Friday, May 27, 2005


Welcome to Charge: the future of energy

By Daniel Sweeney

Recently, on May 15, to be exact, Salon, the well known online journal of political and cultural commentary, ran an interview with one James Howard Kunstler, a writer best known for a decade old work entitled “The Geography of Nowhere”, a keen analysis of the sorry plight of American residential architecture in the suburbs and the dysfunctional lifestyle it has engendered. Now Kunstler has a new book on a new topic, the book being “The Long Emergency” and the topic being the dire changes that Kunstler sees just over the horizon due to the world’s dwindling reserves of petroleum.

Extreme positions sell books, and to prove that point a couple of writers from the Wall Street Journal have just published a book called “The Bottomless Well” by Peter Huber and Mark Mills which reaches precisely opposite conclusions—nothing to worry about, market forces will bring new energy sources online as they are needed, and no reason to conserve—make that second car a second SUV.

So who’s right?

I haven’t read either book yet, but I’m prepared to weigh in on the interview, and in that way comment upon both positions.

First of all Kunstler’s contention that the peak of production of conventional oil is in the offing is probably correct. Something close to a scientific consensus is beginning to emerge on the subject. I am currently preparing a lengthy report on the hydrogen industry, and, in researching it, I have had cause to speak with many petroleum engineers since hydrogen gas is used extensively in oil refining. I can tell you that there is a lot of concern in the petroleum industry about this matter of peak production, though it isn’t making the headlines.

Where Kunstler is wrong and the Wall Street guys are probably closer to the truth is on the issue of unconventional fossil fuels. These are seldom mentioned in discussions of the peak oil crisis, and, when they are, the commentator usually displays profound ignorance of current extraction techniques.

Unconventional fossil fuels are those that, in the past, have been considered uneconomical to extract and to process. They fall into two basic categories, unconventional sources for petroleum fuels and unconventional sources for natural gas.

Now in fact both petroleum and natural gas appear to be reaching production peaks, but since oil is on everyone’s mind due to steeply elevated gas prices, let’s look at unconventional petroleum—some of which is not really petroleum at all—first.

Unconventional petroleum comes in two basic forms, heavy oils and oil shale. Both are superabundant.

Canada alone has heavy oil resources approaching two trillion barrels, possibly as much or more than all of the conventional oil in the world. The U.S. lacks a lot of heavy oil but we probably have more oil shale than everyone else’s put together, enough to produce roughly the same amount of crude, just shy of two trillion barrels, and maybe more. So if you just take the unconventional oil resources of English speaking North America alone, we are in effect our own Middle East.

So why don’t we get the hell out of Iraq, quit threatening Iran, and live off our own vast reserves?

It turns out that it ain’t quite that simple. And to see why, let’s examine the nature of heavy oil and oil shale.

Heavy oil is petroleum, petroleum of high viscosity and high specific gravity. It ranges in texture from a thick sludge to what is known as tar sand which is just that, a stuff resembling wet asphalt and semi-solid in consistency. Incidentally, there is no arbitrary line separating heavy oil from conventional crude. It’s a matter of degree.

The lightest of the heavy oils can be pumped out of the ground just like light crude, but they are more difficult pump through pipelines to refining facilities and more difficult and expensive to refine. The heaviest heavy oils, the tar sands, have to be mined, and are expensive to extract, transport, and to refine.

Oil shales are solid sedimentary rocks containing an oil known as keratin, and, in most cases, no petroleum whatsoever. Keratin is processed into a substance closely resembling crude oil and subsequently used to produce gasoline, aviation fuel, diesel, lubricants, etc. It can also be used to produce asphalt. Oil shales are extracted by one of two means. Either they are quarried and pulverized and the resulting fragments are heated to extract the keratin or, in more recent processes, they are heated in situ in their beds, and the resulting keratin pumped out of the excavation.

The existence of vast deposits of heavy oils and oil shale in North American has been known for a very long time and both substances have been commercially exploited intermittently and on a small scale. But since both have been very expensive sources of petroleum products as compared to Middle Eastern oil, very little extraction has taken place.

But now, with oil prices reaching $50 per barrel, the economics suddenly change. Canadian heavy oil is now competitive with Middle Eastern oil, and oil companies are investing billions in the Alberta fields and in building new refineries. Production has gone from negligible to considerable in the space of a couple of years.

