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An Inconvenient Talk: Dave Hughes’s guide to the end of the fossil fuel age
Chris Turner, Walrus Magazine
Dave Hughes is driving north on Highway 2. Headed out of Calgary, where he worked for thirty-two years at the Geological Survey of Canada, mapping the nation’s coal reserves.
… Dave came right to the curb out in front of your house, your personal chauffeur, because you said you were interested in hearing his talk a second time, and he’ll do his level best to bring his talk to just about anyone who asks. The Talk, he usually calls it, and you can tell it has been a proper noun in his head for a good long while now. Somewhere between that first lecture back in 2002 at the University of Calgary and the 155th, the one he’ll give later today at a Natural Resources Canada research facility outside Edmonton, it became his passion, his quiet crusade, his data-freighted inconvenient truth. The Talk. One hundred fifty-four times.
… The Talk is in essence a constantly updated survey of the state of the planet through a hydrocarbon geologist’s eyes. It plows methodically through reams of energy-geek data. World Conventional Oil and Oil Sands Reserves, 1980–2007. Energy Profit Ratio for Liquid Hydrocarbons. Canadian Gas Deliverability Scenarios from All Sources. The small-font notes at the bottom of each PowerPoint slide enumerate sources that read like a general anaesthetic in print form: BP Statistical Review of World Energy, Proceedings of the National Academy of Sciences, EIA International Energy Outlook. Pie charts and bar graphs with several rainbows’ worth of colour and an overabundance of italicized and all-capped words: “The absolute first priority,” that kind of thing. (By the way, it should be “to reduce energy consumption as soon as possible.”)
… Here’s the upshot: if you plan to drive a car or heat a house or light a room in 2030, The Talk is telling you your options will be limited, to say the least. Even if you’re convinced climate change is UN-sponsored hysteria or every last puff of greenhouse gas will soon be buried forever a mile underground or ducks look their best choking on tar sands tailings, Dave Hughes is saying your way of life is over. Not because of the clouds of smoke, you understand, but because we’re running out of what makes them.
… You’ve learned a few things about Dave in the interim. He’s fifty-eight years old, a married man with a grown daughter and three grandkids whose collective future worries him enormously and fuels the quiet urgency of The Talk. He lives for much of the year on Cortes Island, a remote rural idyll at the northern end of the Georgia Strait, off the coast of British Columbia. Not because it’s a survivalist retreat — though you couldn’t help jumping to that conclusion at first — but because when he first laid eyes on the place in 1977 he knew he’d found his own little slice of paradise. He bought it in 1990, when he still toiled for the Geological Survey in Calgary.
His was a quiet government researcher’s life. Then, in 1995, a major Canadian energy company came calling, hoping to figure out how much natural gas might someday be mined from coal bed methane deposits — an “unconventional” gas reserve. This is how Dave learned that the gas industry was worried there wasn’t enough conventional natural gas left in Canada to feed its pipes indefinitely. His research confirmed those suspicions. (In The Talk, Dave now places Canada’s natural gas production plateau between 2001 and 2006; he supports predictions of a global peak of conventional gas reserves by 2027. He is calmly, logically, witheringly dismissive of rosier scenarios involving unconventional reserves.)
Around the same time, Dave stumbled on the work of Colin Campbell. After thirty years as an oil field geologist, unearthing new pools of crude for the likes of Texaco, BP, and Amoco, Campbell had throughout the ’90s been writing in the press and academic journals, with mounting alarm, about the imminent arrival of peak oil — the moment when humanity will have burned half the planet’s oil reserves, after which an economy driven by the stuff will rapidly (and potentially catastrophically) unravel.
(15 May 2009)
Long article.
Byron King: Buckle Your Seat Belts—“Investment Earthquake in the Energy Sector” Ahead
The Energy Report
A former Navy flyer and one-time field historian on the staff of the U.S. Chief of Naval Operations, Byron King has a gift for putting events into historical context. In this exclusive interview with The Energy Report, he addresses issues of “chronic underinvestment in productive assets.” How will more than six billion people—all wanting a higher standard of living—manage on a planet with dwindling resources? Byron also offers insight into alternative energy sources. They aren’t everything that some people think, but they offer opportunities for investors.
The Energy Report: You edit Agora Financial’s newsletter, Energy & Scarcity. How do you define scarcity?
Byron King: I look at scarcity in the classic sense of shortages, of not enough to go around. When you look at world development in the last century, growing from a population of one billion or so, for much of the time 90% of the people were on the outs and maybe 10% were on the in. The Western world—North America, Europe, Japan and parts of the rest of the world—had access to ample resources, whether it’s mineral resources; energy resources; water, fresh water; food, what-have-you. That’s where we get the modern theories of economics, and commodity cycles. That’s the history that we see. But you have to be careful where you get your history.
