July 2008


AOL03 Jul 2008 01:54 am

There’s a storm cloud bearing down on the Dulles campus…

  Stormy Weather

Energy Conservation / Renewable Resources and Peak Oil02 Jul 2008 10:01 pm

A family member recently pointed me to a clip of Newt Gingrich advocating three ways to lower gas prices. Since I actually took some time to formulate a response, and it may be of broader interest, I thought I’d post it. Here goes:

Newt is a fairly smart guy, but I find some fault with his statements. And while some of his suggestions will pan out into long-term approaches, none of his Three Big Ideas will meaningfully lower the price of gas in the short term.

If you read any one article, it should be this one: http://www.fpif.org/fpiftxt/5326

Here’s a good synopsis of our current energy situation: http://energybulletin.net/node/45679

Big idea 1: Dump large amounts (~one third) of the Strategic Petroleum Reserves (SPR) to punish speculators.

The short-term effect would be really interesting to see, but I don’t think there would be a big — or beneficial — long term effect.

I completely disagree with Newt’s assessment that speculation accounts for $50 / barrel of oil. I think that he fundamentally doesn’t understand how futures work.

I can’t explain the issue as well as an expert, so I won’t try. Here’s a good article from a guy (Samuelson) who knows the subject: http://www.newsweek.com/id/143786

That said, it’s an interesting idea (forget the fact that Newt is pooping on the concept of letting the market run freely — kinda surprising to hear anti-capitalist rhetoric from him)… But it is pissing in the wind.

As of 6/27 the SPR holds about 280 M barrels of sweet oil and another 420 M barrels of sour. Roughly speaking, 1/3 of this reserve is 10 days worth of US usage (the US consumes ~22 M barrels of crude per day).

Does Newt really believe that dumping a *10 day supply of crude* onto the market would have some kind of lasting effect on crude prices?? I suspect he’s smarter than that, and is just using this as a political gimmick.

Big idea 2: Look for oil where it is.

He has some points, but in these and some subsequent statements, Newt ignores (or maybe is ignorant of) some important facts surrounding shale oil and offshore / wilderness drilling.

In [shale oil reserves] we have three times the oil of Saudi Arabia.

This is the most interesting prospect for future development (but I wasn’t aware that anyone was attempting to stop this effort; last I knew, development was underway). Yes, there is a *lot* of potentially recoverable oil in the western US in shale (mostly Colorado, Utah, and Wyoming). This has been known for decades, but back in the early ’80s all the oil majors stopped trying to get this stuff because at the time it just wasn’t worth the effort. Now Shell has an experimental in-situ process that they think will make extraction economically feasible on a large scale. How environmentally damaging the process is remains to be seen (does oil leach into the groundwater?, etc.). Probably the biggest hurdle is that it requires a *lot* of water input; it would put significant additional strain on the Colorado, which western states are already over-taxing.

Claimed EROI (energy return on investment, or the ratio of energy out to energy expended getting it) for Shell’s new process is somewhere between 3:1 and 7:1. This used to mean it was not worth the trouble to extract (compared to, say, 35:1 for conventional oil at the turn of the century), but of course times have changed.

A government study estimates that we could get 2 M barrels per day of syncrude from shale by 2020. That’s 10% of the current US consumption. Shell’s production won’t scale up until ~2015 at soonest (right now they’re charging ahead with field tests), so it won’t provide any immediate relief. It certainly isn’t a return to lots of cheap oil, but it will help reduce our dependence on imports. And there is enough to supplement our supply for a long time (which sucks for climate change, but hey…). Apparently Shell owns a ton of patents on this new process, which could make for some nice profiteering  ;-)

New discoveries. Drilling off the shores of the US.

Yes, we’re occasionally finding new fields, but so far they are not compensating for the decline of the supergiant fields (Saudi Arabia, Mexico, North Sea) that have been keeping us going so far. And the EROI is much lower than existing fields, meaning the resulting product will be fairly expensive.

Whether opening up offshore US drilling would amount to much is the subject of plenty of debate. We just don’t know at this point, but it’s not likely to be more than 5% or maybe 10% of current US consumption.

The ‘huge’ new Brazilian discovery Newt mentions? If we could extract all of that oil, it amounts to *less than a three year supply* for the world at current consumption rates.