Next to nothing has happened with oil shale in terms of the opening of the fields in the U.S., most of which are located in a very small region of dry lake beds at the juncture of Colorado, Utah and Wyoming, but a series of Department of Energy studies has recently been published which report that commercial exploitation is now feasible, and that, moreover, the mining and refining techniques have evolved to the point where they no longer require vast quantities of water as was the case in the past. Since almost all of the shale is on federal land, a simple determination on the part of the Administration could open the land for exploitation.

Significant environmental concerns surround the extraction of keratin from oil shale, but I do not believe that this or succeeding Republican administrations will pay much heed to such concerns, nor to concerns that the allocation of mining rights could be subject to improper influence on the part of campaign contributors—an issue that has terrified preceding administrations and has kept the shale deposits largely off limits to petroleum companies. If rising oil prices are seen to threaten the party’s hold on Congress or the White House, or to exert extremely adverse effects upon the economy, which is precisely Kunstler’s thesis, then, I believe, an oil shale rush will commence, and that vast strip mining operations will begin to gnaw into the shale beds.

So then all will be back to normal with gas down to $1.50 a gallon?

Almost certainly not. Oil shale and tar sand start to make sense when crude tops $50 a barrel, but although they change the whole picture concerning proven reserves, effectively tripling the amount of oil in the ground, they don’t bring down prices in as much as the cost of obtaining gasoline from shale or tar sand is so high. It’s not scarcity that is raising prices any longer but labor and the fact that rendering shale or tar sand into gasoline or diesel is relatively energy intensive.

Which brings up another point. If the energy used to extract and refine shale and tar sand is derived from petroleum products made from these substances themselves, then the size of the reserves becomes somewhat deceptive because much of the potential for gasoline production will be lost.

Still these unconventional petroleum sources are sufficiently vast that Kunstler’s contention that dire scarcities lie just a few years off seems unlikely in my opinion. Gasoline prices will probably remain high, and natural gas prices may become extremely high, but a serious gas shortage will not occur unless there is a major interruption in the flow of oil from the Middle East which will still account for most of the gasoline consumed here since years will be required to get the unconventional sources up to full production.

And there are other possibilities as well. The Administration, if it had the political will, could simply seize the oil resources of the Middle East including those of Iraq, Iran, and the Arabian Peninsula, cordon off the oil fields, and remove adjacent populations to prevent sabotage, and provide artificially low pricing and preferential provisioning to the U.S. The ultimate political and economic consequences of such an audacious act would be difficult to predict, but the immediate effect would be to earn the fervent gratitude of tens of millions of Americans. An Administration that would go to war on a pretext, which now appears to be the case, might not shrink from manufacturing further pretexts to launch wars of naked economic aggression—resource wars, as it were. And there is certainly a rich historical tradition for such forays. Contrary to popular opinion, the U.S. Cavalry did not invade the lands of the American Indians to bring democracy to the tribes.

Leaving aside unconventional petroleum and resource wars as a source for additional gasoline, it is also entirely possible to produce petroleum fuels from coal. Such products, known as synfuels, can be profitably sold for roughly $50 a barrel, the current price of petroleum, and could further augment the huge reserves comprised of unconventional oil. Again the cost problem remains, however, and high oil prices are likely to exert a drag on the economy. Still, the world and the U.S. can probably adapt without making the wrenching changes that Kunstler sees in the offing, i.e. the abandonment of the largest cities and the return of a large segment of the population to subsistence agricultural labor.

The wild card here actually turns out to be natural gas, not oil. Large amounts of hydrogen are required in the refining process, and today virtually all of this hydrogen is derived from natural gas. Hydrogen can be produced by other means, but not nearly so cheaply as by reforming natural gas, and ascending natural gas prices would greatly increase the price of petroleum products whether derived from conventional or unconventional oil sources. From a bearable price of $50 a barrel, oil might rise to a fairly unbearable price of $75 a barrel.

I mentioned unconventional sources of natural gas. These are basically three in number, coal bed methane, tight gas, and methane hydrates, also known as clathrates, and undoubtedly each will be subject to increasing attention in the years to come.

