Silver Donald Cameron

Posts Tagged ‘oil’

The Lonely Mission of David Hughes

Sunday, May 30th, 2010

May 30, 2010

What’s the true value of a barrel of oil?

Around $70, say the markets. The market value of anything is the price that a willing buyer will pay and that a willing seller will accept.

David Hughes shakes his head. It is a big head, with a high forehead topped by a thatch of curly hair. Hughes is a hydrocarbon geologist, a veteran of 32 years with the Geological Survey of Canada. He is now an independent consultant living in Cortes Island, BC. His special interest — his obsessive interest — is the rate at which human beings have been consuming the earth’s fossil-fuel supplies. He has spoken about this subject all over the world, including here in Nova Scotia.

For Dave Hughes, the value of a barrel of oil is the amount of work the oil can do. It represents about six gigajoules of energy. A joule is roughly the amount of energy it takes to lift an apple from the floor to the kitchen counter. Six gigajoules is six billion joules, enough energy to lift that apple 6,000,000,000 times.

Put a guy on a treadmill wired to a generator, and in an hour he can generate about 360,000 joules. Keep the guy on the treadmill continuously except for breaks, weekends and holidays. How long will it take him to produce the energy contained in a barrel of oil? About 8.6 years — and if you were paying him the Alberta minimum wage, you’d owe him $138,363.

That’s the real value of a barrel of oil. Oil is a miracle substance. It has given us a lifestyle hitherto obtainable only by people who owned slaves, and we literally treat it like garbage. That plastic bag you buy, the bag that was created for the sole purpose of being thrown away, is made out of invaluable, irreplaceable, vanishing oil.

And the era in which that was possible, the era of cheap fossil fuels, that era is ending. Spreading that message is what Dave Hughes is all about.

Discussions of energy supply have been dominated by economists, not geologists. Economists will tell you that shortages make prices rise, and rising prices create additional supplies or alternative technologies or both. So the problem is self-correcting.

Geologists reply that the economists’ model only works if there is no limit to the potential supply But that’s a fictional world. In this world, Dave Hughes notes, what count are things like EROEI, or Energy Return On Energy Invested, a very different measurement.

In traditional oil fields, EROEI is about 100 to 1. You consume one barrel of oil to drill a hole in the desert, and 100 barrels come gushing up. Today, EROEI in traditional oil fields has fallen to 25:1. Oil scraped off the surface of Alberta’s tar sands has an EROEI of only 6:1. Oil retrieved from deep in the tars sands has an EROEI of 3:1. The ratio for corn-generated ethanol is barely over 1:1.

Oil supplies with an EROEI lower than 1:1 will never be produced, no matter how high the price of oil, because they absorb more energy than they yield. And that’s why it’s meaningless to note that there may be billions of barrels locked up in formations like oil shales, which have never been mined at a net energy profit. It’s possible, of course, that technology will find an efficient way to extract oil from such sources — but not soon, and not on a sufficiently massive scale to allow us to continue using oil at our present breakneck clip.

Fundamentally, to understand EROEI is to recognize the truth of Dave Hughes’ analysis. Obviously, if we had access to plentiful oil reserves with an EROEI of 25:1 or so, we would not be bothering with low-yield sources like corn ethanol and the tar sands. We would not be spending $100 million to lower a drill bit through a mile of ocean water in order to drill down through four more miles of Brazilian sea-floor.

But we are.

We are not “running out of oil,” Hughes agrees. But we are certainly running out of cheap, easily-recovered oil. We are about to discover the real value of oil, and it may not be a pleasant experience.

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Silver Donald Cameron’s full-length video interview with David Hughes was recently posted at www.TheGreenInterview.com. This column is also posted on the blog at TheGreenInterview.com.

Guns along the Northwest Passage

Thursday, June 26th, 2008

“Thanks to global warming, the Arctic icecap is rapidly melting, opening up access to massive natural resources and creating shipping shortcuts that could save billions of dollars a year. But there are currently no clear rules governing this economically and strategically vital region. Unless Washington leads the way towards a multilateral diplomatic solution, the Arctic could descend into armed conflict.”