These new discoveries will probably be supplying some fraction of our energy over the longer term, but as far as short term relief goes, they aren’t much help. It typically takes anywhere from 10 to 30 years to bring these new discoveries on line. Of course if we head into a major global recession or depression, all bets are off.

Bottom line is that, while we will undoubtedly start leaning more and more on shale oil, new discoveries, and tar sands, they will not replace conventional crude as it is currently consumed. Nor will they bring back cheap gas. And we’re going to pay environmentally (both from extraction processes and from the resulting carbon emissions).

ANWR.

I think this one is a no-brainer. The relatively modest amount of crude available from there (enough to supply the US for about *5 months*) is not worth the environmental damage that will result. And it would be about 10 years before we brought these fields online, so no short-term relief anyway.

Here’s a quote from Roger Blanchard (from an article in the Energy Bulletin):

Desperate people do desperate things. As Americans become more desperate for oil, I expect that ANWR and offshore areas will be opened for oil development. It will be like burning the furniture to keep the house warm in mid-January. It will be a desperate move that won’t result in much.

IMO, we should be looking at these sources of hydrocarbons as a one-time gift to be used with some discretion, and only for meaningful purposes (manufacturing input to pharmaceuticals, important plastics, etc.). They should be something we try to keep around for our grandchildren, and not waste by powering our SUV down the road to the local 7-11. But humans as a whole have shown they don’t have that sort of self-restraint, so I don’t kid myself  :-/

That said, I’ve heard one interesting argument for drilling now as opposed to waiting: these operations to extract hard-to-reach oil require large, technically challenging infrastructure, and in a few decades we may no longer have the manufacturing capabilities necessary to *ever* extract the oil. Good point but IMO, at the end of the day we’re not going to store away those last wonderful hydrocarbons for future medical or food or life-saving purposes, they will just go into the gasoline tanks of the extremely wealthy. If that’s the case, I think we as a society should decide to keep them in the ground.

Tar sands (oil sands) (Newt didn’t mentioned this, but as long as I’m rambling…).

It is true that producing syncrude from tar sands (which is what Canada has so much of) is economically viable with crude prices where they are. EROI is between 5:1 and 6:1 according to most research. But producing it requires lots of natural gas and water (both will quickly become limiting factors in large-scale production), and it is *very* damaging to the environment (Canadians are increasingly calling for a stop to tar sands extraction, though I don’t think they have much of a chance there). Right now it looks like tar sands will be a small, very messy energy supplement, not a major source.

Here’s Al Gore on getting oil from the tar sands of Canada (Rolling Stone, July 2006):

For every barrel of oil they extract there, they have to use enough natural gas to heat a family’s home for four days. And they have to tear up four tons of landscape, all for one barrel of oil. It is truly nuts. But you know, junkies find veins in their toes. It seems reasonable, to them, because they’ve lost sight of the rest of their lives.

Big idea 3: Maximize use of alternative fuels.

Cool-o technology solutions (trash into fuel, etc.).

Good luck. I don’t have a lot of faith in these efforts. And as far as clever ways to manufacture syncrude, my enthusiasm is tempered by the realization that we are only doing our best to ensure that we cross a tipping point beyond which climate change is irreversible. Excellent.

Nuclear.

I generally agree that nuclear will be important in the next few decades, but remember two things: 1) New capacity takes something like 10 – 20 years to come online, and 2) Uranium supplies look like they are going to peak soon too.

Newt is correct that nuclear is a ‘steady state’ (i.e., constant) source of power (as opposed to, say, wind or solar), but his comments about using excess in off hours to create hydrogen for energy storage implies that we will *have an excess* of electrical power. I seriously doubt that will be the case.

Newt is right that a transition to alternative energy is a huge, huge undertaking. My sense is that the energy crunch in the near term is going to hurt the US and global economies enough so that we may not make that massive transition before permanently ‘powering down’. But powering down may not be a bad thing. For one, it just may keep carbon emissions low enough to avoid crossing an environmental tipping point beyond which severe climate changes make things get very ugly. Though we may already be too late for that.

Or in powering down we may rely too much on coal, which may be the worst-case scenario.

Ugh. I dunno.