Coal bed methane forms in coal seams and has not been very economical to extract in the past. That may soon change. Estimates of the size of this resource vary, but it is generally assumed to be much smaller than conventional sources. Tight gas is found in deep rock seams in mountainous areas. Again resources are considerable but much smaller than those for conventional gas. Extraction of tight gas has already begun in North America with no discernible effect on gas pricing. The real questions involve the third resource, the methane hydrates. These are chemical compounds formed when water and methane are combined under intense cold and high pressure. They are extremely abundant on arctic sea floors and may store thirty times as much methane as conventional natural gas resources. Since methane can also be used to produce diesel fuel, these are potentially an extremely valuable form of mineral wealth.

Because methane hydrates are found only in remote arctic and subarctic areas or at great depths in temperate seas, they will be expensive to extract. Techniques for exploiting methane hydrates are experimental today, but good progress has been made to date, and I think they will be extensively exploited in time. There are considerable dangers associated with their exploitation, however. Methane is a highly potent green house gas, and extensive leaks and wastage during the extraction process could greatly increase the dangers of catastrophic climate change.

In sum, fossil fuel resources are adequate for perhaps another century of lavish expenditure even with increasing demand and a growing world population. Add to this the fact that fossil fuel derivatives can be cut with cheap alcohol derived from cellulosic sources, and the immediate situation does not appear too dire if one only considers the adequacy of supplies for maintaining current patterns of electrical generation and transportation.

So is Kunstler simply some cranky curmudgeon with a hard-on out to sell a few books?

It’s not that simple.

First of all, unconventional fossil fuels will run out eventually. They’re not an infinite resource. They’re more like the reserve tank on one’s vehicle. A warning bell is ringing and the warning light is on. Even with unconventional sources, shortages will manifest themselves in a few decades, and a few decades is not a long time to develop abundant alternative energy sources.

The current state of energy generation from wind, geothermal, solar, and nuclear, if one chooses to consider the latter an alternative source, is not such as to permit the cost effective replacement of fossil fuel resources while maintaining current energy usage levels. A world entirely served by renewable energy is conceivable, but the path to getting there is laden with formidable obstacles. In the past successful energy revolutions have been driven by market forces and success has ultimately rested upon cost advantages. Renewables, very simply, carry much higher infrastructure costs because, with the exception of nuclear, they exploit diffuse resources where energy in weakly concentrated. The wind passing over a plain is scarcely energetic at all compared to the expanding gases ripping through a natural gas turbine at a modern electrical generating plant, and thus one gas turbine can equal the output of a thousand wind turbines. And the crowning irony is that gas turbines are much more efficient than wind turbines. A wind turbine extracts only about 30% of the energy of the wind impinging upon its blades while a gas turbine can utilize over 60% of the energy stored in the chemical bonds of the fuel it burns.

If the U.S. or other developed countries is to build an alternative energy infrastructure to replace what is here today, a substantial portion of the total industrial capacity of the land will have to be devoted to that goal, which means foregoing investments and expenditures in other areas—sacrificing for the future, if you will. And who the hell wants to sacrifice for the future, especially here in America, the land of the deficit?

If the U.S. and rest of the industrialized world does not change course, Kunstler’s dark vision could come to pass. It won’t happen as quickly as he supposes, but it could happen later in this century.

In any event, the most pressing issue associated with our current dependence on fossil fuel is that involving green house gases. The scientific consensus on the dangers of global warming and its origin in the release of large volumes of carbon dioxide is now almost absolute and dismissals of the science by such Nobel laureates as Ann Coulter, George Will, and Rush Limbaugh should be taken for what it is, politically motivated propaganda.

One final note: Kunstler in his books predicts the end of the automotive culture due to fossil fuel scarcity, and a return to an era when travel was limited. I do not believe that an industrial society could retrogress in this manner and survive. Countries with the population densities of the U.S. and Europe probably cannot return to nonmechanized subsistence agriculture of the sort he envisions, leaving aside the problems of land redistribution in an era when mega farms are the rule, while the dependence of the developed world on resources imported from all corners of the globe, precludes an abandonment of modern transportation by air and sea. Look at the yield of American farms in the late nineteenth century when the population was less than a third that of today, and then look at the yields of the present highly mechanized system of agriculture. A century ago the U.S. barely fed itself with over half the population engaged in agriculture, and most of the best farmland already being utilized. What happens when you try to go back to that system with triple the population? One doesn’t want to contemplate the answer.

I do believe that further revolutions in transportation are possible which could greatly reduce our dependence on fossil fuel, but that is a subject for future posts.


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