That’s the summary of a recent paper in Foreign Affairs, published by the US Council on Foreign Relations. Written by retired US Coast Guard officer Scott Borgerson, it was sent to me by an American friend who wanted my opinion. That summary made me blink.

Borgerson argues that global warming means that the fabled Northwest Passage will soon be ice-free in summer and, with icebreakers, navigable year-round. The melt will continue even if we stop greenhouse gas emissions tomorrow. Furthermore, the Arctic is rich in resources. The Russian offshore alone may contain oil reserves twice as large as Saudi Arabia’s.

Five nations border the Arctic – Russia, the US, Norway, Denmark and Canada. There is no established agreement about where Arctic boundaries lie, as witness our contretemps with Denmark over tiny Hans Island. Do we really care about that minute pile of rock? No – but we do care about the adjacent seabed resources.

No legal framework determines who owns such resources, because they were always thought inaccessible. But now the rush is on. Russia has claimed 460,000 square miles of Arctic waters, has taken to flying strategic bombers over the Arctic, and recently planted a Russian flag on the seabed at the North Pole.

And are the waters of the Arctic archipelago, including the Northwest Passage, international waters open to the shipping of all nations – or territorial waterways belonging to Canada? Canadians assume that Canada owns all that territory, including considerable parts of the ocean – but the US and the European Union disagree. The point is not academic. A navigable Northwest Passage would cut 2000 nautical miles off a voyage from Seattle to Rotterdam and would shave about $3.5 million from its cost. And hundreds of ice-class ships are coming into service.

Borgerson aims to wake up the US, which has never ratified the UN Convention on the Law of the Sea (UNCLOS), and thus cannot formally assert its Arctic rights. Worse, says Borgerson, although the US navy is larger than the world’s next 17 navies combined, it has only one usable icebreaker. Russia has 18. Canada plans to build up to eight new icebreakers, and is installing a satellite surveillance system. If possession is nine-tenths of the law, the US is in trouble.

Overall, says Borgerson, “the combination of new shipping routes, trillions of dollars in possible oil and gas resources, and a poorly defined picture of state ownership makes a toxic brew.” The US should ratify UNCLOS, build icebreakers and strike a deal with Canada to create an Arctic seaway management commission comparable to the St. Lawrence Seaway Development Corporation. And it should lead the way to peace by convening a conference of Arctic nations to create “an overarching treaty that guarantees an orderly and collective approach to extracting the region’s wealth.”

It all sounds good – but that’s not how the US normally behaves. The notion that the US is needed to keep the peace between Canada and Denmark is deeply amusing, though the Russians are no joke. When it comes to national security and oil-supply issues, however, the US is generally the problem, not the solution. If the US wants unimpeded access to the Northwest Passage, it will declare that it is bringing peace and democracy to the Inuit, and it will send the navy, not the negotiators.

Borgerson’s argument is a good one – but he’s got the wrong country. Canada has the most to lose in the Arctic, and – as in the Cold War – it is sandwiched between the world’s most formidable military powers. It would be folly for Canada – or Norway, or Denmark – to take up arms in the Arctic. Instead, Canada should combine with the Scandinavians to initiate a comprehensive Arctic treaty conference, inviting the Russians and the Americans to participate.

Canada could offer to internationalize the Northwest Passage and manage it collectively – in return for a declaration that the Arctic archipelago itself is Canadian. We should also note that nature may not consent to be managed, that the consequences of the Arctic melt are unpredictable, and that the Arctic nations should insist that any new cache of fossil fuels be rationed, not squandered. Our reckless use of fossil fuels got us into this mess. If the new resources will only get us in deeper, their rapid exploitation should be resisted.

The Arctic could be our last chance, as a species, to act with intelligence. Canada can play a key role. It’s a rare opportunity. Let’s seize it.

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