Sunday, March 3, 2013

'Peak Oil' Advocate: World 'Desperately Needs' New Energy

This is where we stand, and it's a fairly bleak view: "Peak oil" -- the concept that the globe's oil supplies are finite and will, perhaps sooner rather than later, run out entirely -- is almost here.

Nothing new (with the possible but unlikely exception of Iraq) is coming online anytime soon. And while the clock is ticking, forward movement on developing renewable energy resources has been sadly inadequate. In the meantime, the idea that shale reservoirs will lead the US to energy independence will soon enough be recognized as unrealistic hype. There are no easy solutions, no viable quick fixes, and no magic fluids. Yet the future isn't all doom and gloom: Certain energy technologies do show promise. We had a chance to speak with well-known energy expert Dave Summers, where we cut through the media noise and take a realistic look at what our energy future holds.

Dr. Dave Summers — scientist, prolific writer and author of "Waterjetting Technology" — is the co-founder of energy discussion website The Oil Drum and currently writes at the popular energy blog Bit Tooth Energy. From a family of nine generations of coal miners, Summers' patented waterjetting technology enables the high-speed drilling of small holes through the earth, among other applications. What do you foresee in our energy future? Will new extraction techniques and advances in drilling technology help put off peak oil?

Dave Summers: Most of the "innovation" in energy extraction from underground has been known for some time. It's just taken time to work its way through to large-scale market use. There are techniques such as in-situ combustion, whether of coal or oil sand, that are now being developed that show some promise. But each increment of gain is at higher cost, and is chasing after a smaller target volume. Even if better methods of drilling were developed (and we have looked at several) in the cost of overall production this would not, in itself, provide that much benefit.

If ways could be found to economically release more hydrocarbon from existing and drilled reservoirs, then that might have a significant impact, but though this has been sought after with lots of effort, there has been no magic fluid or way of doing that yet.

Peak oil is about here. Though we can argue about fractions of a million barrels of day, it is hard to find any large volumes that can be expected to come onto the market in the next decade (with the possible, though unlikely, exception of Iraq). The clock on this has been ticking for some time, and some of the moves toward increasing renewable energy sources (though motivated by a different driver) have helped mitigate some of the problem, but sadly not enough. Can the shale boom be replicated in Europe?

Dave Summers: The technology for developing the hydrocarbon volumes in tight shales and sands is now becoming well defined, and can thus be transferred to Europe. It will likely make that transition fairly quickly. That's why some countries have American partners in their development. However, the environmental movement that is strongly against the technology is more entrenched, and has more political clout in Europe, so this may slow the transfer.

At the same time, though there are significant volumes of shale, it is only after wells have been drilled and fracked that one can get an estimate as to whether or not the resource can be turned into a reserve. This information is still a bit sparse, and it makes it difficult to be definitive at this time. Is the Keystone XL pipeline vital to the US quest for energy independence?

Dave Summers: The pipeline is something that is a convenience in getting more oil from Canada into U.S. refineries. There are other steps (pipelines now flowing backwards for example) that are being taken to deal with the situation. As long as the sole export market for the oil is into the United States, Canada has to take the price that it is offered for the oil, or not sell it. Should a second sales path (such as a pipeline to the coast) allow significant sales to other customers (say China) then the price will likely go up, and supplies to the US will get more expensive, and potentially smaller. What happens if Keystone isn't approved – is there a plan B?

Dave Summers: On whose part? The Canadians will run a pipeline to the coast and make more money over time. In the short term, the US will be able to balance any shortfalls with domestic production, but in about three years, as that starts to fall off, then life might get more difficult. It takes a long time to develop a new resource. How much of a role will fracking play in US efforts to reduce carbon emissions?

Dave Summers: Well, that is a little bit of a loaded question. Any drop in carbon dioxide levels that will come from changing from coal-fired power stations to gas-fired is not really going to be significant on a global level, and the changes are more likely be market driven, than for political reasons.

It is hard to see, basic operational costs being what they are, that the low price for natural gas can be sustained that much longer. Any slippage in the supply, however, will drive the price up and that will cause a re-equilibriation of the market. How that plays out against political considerations in the Eastern states is, as yet, anybody's guess. More


No comments: