Natural gas has eight years left
Dan Crawford
The Republic
www.republic-news.com
Vancouver's Opinionated Newspaper
February 2 to 14, 2006 • No 131
A Natural Resources Canada presentation in the heart of Canada's energy industry lays bare the stark reality of energy resources
by Dan Crawford
The University of Calgary's Geology Department played host to a presentation given by Dave Hughes:"The Coming Energy Sustainability Crisis: Alternatives to Oil, Implications of Demand Growth and the Way Forward."
Hughes is a full-time employee at Natural Resources Canada. He spends much of his time delving into North America's energy situation, heavily focusing on the natural gas component. In recent years, his research and presentations have garnered interest across Canada, as well as globally. As a result, Hughes has spoken at more than 90 engagements in the past three years and 40 in the past year alone.
The auditorium in Calgary was filled nearly to capacity with people from all walks of life--a surprising turnout for a Friday night lecture.
Hughes began with a slide showing the resource pyramid. Located at the top of the pyramid are the high-quality resources normally found in large distinct pools. Going down the pyramid to the base, the resources become more abundant but of lesser and lesser quality and dispersed over larger and larger areas. Exploiting these resources eventually leads to a point where the energy used for the extraction and distribution equals the amount of energy recovered, marking the transition between energy source to energy sink.
A look at global primary energy growth showed that over the past four decades, growth has been 165%, with 4.3% growth in 2004 alone. Overall, natural gas has been the fastest growing fuel source in percentage terms at 283% since 1965. In most recent years, from 2001 to 2004, the fastest growing fuel source has been coal.
For natural gas, North America is now on what Hughes calls an "exploration treadmill," meaning that the number of wells drilled must be continually increased in order to hold production steady.
The published numbers from the Canadian Association of Petroleum Producers (CAPP) concerning Natural Gas production in Canada confirms his statement. Look at the number of wells drilled by year, followed by production for that year:
1997: 4,842–15.7 Bcf/d
1998: 4,991–16.1
1999: 7,018– 16.6
2000: 9,078–17.1
2001: 10,757–17.4
2002: 9,061–17.4
2003: 12,951–16.9
2004: 15,126–17.0
North America peaked in terms of conventional natural gas production in 2001–2002. Notable examples of the effects of this peak are the dramatic increase in prices for natural gas and natural gas-dependent products, such as fertilizers and plastics, leaving North America's largest natural gas producer, Encana, publicly stating that the company focus is now on "unconventional" resource plays.
Hughes walked through various scenarios where the shortfall in conventional natural gas supplies could be made up. He touched on Liquefied Natural Gas imports, coal bed methane, and the Mackenzie Valley pipeline. His conclusion was that it is going to be extremely challenging, perhaps even impossible, to keep North American production at a level plateau in the years ahead.
Consumption trends and patterns were also explored. In every case, the phenomenal growth rates in our economy show a complete disconnect with the reality of the resources currently supporting them. Canada, for example, has 8.1 years left in natural gas reserves.
In terms of resources, two-thirds of the world's remaining hydro-carbon energy is in the form of coal. This also happens to be the lowest-cost hydro-carbon source. Due to coal's abundance and low cost, a large growth in consumption of this resource is anticipated in the years ahead. A heavy focus on clean coal technologies is now emerging. In Germany coal is burned in a 3,900 megawatt electricity plant to achieve 43.2% thermal efficiency. In comparison, Alberta's coal plants are more than 30 years old and run at 32% efficiency.
Hughes's talk concluded with a look at world population and the divide existing between the industrialized and the developing nations. It was shown that Canada is the world's number one energy consumer per capita, consuming five times more than the overall world average. In comparison to India, we consume 30 times their average and 100 times the average for Bangladesh.
The one billion people making up the industrialized world consume 60% more energy than the five billion in the developing nations. The developing nations, though, are growing their consumption at much higher rates, as well as doubling their populations since the 1960s. China's per capita energy consumption growth is 300%, and total energy consumption growth is 600% in that time. India's per capita energy growth is 200%, and total energy consumption there has grown 600%. Indonesia's per capita energy growth is 600%, and total energy growth is 1,400%.
At the end of the presentation, Hughes stated that there is no question that the world will eventually become energy sustainable. The only question is how that transition will occur. A number of general guidelines and solutions were offered, mainly involving better design and planning of infrastructure for both transit and buildings. The importance of conservation and efficiency was also stressed, along with the savings that will result from "demand destruction."
It was a very refreshing experience to attend such a talk in Calgary, in the very heart of Canada's oil and gas industry. It was also encouraging to see an employee of Natural Resources Canada voice these concerns to the public.
There is no doubt that people are beginning to question their reliance on, and the availability of, energy. As talks like this one become more common around the world, less and less people will be able to state truthfully that they had no idea about the impending energy crisis. Now comes the toughest part: actually doing something about it.
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