Message: Here's why the U.S. is facing up to its thirst for oil - Nov.21/07 Neil Reynold
Here's why the U.S. is facing up to its thirst for oil
NEIL REYNOLDS
From Wednesday's Globe and Mail
November 21, 2007 at 6:04 AM EST
OTTAWA — In a massive new multivolume report on energy strategy in the United States, a high-powered federal task force puts "peak oil" into perspective. On the one hand, it says, the country has already consumed, in 150 years, 446 billion barrels of its own fossil-fuel endowment. On the other hand, it says, the country has 8.59 trillion barrels left - or more "oil equivalent" than the rest of the world combined. More than 95 per cent of America's oil reserves, in other words, are still in the ground.
Canada enters this particular calculation in passing. "North American oil shale and [oil] sands alone far exceed all the remaining proven and undiscovered oil resources of the entire world," the task force reports. "They represent 3.5 trillion barrels of oil resources. America's commercial-quality oil shale resources alone exceed two trillion barrels. This shale can be processed to generate ultraclean, high-quality diesel and jet fuels, along with high-value chemicals - with existing technologies under normal economic conditions."
Further, U.S. coal reserves exceed 260 billion tons - "250 years of supply at the existing production rate [for electricity] of 1.1 billion tons a year." The task force says clean coal can be the largest and quickest single new source of oil in the U.S. - and that the conversion can be economic (producing a 15-per-cent return on investment) with world oil prices between $40 to $50 (U.S.) a barrel.
Mandated by the U.S. Energy Policy Act of 2005, the 11-member Strategic Unconventional Fuels Task Force submitted its final report in September. Its members include the U.S. secretary of energy, the secretary of defence and the governor of Colorado, Bill Ritter, who was in Alberta just last week checking out oil sands technology partnerships. The Energy Policy Act ordered the three government departments to accelerate the development of unconventional fuels as a matter of national security - and to seek technology partnerships with the companies that developed Alberta's oil sands.
In its report, the task force concluded the U.S. Department of Defence can use coal and shale for all its fuel needs - all 312 million barrels of oil a day - by 2011. (The U.S. Air Force is the biggest military user of oil by far, requiring 219 million barrels of jet fuel a day; it is already testing synthetic fuels to replace conventional fuels.) The task force found the U.S. can produce between 7.65 million barrels and 9.35 million barrels a day from unconventional resources by 2035. This oil would be produced as follows: (1) from oil shale, 2.5 million barrels a day; (2) from oil sands, 0.5 million b/d; (3) from coal, 2.6 million b/d; (4) from heavy oil, 0.75 million b/d; and (5) from depleted and abandoned wells, a minimum of 1.3 million b/d and as much as three million b/d.
The task force describes this goal as aggressive but realistic. If accomplished, it would mean that the U.S. would meet all of its anticipated increase in oil demand by 2035 from domestic production - with several million barrels a day left over to reduce oil imports significantly.
But the task force calculates that technological advances will make the payoff much greater. It anticipates efficiency gains alone will equal an additional five million barrels a day. From the combination of new oil and increased efficiency, the task force estimated that the country would save as much as $130-billion a year in import costs, would increase public sector revenues by $30-billion a year, would employ an additional 200,000 people and would cost the Treasury only $3-billion a year to accomplish.
The U.S. consumes 20 million barrels of oil a day, 25 per cent of global consumption. The task force expects this number to reach 26 million barrels by 2035, a number that would still equal 25 per cent of global consumption.
Conventional wells, it said, will still produce eight million barrels a day (as they do now); unconventional production will produce as much as 9.35 million barrels a day. Energy efficiency will kick in the equivalent of another five million barrels. Total: 22.35 million barrels of oil a day. Oil imports needed in 2035? As little as 3.65 million barrels of oil a day - one-quarter of last year's imports or alternatively, twice China's present consumption of oil.
All this, the task force concluded, can be done "urgently, immediately and responsibly in an environmentally sound and sustainable manner." Indeed, the task force concluded it must be done. The U.S. is at sufficient risk from both economic and security perspectives, it said, to warrant "aggressive development" of its fossil-fuel resources. On energy policy, the U.S. may - finally - be getting serious.
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