World ASPO Conference, Thursday Afternoon, Oct. 26

World ASPO Conference Thursday afternoon

This is, of necessity, brief notes, but I have tried to get the basics.

Natural Gas, LNG, Unconventional Fuels

David Hughes, Geological Survey Canada

Canadian Tar Sands

Tar sands only have a 2:1 energy profit ratio, that is, it takes a unit of energy to create two units of energy. In general only a small percentage of unconventional resources, such as tar sands or oil shale, in the ground can actually be extracted. Talk of huge reserves is misleading. What matters is what can actually be turned into useful fuel at an energy profit. In the case of oil shale it is just a few percent.

The other problems include:

Huge cost overruns in constructing the mining and processing infrastructure
Uncertainties in extraction potential, meaning that getting investment is difficult.

Jim Bartis, Rand Corporation

RAND has been studying the energy economics of biofuels.

Alcohol and biodiesel have low oil displacement, perhaps ½ a barrel of oil displaced by a barrel of biofuel. This is because of the high fossil fuel inputs. There are also the problems of limited acreage and the competition of biofuel production with food crops. The conclusion of their studies was that without major technical advances the contribution of biofuels will be insignificant.

He also spoke about biomass gasification to produce liquid fuels. Here there is a conflict between economics of scale and the economics of material handling. The complexity of the process requires a large plant in order to be economical. Conversely, as the plant demands biomass from a larger and larger radius, the energy and economic cost of transporting the biomass grows.

He went on to discuss oil shale production. Oil shale is porous rock that contains a substance called kerogen, the precursor of crude oil. All it needs is a few million years of heat and pressure. The shale can be mined, crushed, and cooked under pressure. There are huge shale resources in a small area at the intersection of Utah, Colorado, and Wyoming. The entire resource is equal to 1 trillion barrels of oil, roughly four times that of Saudi Arabia. Sounds good, right?

Problems:
It is hugely energy intensive. The mining and processing gives it a high cost and very low energy profit ratio. It could be produced at a price of $70-95 a barrel. It can also be processed in situ by drilling wells and putting heating elements underground. The heat processes the kerogen in place, which is pumped out of conventional wells. Again, this is energy intensive. It could be produced at $30-40 a barrel. Still, there are many unanswered questions about technology and environmental impacts. The major resource is in the Colorado River watershed. The effects on groundwater chemical contamination and salinity could be profound. The process requires about 3 barrels of water to produce a barrel of oil.

There are surface impacts as well, considering the 200 wells drilled per acre. The process produces 1.5 to 2 times the CO2 of conventional oil. It has an uncertain future. Given the present state of development, RAND estimates that oil shale could produce only about 3 mbpd 30 years from now. (About 1/7 of U.S. present consumption) RAND recommends slow and careful development, with no government promotion unless private companies are willing to get into it for real profit rather than government subsidy.

Coal to oil conversion also has unclear prospects. Plant costs and performance are unknown. RAND estimates that it would take a $5 billion plant to produce a mere 50,000 barrels a day, a cost of $100k per barrel per day. Crude oil would have to be at least $55 a barrel for profitability. It produces twice the CO2 of conventional oil. Proponents have talked of pumping the CO2 back underground to permanently sequester it, but can’t predict leakage rates. Face it, if there is a 5% leakage rate, then all the CO2 would be back in the atmosphere in 20 years anyway.

Ezra Hausman of Synapse Energy Economics spoke about the importation of liquified natural gas (LNG). LNG is produced by cooling NG to –259 F. It isn’t actually pressurized. This reduces the volume by 600 times. It is a highly capital intensive process with a 15-30% energy penalty.

Right now, the expansion in LNG receiving and regasification facilities exceed liquification facilities, meaning that there is competition for the resource.

He noted that most “new”discoveries of NG in the U.S. are actually the redevelopment of existing fields. The discovery of new fields have dropped by half over the last 15 years.

His proposed solution is “negatherms,” the conservation of natural gas energy. He pointed out that existing programs, if fully implemented, would offset all potential

Jim Gordon, Cape Wind Project

Jim has been touting the Cape Wind Project. Nothing new or striking, buuuut….

A crowd of protesters just invaded the conference room and started chanting about a diesel power plant in Chelsea MA. Apparently Jim Gordon, the present speaker is not only promoting the Cape Wind offshore wind farm, but also promoting a diesel fired power plant in a low income area. We have flyers on every table and banners over the balcony accusing him of environmental hypocrisy. The security people are shutting them up and herding them off the balcony. Well, what’s a conference without a protest?

May I be excused? My brain is full. More tomorrow.