Now we’re living in a world with over 6½ billion people. One billion or so are at or approaching a middle-class standard of living. The other 5 billion or so? They understand what a better existence means for them. When, say, 4 billion more people are competing for that oil or the mineral resources—the copper, the nickel, the iron ore, the food that you can grow on the arable land, the fresh water, the fish in the sea—you deplete your resources a lot faster than in the good old days.
Historical commodity cycles are useful examples. But the commodity cycle that we’re living in now, and that’s evolving very rapidly, is going to be quite different. It’s outside that proverbial “box.” That’s where the scarcity concept originates. So when people say, “it’s different this time,” well, yes it’s a couple of billion people “different” this time.
TER: But is it really a scarcity of commodities? Or is it that we haven’t we been able to increase our production of commodities to accommodate the increased demand? Or are we just at the inflection point that production hasn’t increased enough to match demand that we project in the next five years?
BK: There has been chronic underinvestment in productive assets in most modern Western societies. It’s generational. It’s perverse. We brag about it. We call ourselves a “consumer society.” As opposed to what? A “producer” society? Yes, because we don’t produce near as much as we consume. How long can that last? Until the rest of the world catches on to the con, I suppose. Which is happening right now.
The West has been lucky since the end of the Second World War. We saw immense discoveries of oil, for example, in the Middle East in the ’40s, the ’50s and the ’60s that got developed in the ’70s, ’80s and the ’90s. We’ve had a couple of generations’ worth of cheap energy and, by extension, cheap credit.
But the world hasn’t replaced those early oil discoveries with new discoveries because where else are you going to look? Where’s the next North Sea? Where’s the next Alaska?
(14 May 2009)
Byron King is a contributor to Energy Bulletin.
A maverick’s message on oil (Jeff Rubin)
Colin McConnell, Toronto Star
Jeff Rubin says prices are going nowhere but up, and life as we know it will change forever
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At some point, the message that Jeff Rubin wanted to give began to diverge from the message he was expected to deliver as CIBC’s chief economist.
You could see it in his research reports over the past 18 months – talk about the urgent need for energy conservation, the inevitability of carbon pricing, oil at $225 (U.S.) a barrel by 2012, and how the high cost of transportation as a result of peak oil will throw the machinery of globalization into reverse.
His conclusions were frequently controversial and certainly unconventional, particularly in a country so dependent on the global trade of its oil and other natural resources.
Ask Suncor Energy chief executive Rick George about Rubin’s prediction of $200 oil and a dismissive smirk follows. “Is he an economist or an entertainer? I guess if you live long enough you’ll see anything.”
So while it came as a surprise when Rubin, in late March, suddenly resigned from CIBC World Markets after 20 years at the bank’s investment arm, it wasn’t really a shocker to those who knew the maverick economist best.
(16 May 2009)
Plateau theory drives Total to oil sands
Eric Reguly, Globe and Mail
The French energy giant thinks conventional oil production will top out in a decade at 95 million barrels. The long-term plan is to diversify into nukes and other sources. But for now, its eye is squarely on oil sands
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For Total SA, it’s all about 95. The French oil giant builds its business with 95 in mind, as if the figure were tattooed on its executives’ foreheads. The figure refers to Total’s belief, not shared by the majority of Big Oil players, that global production will top out at 95 million barrels a day after 2020. That’s only about 10 million more than current production.
Many oil gurus refer to the top-output theory as “peak” oil. Total prefers to call it “plateau” oil, a subtle variation on the theme that suggests production, having reached 95 million barrels a day, will remain at that level for some time in spite of every effort to squeeze more from Earth’s desiccated bowels (the peakists think production will fall relentlessly after reaching a peak, which may come well before 95 million).
Whether peak or plateau, the upshot is the same: Total thinks conventional oil production is approaching its practical limit. That’s why Canada and Venezuela figure so large in the company’s future.
(16 May 2009)
Brain power can meet the energy crisis
Larry Elliot, Guardian
Back in the 1970s, North Sea oil was seen as the saviour of the British economy. The money would be spent modernising industry so that it could play in the big league with the Germans, the Japanese and the Americans. Instead, we spent the money on unemployment benefit and tax cuts. The industrial renaissance never happened.
By the time the oil started to run out, financial services were the next big thing
… It won’t be nearly as much fun as the years of living in a dreamland, but stripping away the pretence that there is some easy, painless solution to Britain’s long-standing problems represents the first stage to recovery.
… The bad news is that even if the peak oil sceptics are right and there is plenty of untapped crude in the South Atlantic, Canada’s tar sands or Central Asia, it is going to be more expensive to extract it. Oil has been critical to the development of industrial societies but energy firms, unsurprisingly, went for the oil that was easiest to get at and of the highest quality, since that meant low extraction costs and high profits.
In other words, the energy required to get fuel out of the ground was small; the energy return on energy investment (EROI) was high. But as companies have moved to tougher environments, the EROI on oil and gas production has fallen – one estimate is from 33:1 in 1999 to 19:1 in 2005.
(17 May 2009)
