began the discussion with the note about the rivers around Fort McMurray turning brown due to the tar sands residue. Well one of the wonders of today’s technology is that you can check.

I had posted about this before, but this time thought to use modern technology. If you go to Google Earth and type in “Fort McMurray” it will give you an overview of the town in Alberta, and the mines can be found just to the North of it. Please note that the river running through the town, from the mines, is blue. Now I don’t think that Google spends their time painting in rivers – so I guess it really is (Well it is really clear, but you get my point). As I noted at the time the brown color occurs as the water from the sand/bitumen separator carries the sand to the tailings pond. Because the clean sand is brown when wet the water looks brown, until the sand settles out in the pond. You can see that the sand then dries to a whiter color, and the contained water in the main body of the pond is also blue. (It was also blue when I saw it on my visit). Once the hole dug to remove the oil sand has been filled in, then the cover will be replaced and it will return to normal, except that the rivers and streams won’t have a tarry bottom any longer.

As I saw, when going out to dinner last Saturday night, we are now entering High School Prom Season as this year’s graduates prepare to move on to jobs and college. It is this generation that will see the unfolding energy crisis in all its facets. While in college they will likely see Peak Oil; while working Peak Natural Gas, and, before they retire, Peak Coal. Which means that between those about to retire and these kids lies the brain power that is going to have to solve the reality of finding alternate sources of fuel at World-scale volumes.

On April 18th, I participated in a conference call with the American Petroleum Institute. The topic of the call was Energy and the Environment. You can download a transcript here or the audio of the call here.

Here was a list of participants, pulled from the call transcript:

Jeff McIntire-Strasburg is from Treehugger and we just went through, briefly, a blog roll. We have on the call Robert Rapier from The Oil Drum and R-Squared; Hank Green of EcoGeek; Tom Fowler of NewsWatch: Energy which is Houston Chronicle; Marc Gunther, Fortune; Mark Gongloff of The Wall Street Journal Energy Roundup; and Carter Wood of ShopFloor.org.

I think they missed mentioning John Gartner from Wired.

In testimony before the House subcommittee on Energy & Resources in June, 2004, Vello A. Kuuskraa, president of Advanced Resources International (ARI), presented a graphic to members of congress showing huge potentially recoverable domestic reserves of stranded oil. This oil would be recovered by use of CO2 EOR (enhanced oil recovery). Here's an updated version of that graphic—from Undeveloped US oil resources: A big target for enhanced oil recovery — published in World Oil, August, 2006.

Figure 1

However, the problem of declining domestic oil production is not due to a lack of resources. We still have nearly 400 billion barrels of oil that is being left behind, "stranded". This is because our primary and secondary recovery methods recover only about one-third of the original oil in-place from our domestic oil fields, [Figure 1 above].

Numerous approaches are being tried to recover a portion of this "stranded" oil. The one with the highest, but still unrealized, potential is using CO2-enhanced oil recovery (CO2-EOR). Twenty years ago, enthusiasm for this idea was high.

Let's talk about what's going on here, considering the impact it will have on future U.S. domestic oil production and energy independence.

Looking at the ASPO Blog, I read these statements by some prominent members of the peak oil community.

[Robert] Hirsch doubts that the world can keep increasing oil flows for much longer. "CERA sees a long plateau ahead," he said. "But I can't find a plateau in the data I'm looking at." The downturn, when it comes, could take the world by surprise. "Peaking could come with little warning and sharp declines," he said....

"We have 1,500 days until peak and tomorrow we'll have one day less," Chris Skrebowski, the editor of Petroleum Review, told the ASPO-5 crowd today. Skrebowski's projections, which focus on oil flows instead of reserves, has the world peaking at between 92 and 94 million barrels per day. Unfortunately, he said, "collectively we're still in denial."

Hirsch is the principal author of the now famous Hirsch Report (large pdf). Skrebowski maintains the Megaprojects Database of future oil production. These quotes got me thinking about the shape of the peak in world oil production which Skrebowski projects as occurring in the fall of 2010.