ENERGY: Hydrocarbons in North America by J. David Hughes

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The Post Carbon Reader Series: Energy

Hydrocarbons in North America

By J. David Hughes

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About the Author

David Hughes is a geoscientist who has studied the

energy resources of Canada for nearly four decades,including thirty-two years with the Geological Survey

of Canada as a scientist and research manager. Over the

past decade he has researched, published, and lectured

widely on global energy and sustainability issues within

North America and internationally. He has been inter-

viewed extensively on radio and television, and his work

has been featured in Canadian Business, Walrus maga-

zine, and Thomas Homer-Dixons book Carbon Shift

(2009). Hughes is a Fellow of Post Carbon Institute.

Post Carbon Institute

2010

613 4th Street, Suite 208

Santa Rosa, California 95404 USA

This publication is an excerpted chapter from The Post Carbon Reader: Managing the 21st CenturysSustainability Crises, Richard Heinberg and DanielLerch, eds. (Healdsburg, CA: Watershed Media, 2010).For other book excerpts, permission to reprint, and

purchasing visit http://www.postcarbonreader.com.

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North America is at the top of the food chain when

it comes to consuming energy: Its inhabitants have

nearly four times the average global per capita energy

consumption.1 Although Mexicans consume less than

the global average, Americans consume 4.5 times and

Canadians nearly 6 times as much. In absolute num-

bers, we in North America consume one-quarter of the

worlds primary energy production, even though we

make up less than 7 percent of the worlds population.

North Americas massive energy diet is largely madeup of hydrocarbonsa full 83 percent comes from oil,

gas, and coal, and if we include nuclear energy, 91 per-

cent comes from nonrenewable fuel sources. In 2008,

North America consumed 27 percent of the worlds oil

production, 25 percent of natural gas production, and

18 percent of coal production. Most of the rest of our

energy consumption was derived from nuclear power

and large hydropower, with renewable energy sources

such as biomass, wind, photovoltaics, and geothermal

making up less than 2 percent of our total. Moreover,

despite a several-fold growth in non-hydropower

renewable energy sources,2 nonrenewable sources are

still forecast to supply 88 percent of our primary energy

consumption by 2030 (figure 17.1).

The sheer scale of our dependency on nonrenewable,

energy-dense fossilized sunshine is often lost on

those who believe that renewable energy sources can

supplant hydrocarbons at anything like todays level

of energy consumption. Thus it is prudent to examine

the prognosis for fossil fuels within North America,

as they will make up the bulk of our energy consump-

tion for many decades to come.3 The North Americanfossil-fuel story is largely driven by consumption in the

United States, the biggest user of energy in the world

and, until China overtook it in 2006, the biggest car-

bon dioxide emitter. Also critical to this story is the

vulnerability of the U.S. economy given its addiction

to hydrocarbons. It is highly dependent on imported

oil and may soon be dependent on imported natural

Nonrenewable energysources are forecast to supply

88 percent of our primaryenergy consumption by 2030.

140

120

100

80

60

40

20

160

0

2025202020152010

Year

2005200019951990 2030

QuadrillionBtuperYear

Nonrenewable

88%

History Forecasts

20% growth 20092030

Oil

Natural Gas

Coal

Nuclear

Hydro/Renewables

Figure 17.1

History and forecasts of North American energy consumption by fuel

19902030.

Source: Data from U.S. Energy nformation Administration, International

Energy Outlook 2009, DE/EA-0484, ay 27, 2009, http://www.eia.doe.gov/

oiaf/ieo/.

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gas. For these reasons, this chapter will focus primarily

on the future availability and vulnerability of supplies

of hydrocarbons to the United States, and will look in

detail at oil, natural gas, and coal.

il

Oil is a globally traded and priced commodity.

Nonetheless, oil produced at home is much preferable

from the point of view of ones national trade balance,

and imported oil from secure and reliable sources is

much preferable to that from less reliable and potentially

hostile sources. Oil consumption in the United States

grew by 69 percent from 1965 through 2008, with nota-ble drops following the oil embargo in the late 1970s and

during the recession that started in 2008. Domestic oil

production peaked in 1970, however, and in 2008 about

65 percent of U.S. oil consumption was imported.4

New U.S. oil discoveries, such as deep-water offshore

oil in the Gulf of Mexico and shale oil in the Bakken

Formation of Montana and North Dakota, are some-

times touted as panaceas to offset declines in domestic

production. In reality, however, these discoveries will

add relatively little supply compared to the countrys

massive annual consumption of 7 billion barrels, as

the Gulf of Mexico is very expensive and time consum-

ing to develop, and the Bakken Formation oil is pro-

duced at low rates and has been estimated to contain

only 4.3 billion barrels or less of recoverable oil.5 Oil

shales in Colorado and Wyoming, although purported

to have massive in-place resources, are expensive and

logistically challenging to extract and process, and are

expected to have limited flow rates and a very low net-

energy profit, should they ever be proved to be com-

mercially viable.6 Ultimately, the potential flow rate of

a resource is more important than its purported size

and the reality is that the flow rates of North American

unconventional-oil sources and oil in difficult loca-

tions (such as deep water offshore) cannot be scaled up

rapidly enough to significantly compensate for declines

in the flow rate of conventional oil.

There are geopolitical and economic risks to beingdependent on imports for two-thirds of consump-

tion. The Organization of the Petroleum Exporting

Countries (OPEC) cartel provided 46 percent of U.S.

oil imports in 2008 (table 17.1). Of the major non-

OPEC exporters, only Canada and Brazilcomprising

21.3 percent of 2008 importslikely have the abil-

ity to increase exports significantly. Although non-

OPEC exporter Mexico is the third-ranked source of

U.S. imports, it is in steep decline as its Cantarell field

(formerly the second-largest producer in the world) has

plunged from more than 2 million barrels per day (bpd)

in 2005 to half a million bpd at present.7

Canada is the largest oil supplier to the United States.8

Canadian conventional-oil production peaked back

in the 1970s, but Canadian oil production is still big

business, and its future is focused on the tar sands

of Alberta. As recently as 2007, Canadas National

Energy Board (NEB) was highly optimistic about the

CountryExports to U.S. in 2008

(thousand barrels per day)

Canada 2,499

Saudi Arabia* 1,534

exico 1,305

Venezuela* 1,192

Nigeria* 991

raq* 628

Algeria* 550

Angola* 514

Russia 466

Virgin slands 321

Brazil 259

United Kingdom 237

Ecuador* 221

Kuwait* 211

Colombia 201

ther (80 countries) 1,821

TTAL 12,951

Source: Data from U.S. Energy nformation Administration, U.S. mports

by Country of rigin, June 29, 2009, http://tonto.eia.doe.gov/dnav/pet/

pet_move_impcus_a2_nus_ep00_im0_mbbl_a.htm.

Table 17.1

Top Crude il and Petroleum Product Exporters to the Uni ted States,

2008 (PEC countries denoted by asterisk)

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tar sands, forecasting a near tripling of production

from 1.4 million bpd at present to 4.15 million bpd

by 2030.9 But in July 2009, owing to the suspension of

several projects due to the 2008 economic downturn,

NEB forecast a comparatively restrained doubling of

tar-sands output by 2020.10 The Canadian Association

of Petroleum Producers, noted for its bullish forecasts,

is similarly now more restrained and forecasting an

increase to 3.2 million bpd by 2025.11 Given some of

the new environmental regulations being implemented

for the tar sands, including tailings and carbon man-

agement (which will increase cost and make this poor

net-energy source of liquids even worse), these forecasts

are still highly optimistic.

Forecasts of future energy supply that merely extrapo-

late consumption trends from the past, with the assump-

tion that new supplies will somehow miraculously be

available, are trademarks of government energy reports

such as those from the International Energy Agency

(IEA) of the Organisation for Economic Co-operation

and Development (OECD), the United States Energy

Information Administration (EIA), and Canadas

NEB. One example is illustrated in figure 17.2, which

is the EIAs reference case for liquids supply (i.e., all

liquid petroleum and natural gas liquid products) in

the United States through 2035 compared to actual

supply for the previous four decades. The EIA appar-

ently assumes that the geology of the United States oil

provinces, with production long in decline, will mirac-

ulously heal itself, and production will go up through

2035. This, coupled with a forecast rapid growth in

biofuels (mainly ethanol of dubious net-energy con-

tent), serves to decrease imports in the forecast from

65 percent of consumption at present to 48 percent in2035, even though consumption rises by 12.3 percent

over this period. The old adage if it seems too good to

be true then it probably is comes to mind.

The EIAs forecasts are used to inform government

and the general public on future energy-supply issues.

In light of what we know of global peak-oil issues

(i.e., the increasing cost and diminishing quality and

deliverability of the worlds oil sources), these reports

unfortunately promote complacency and hence squan-

der valuable time to mitigate the impacts of declining

supply in the belief that all is well on the energy front.

Kjell Aleklett, leader of the Global Energy Systems

research group at Uppsala University in Sweden, has

stated that the head of the EIA is one of the worldsmost dangerous people.12 A clear view of the realities

of future oil supply is crucialrosy forecasts may serve

the immediate needs of bureaucrats and politicians but

are a travesty when considering the consequences of

the lost opportunity of time and capital in managing a

transition to a more sustainable future.

Natural Gas

The United States consumed 22 percent of global natu-ral gas production in 2008. Unlike oil, natural gas is

not a globally priced commodity but rather is continen-

tally priced because of the expense and logistical diffi-

culty of moving it across oceans as liquefied natural gas

(LNG). LNG accounted for about 8 percent of global

gas consumption and less than 2 percent of U.S. con-

sumption in 2008. Thus most natural gas consump-

tion in the United States is from domestic production

Figure 17.2

Historical production and imports of oil in the United States, 1965

2008, compared to the EA reference-case forecast, 2008-2035.

History EIA Forecast

Consumpon (up 69%) Consumpon (up 12.3%)

MillionBarrelsperDay

Year Year

1965 1975 1985 1995 2005 2008 2013 2018 2023 2028 2033

0

5

10

15

20

25

0

5

10

15

20

25

Net Imports

(65% of 2008

consumpon)

Producon

(down 40%

from peak)

Producon

(up 46%

from 2008)

Net Imports

(48% of 2035

consumpon)

BiofuelsandSynthe

cs

Peak

1970

Sources: BP Statistical Review of World Energy 2009, Historical Data,

June 2009, http://www.bp.com/statisticalreview; U.S. Energy nformationAdministration, Annual Energy Outlook 2010 Early Release Over view, DE/EA-

0383, December 14, 2009, http://www.eia.doe.gov/oiaf/aeo/index.html.

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and pipeline imports from Canada. Gas consumption

in the United States reached a recent peak of 23.3 tril-

lion cubic feet in 2000. Consumption has declined

in all sectors except electricity generation since then,

although its use has been rising again recently. The

industrial sector, comprising petrochemical, fertilizer,

and other industries, declined the most as volatile and

often high gas prices pushed factories offshore.

Gas production in the United States hit an all-time

high in 1973 and then declined, but has been rising to

near 1973 levels recently owing to the development of

unconventional gas (i.e., shale gas) and unprecedented

amounts of drilling. This does not imply a long-termsolution to production declines, however. Depletion

rates of gas wells are much higher than those of oil

wellsoverall decline rates averaged 32 percent per

year for the lower forty-eight states in 2006.13 This

means that one-third of gas production must be

replaced each year by more drilling, and that 60 per-

cent of current lower-forty-eight gas production comes

from wells drilled and connected in the previous four

years. Unconventional production from shale-gas wells

has much higher decline rates than conventional-gas

wells, typically in the range of 65 to 80 percent in their

first year of production, suggesting that the increased

reliance on shale gas going forward is likely to acceler-

ate the overall rate of U.S. gas depletion.14

This has contributed to what I refer to as the explora-

tion treadmill: more and more drilling to keep produc-

tion flat, let alone growing (figure 17.3). The number

of successful gas wells drilled each year has tripled

since 1999, yet production has grown by only 15 per-

cent. Active-rig counts (the number of rigs drilling forgas) peaked in late August 2008 and had collapsed by

56 percent by the fall of 2009 (the drop in successful

gas wells is just visible in the left-hand chart), a dip that

will likely show up in declining U.S. gas production

by mid-2010. This exploration treadmill is just as pro-

nounced in Canada, which is the main source of gas

imports to the United States. Even though Canadian

successful gas-well completions are nearly triple what

they were in 1996, and were at one point in 2004 nearly

quadruple, Canadian gas production is now declining

at 7.5 percent per year, and Canadas ability to exportany gas by 2030 is seriously in doubt.15

Nonetheless, there is a wave of hype promoting natural

gas as a panacea to offset the United States extreme

vulnerability to imported oil. T he natural gas industry

has established a new lobbying group in Washington

called Americas Natural Gas Alliance, in addition to

the existing American Clean Skies Foundation, which

was chaired by Chesapeake Energys CEO Aubrey

McClendon until December 2009.16 This hype on

the ability of natural gas to fuel business as usual fora very long time, including replacing imported oil, is

based on shale gas, a resource made accessible by new

technology involving horizontal drilling and multiple

hydraulic fracture treatments. Chesapeake is a major

shale-gas producer, and the ultimate natural gas opti-

mist is McClendon himself, who testified to Congress

on July 30, 2008:

Figure 17.3

The natural-gas exploration treadmill in the Uni ted States,

19912009.

Wells Completed Dry Producon40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0 0

5

10

15

20

25

Development

Exploratory

Year Year

1991 1994 1997 2000 2003 2006 2009 1991 1994 1997 2000 2003 2006 2009

SuccessfulWellsDrilled

TrillionCubicFeetperYear

PRODUCTION UP 15%

DRILLING UP 200%

Note: The level of eort quantied by the number of wells drilled has tripled, yetproduction has risen by only 15 percent.

Sources: Drilling data from U.S. Energy nformation Administration, Crude

il and Natural Gas Exploratory and Development Wells, http://tonto.eia.doe

gov/dnav/pet/pet_crd_wellend_s1_m.htm ; production data through ctober

2009 from U.S. Energy nformation Admin istration, Natural Gas on thly,

http://www.eia.doe.gov/natural_gas/data_publications/natural_gas_

monthly/ngm.html.

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I believe natural gas can and should be the driv-

ing force for how this Congress can take bold

action to free our country from the death grip of

high prices for imported oil, thereby improving

our economy, enhancing national security and

helping the environment. Its a trifecta, triple

play and hat trick all rolled into one. I believe

U.S. natural gas producers can increase supplies

by 5% per year for at least the next decade and

that assumes there is no more access to public

lands and waters than there is today.17

The hype on shale gas as a silver bullet is pervasive.

T. Boone Pickens and McClendon have promoted the

natural gas panacea in ads on CNN and elsewhere for

the Pickens Plan.18 Actor Tommy Lee Jones was even

brought into the fray in 2008 promoting shale gas, and

Shale TV, a station dedicated to promoting shale gas

in Texas and funded by Chesapeake, was about to be

launched until the economy rolled over in the fall of

2008. In Canada, even though gas production is drop-

ping at 7.5 percent per year, Pacific Trail Pipelines is

planning on building a 463-kilometer pipeline to con-

nect to a proposed liquefaction facility on the West

Coast to export gas it envisages coming from shale gas

in northeastern British Columbia (which has little pro-

duction at present).19

So what are the realities behind shale gas, which now

accounts for 14 percent of U.S. production? As of

mid-2009 the Barnett shale-gas play (i.e., the produc-

tion operation), which in part underlies the Dal lasFort

Worth metro area in Texas, accounted for 64 percent

of U.S. shale-gas production, a significant part of the

remainder being Antrim shale gas in Michigan, which

has been in decline for many years. The Barnett play

peaked, as predicted, in the first quarter of 2009, by

which time more than 12,000 wells had been drilled

at a cost of $2 million to $4 million each. Decline

rates in the Barnett are typically 65 percent in the first

year but initial production rates are high. Other shale plays throughout the United States are having simi-

lar experiences of high initial productivities, but also

high decline rates and challenging economics. The

Haynesville play of east Texas and Louisiana, for exam-

ple, experienced decline rates of over 80 percent in the

first year, and a sky-high cost of up to $10 million per

well.20 In addition, the environmental impacts of shale-

gas drilling are coming under increasing scrutiny: Two

to five million gallons of water are required per wellin

the Barnett, a third of which is recovered and must bedisposed of, with potential impacts on aquifers.

Arthur Berman, a geological analyst formerly with

World Oil magazine, has done some very insight-

ful analyses of shale-gas potential in the Barnett,

Haynesville, and other plays. He has found that

decline rates, well lifetimes, and ultimate recoverable

reserves for shale-gas wells in these plays have been

The hype onshale gas as

a silver bulletis pervasive.

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optimistically assessed, to say the least.21 Assumptions

of production profiles over well life, compared to actual

measurements, suggest ultimate recoverable reserves

per well are a thirdof what is commonly quoted, and

well life spans could average eight years, not forty years

as is commonly assumed. Berman has stated, among

other things:

I am disturbed that public companies and

investment analysts make fantastic claims about

the rates and reserves for new shale plays with-

out calibrating them to the only play that has

signicant production history. Almost every

assumption used by the industry to supportpredictions about the Haynesville or Marcellus

shale plays is questionable based on well per-

formance in the Barnett shale.

Berman was a contributing editor for World Oilmaga-

zine until November 2009 when he resigned after his

column was canceled over protests from shale-gas pro-

ducers, whose stock price and stock issues for raising

capital depend on a gung-ho worldview of shale-gas

potential. Bermans editor was subsequently fired over

the issue.22 Stifling analysis and debate on such a cru-cial issue is disturbing considering its importance for

planning future energy security. Much more will be

known about the true potential of shale gas in plays

outside of the Barnett in two to four years.

When it comes to the forecasts our leaders use to assess

what lies ahead in terms of natural gas supply, the situ-

ation is very similar to that previously described for oil.

Figure 17.4 illustrates what has actually happened with

natural gas in the United States over the past decade.

Production (both conventional and unconventional)in Colorado, Wyoming, and Texas has been increasing,

whereas production in Kansas, Alabama, Louisiana,

New Mexico has been declining, and Gulf of Mexico

production fell by more than 50 percent. But look-

ing forward, the EIA provides basically another no-

worries forecast (figure 17.5) through 2035, with shale

gas growing more than fivefold, a miraculous reversal

in the geological fortunes of the Gulf of Mexico, and

Figure 17.4

United States marketable gas production by region, 19982009.

0

5

10

15

20

25

TrillionC

ubicFeetperYear

1998 2000 2002 2004 2006 2008

Year

Federal Gulf of Mexico -55%

Alaska-14%

Texas +35%

(Barne shale gas)

Other States +41%Top Five Producers: Colorado (+100%), Utah (+56%), Kan sas (-38%), California (-6%), Alabama (-34%)

NewMexico-7%

Louisiana-1%

Wyoming+184%Oklahoma+10%

Figure 17.5

United States gas-supply forecast by source, 20072035.

0

5

10

15

20

25

30

2007 2012 2017 2022 2027 2032

Year

TrillionC

ubicFeetperYear

Alaska

Shale Gas +420%

Coalbed Methane

Lower 48 ProduconGrows 22% 20072035

Lower 48 Unconvenonal

Lower 48 Onshore Associated

Lower 48 Convenonal(including Tight Gas)

Canada Imports8% growth 20072035

Sources: U.S. Energy nformation Administration,Annual Energy Outlook 2010

Early Release Overview, DE/EA-0383, December 14, 2009, http://www.

eia.doe.gov/oiaf/aeo/index.html; Canada decits based on projections of the

Canada National Energy Board, Energy Outlook, November 2007, http://www.

neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgyftr/nrgyftr-eng.html#s4 .

Source: U.S. Energy nformation Administration, data through ctober 2009

from Natural Gas on thly, http://www.eia.doe.gov/natural_gas/data_

publications/natural_gas_monthly/ngm.html.

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an overall growth in lower-forty-eight production of

22 percent by 2035.

This forecast is based on the following premises, whichmay prove to be unwarranted:

1. Drilling rates after a decline due to the current

economic recession will be ramped up to equal

and higher levels than those at their all-time peak

(more than 36,000 successful gas wells per year in

2008), resulting in nearly one million new gas wells

drilled by 2035.

2. The observed exploration treadmill of declin-

ing average well productivity will cease to operateand in fact will reverse itself, as yet more wells are

crowded into available prospects.

3. Shale gas will live up to the hype, despite high

decline rates, high costs, and significant associated

environmental issues.

Such forecasts do not reflect the underlying uncertain-

ties controlling future gas supply and, in my view, are

unhelpful in putting together a coherent plan for a sus-

tainable energy future as they lull policy-makers into a

false sense of security.

In the likely event that EIA forecasts of gas supply do

not materialize, imports of LNG will be needed. Much

new LNG receiving capacity has been built in the

United States over the past few years and at present is

highly underutilized. T he real story of LNG, however,

is global liquefaction capacity, which is much less than

global re-gasification capacity. As well as adding geo-

political complications to the gas trade (complications

that have long been a fact of life with oil but so far havenot been a serious issue for gas), LNG will very likely

be a higher-cost supply source because a spot market is

developing and the gas will be sold to the highest bid-

der. LNG is also an unfriendly source of gas from the

point of view of net energy and greenhouse gas emis-

sions, as 15 to 30 percent of the energy in the gas is

consumed in the liquefaction, transportation, and re-

gasification process.

Coal

The United States could be said to be a Saudi Arabia of

coal as it controls some 29 percent of world resources.The United States produces over a billion metric tons

of coal per year, a distant second only to China, which

produces more than 2.7 billion metric tons per year.

Half of the electricity generated in the United States is

fueled by coal, much of it in older plants with less-than-

optimal controls on emissions. In addition, the United

States produces more than 60 million metric tons of

high-quality metallurgical coal each year, which is used

in steel making. Metallurgical coal is indispensable in

the steel industry, and hence underlies much of theinfrastructure of modern society.

In the United States, much of the higher-energy-con-

tent coal is mined in Appalachia, which produces bitu-

minous thermal- and metallurgical-grade coals from

underground mines and by mountaintop-removal

surface operations that have major environmental

impacts.23 Declining Appalachian production is being

made up from very large-scale and mainly surface min-

ing operations in the West, in particular the Powder

River Basin of Wyoming, which produces more than400 million metric tons per year from very thick seams

of low-sulfur, sub-bituminous coal. Owing to the

decline in production of the high-heating-value coals

of Appalachia and their replacement with the lower-

heating-value coals of Wyoming and other regions, the

United States experienced a recent peak in the energy

contentof extracted coal in 1998 even though the total

amount of coal extracted increased through 2008

(although it dropped significantly in 2009).

Several studies have recently been published on peakcoal, the point at which global coal deliverability wil l

begin an inexorable decline, likely in the 20202030

time frame. These studies are nicely summarized in

Richard Heinbergs book Blackout and hence will not

be dealt with further here, except to say that the con-

ventional wisdom of coal being a fuel for the long haul

has been found severely wanting.24 Another excellent

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in-depth review of U.S. coal resources and other coal

issues has been written by Leslie Glustrom.25

The United States has been a major coal exporter inthe past (over 12 percent of total production in the

early 1980s), but more recently it has been importing

ever-larger quantities of mostly thermal coa l (for power

generation), mainly from Colombia and Indonesia,

although it is still a minor net exporter (59 million tons

in 2009). When it comes to future forecasts of coal pro-

duction in the United States, the EIA provides, as with

oil and natural gas, yet another no-worries forecast.26

Figure 17.6 illustrates the EIAs reference-case forecasts

for coal production by region compared to historicalproduction. Coal production is forecast to grow from

the lower-quality deposits in the West and decline in

the mature mining region of Appalachia.

Whether U.S. coal production can be ramped up by

12 percent, as in the EIA forecast, or even maintained

is questionable. It would certainly require major new

investments in mines and transportation infrastructure

as the infrastructure for moving coal from the Powder

River Basin, for example, is at maximum capacity. Given

the issues with supply of natural gas discussed earlier,and challenges with the scaling up of renewables, there

will clearly be a role for coal in the transition to a more

sustainable energy future. However, the current focus

on carbon capture and storage (CCS) with its parasitic

energy losses and high capital costs is, in my opinion,

the wrong way to go. Energy losses for CCS amount

to 30 percent of the energy produced in a typical coal

plant, requiring an increased burn rate for the same

amount of electricity, which accelerates the consump-

tion of a nonrenewable resource. Moreover, the capitalcosts for CCS infrastructure can be 50 percent of the

cost of a plantmoney that could be better invested in

infrastructure to provide an alternative to high-energy

throughput lifestyles.27

Coal is a low-value fuel compared to natural gas or

oil because it is less versatile in its potential applica-

tions without significant energy-conversion losses and

costs. High-efficiency configurations of coal-fired

generation with heat capture (combined heat and

power, or CHP) have the potential to double the effi-

ciency of coal plants and eliminate the consumption

of hydrocarbons that would otherwise be required

to generate that heat (thereby also radically reducing

emissions). The issue of coal use is often fraught withemotion. However, considering the scale of its contri-

bution to U.S. energy supply, and the lack of scalable

alternatives, it is unlikely that it can be completely

phased out in the foreseeable future. Coal must there-

fore be used in its highest-efficiency and lowest-emit-

ting configurations.

The Scaling Dilemma

Hydrocarbons have a role in every aspect of mod-ern life, including building materials, transportation,

food, communication, electricity, and so forth. The

scale at which hydrocarbons are consumed to fuel the

global economy as currently structured makes it impos-

sible to conceive of alternatives to replace them at that

scale; clearly a more sustainable future necessitates a

radical reduction in the amount of energy consumed.

Renewable sources of energy, which must contribute

Figure 17.6

Historical coal production, 19772009, and annual production

forecasts by region, 20072035.

Historical Producon Forecast by Region

0

200

400

600

800

1000

1200

1400

0

200

400

600

800

1000

1200

1400

MillionShortTons

1977 1982 1987 1992 1997 2002 2007 20122007 2017 2022 2027 2032

Year Year

All Regions+55%

Other(ND,SD,AZ,NV,WY,WA,

AK)

RockyMountains

GulfCoast

Montana

Interior

Powder River BasinWyoming

Appalachia

Producon Up 12%

Sources: U.S. Energy nformation Administration, onthly Energy Report:

Coal, February 26, 2010, http://www.eia.doe.gov/emeu/mer/coal.html;

U.S. Energy nformation Administration, supplementary tables 120 and

121 inAnnual Energy Outlook 2010 Early Release Over view, DE/EA-0383,

December 14, 2009, http://www.eia.doe.gov/oiaf/aeo/index.html.

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to a solution, are still dependent on hydrocarbons for

their manufacture.

Then there is the issue of energy quality. Renewablesources of energy such as wind or photovoltaics are

intermittent and unpredictabletheir actual genera-

tion is typically a third or less of their rated capacity,

and hence they require backup by reliable generation

sources, usually fueled by hydrocarbons. Our electric-

ity infrastructure is tasked to provide uninterrupted

service at all hours to all users, no matter how high

the demandit is highly unlikely that it can be con-

verted to renewable energy at anything like the scale

of electricity consumption we enjoy today because ofthe intrinsic limitations of renewables and the mas-

sive scale required. The concept that we can maintain

our current massive transportation infrastructure by

converting from vehicles that run on liquid petro-

leum products to those that use electricity or natural

gas is likely doomed to failurewe need to rethink

our transportation requirements to have a much lower

energy footprint.

Although electricity generation is only a fraction of the

work hydrocarbons perform for us, it is particularlyinstructive to examine the role of hydrocarbons in elec-

tricity generation to appreciate the daunting scale of

replacing them with alternatives at present consump-

tion levels going forward. The EIA forecasts U.S. elec-

tricity generation to increase by nearly 27 percent from

2007 to 2035 (figure 17.7). Hydrocarbons account for

71 percent of electricity generation at present, with

coal being nearly halfand by 2035 they are expected

to still be the main power source, at 65 percent of total

generation and with coal comprising 44 percent. Amassive 452 percent increase in the capacity of non-

hydro renewables, if achieved, would make up only just

over 11 percent of total electricity-generation market

share. Large hydropower is also forecast to grow but

lose market share owing to a lack of remaining develop-

able sites, as is nuclear due to the enormous challenges

and expense of refurbishing and/or replacing the aging

U.S. nuclear fleet.

The prognosis for non-hydropower renewable sources

is particularly at odds with the popular vision of our

future economy being powered by wind turbines and

solar panels (figure 17.8). The largest single source of

renewable energy is actually forecast to be wood and

other biomass, growing more than sevenfold to serve

Figure 17.7

Forecast U.S. electricity generation by fuel, 20072035.

MarketShare

TerawaHours

2007 2011 2015 2019 2023 2027 2031 2035

0

1000

2000

3000

4000

5000

6000

Year

11.2%

5.8%

17.1%

43.8%

21.2%

6.0%

19.4%

48.5%

22.0%

Nuclear +11%

Coal +14%

Natural Gas +22%

Large Hydro +22%

Renewables +452%

+26.5% growth 20072 035

Figure 17.8

Forecast U.S. electricity generation from non-hydropower renewable

energy sources, 20072035.

}}}

0

100

200

300

400

500

600

700

Terawa-Hours

2007 2011 2015 2019 2023 2027 2031 2035

Year

2.6%

452% Growth 20072035(11.2% of Total)

MarketShare

0.43%

0.53%

0.54%

5.5%

4.1%

Wood and Other Biomass +636%

Wind +530%

Geothermal +92%

Municipal Waste +67%

Photovoltaics +2927%

Solar Thermal

Source: U.S. Energy nformation Administration, supplementary table 101

inAnnual Energy Outlook 2010 Early Release Overview , DE/EA-0383,

December 14, 2009, http://www.eia.doe.gov/oiaf/aeo/index.html.

Source: U.S. Energy nformation Administration, supplementary table 85inAnnual Energy Outlook 2010 Early Release Overview , DE/EA-0383,

December 14, 2009, http://www.eia.doe.gov/oiaf/aeo/index.html.

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5.5 percent of total market share, followed by a sixfold

growth in wind to 4.1 percent of market share. Solar

photovoltaics are forecast to grow by thirty times, but

even then they would contribute only less than half a

percent of forecast generation.

This illustrates the scaling dilemma society faces in

replacing hydrocarbons in our current business-as-

usual mode of energy consumption. Even with a radi-

cal sca le-up, non-hydropower renewables are forecast to

make up less than 12 percent of electricity generation

in 2035, and a much smaller proportion of total energy

consumption. The fossilized sunshine that hydro-

carbons represent is an extremely convenient, denseform of energy for which there are no alternatives at

the scale of energy throughput we enjoy at this point

in humanitys existence. Forecasts of continuing avail-

ability of hydrocarbons for the next couple of decades

for business-as-usual levels of consumption are tenu-

ous at best and wishful thinking at worst. Solutions to

the pending decline in the availability of hydrocarbons

rest on rethinking and radically reducing our levels of

energy consumption and developing the infrastructure

for alternatives to lifestyles now based on cheap energy.

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Endnotes1 Calculations from data provided in U.S. Energy nformation

Administration (EA), International Energy Outlook 2009, ay

27, 2009, http://www.eia.doe.gov/oiaf/ieo. ther statistics

in this paragraph derived from data at this source.

2 A major portion of the renewable energy sector is large

hydropower, which by some denitions is nonrenewable

in the longer term, and certainly is not without its

environmental impacts.

3 U.S. Energy nformation Administration, International Energy

Outlook 2009; nternational Energy Agency (EA), World

Energy Outlook 2009, http://www.iea.org/weo/2009.asp .

4 Data from spreadsheet available with BPs Statistical Review

of World Energy 2009, June 2009, http://www.bp.com/

productlanding.do?categoryd=6929&contentd=7044622 .

5 U.S. Geological Survey, 3 to 4.3 Billion Barrels of Technically

Recoverable il Assessed in North Dakota and ontanas

Bakken Formation25 Times ore than 1995 Estimate,

press release, April 10, 2008, http://www.usgs.gov/

newsroom/article.asp?D=1911 .

6 A. K. Gupta, . C. Herweyer, and C. A. S. Hall, Appendix

E: il Shale: Potential, ER and Social and Environmental

mpacts, The il Drum, April 15, 2008, http://www.

theoildrum.com/node/3839.

7 David Luhnow, exicos Fading il utput Squeezes

Exports, Spending, ilnline, September 16, 2009, http://

www.oilonline.com/News/NewsArticles/ctl/ArticleView/

mid/517/articled/22144/categoryd/16/exicos-fading-oil-

output-squeezes-exports-spending.aspx.

8 Canada is also an oil importer, as its east coast provinces

are highly dependent on oshore oil. This makes Canada a

relatively small net exporter of about 1 million barrels per day.

9 Canada National Energy Board, Continuing Trends, chap. 4

in Canadas Energy Future: Reference Case and Scenarios to

2030, http://www.neb.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/

nrgyftr/2007/nrgyftr2007chptr4-eng.html#s4_5 (accessed

November 2007).

10 Canada National Energy Board,2009 Reference Case

Scenario: Canadian Energy Demand and Supply to 2020, July

2009, http://www.neb.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/

nrgyftr/2009/rfrnccsscnr2009-eng.pdf.

11 Canadian Association of Petroleum Producers (CAPP), Crude

Oil: Forecast, Markets and Pipeline Expansions, June 2009,

http://www.capp.ca/getdoc.aspx?Docd=152951&DT=NTV.

12 Kjell Aleklett, Comments on Guardian Article: Key

il Figures Were Distorted by US Pressure, Says

Whistleblower, Energy Bulletin, November 10, 2009,

http://www.energybulletin.net/50662.

13 The 32 percent decline rate for natural gas is found in

the chart US Natural Gas Production History, prepared

by EG Resources, nc. from HS Energy data; see slide

3 of the PowerPoint presentation Washington Energy

nformation eetings, American Exploration and

Production Council, July 11, 2007, http://www.dpcusa.org/

natural/ppt/070711.ppt.

14 Shannon Nome and Patrick Johnson, From Shale to Shining

Shale: A Primer on North American Natural Gas Plays,

Deutsche Bank, July 22, 2008.

15 J. David Hughes, The Energy Sustainability Dilemma:

Powering the Future in a Finite World, public lecture

given in ttawa, ntario, September 10, 2009, http://

www.aspocanada.ca/images/stories/pdfs/ottawa_

sept_10_2009.pdf.

16 Americas Natural Gas Alliance, http://www.anga.us/;American Clean Skies Foundation, http://www.cleanskies.

org/index.html.

17 Aubrey cClendons testimony to the U.S. Congress, Select

Committee on Energy ndependence and Global Warming,

July 30, 2008, http://www.globalwarming.house.gov/

tools/2q08materials/les/0125.pdf .

18 Pickens Plan, http://www.pickensplan.com/act/.

19 Scott Simpson, Kitimat LNG Pipeline Takes Another

Step Forward, Vancouver Sun, April 9, 2009, available

at http://www.pacictrailpipelines.com/sites/ptp/les/

VanSun_KLNG_Apr09.pdf; proposed British Columbia West

Coast liquefaction terminal, Project Description, Kitimat

LNG Terminal, http://www.kitimatlng.com/code/navigate.

asp?d=10.

20 Nome and Johnson, From Shale to Shining Shale.

21 Arthur Berman, Lessons from the Barnett Shale Suggest

Caution in ther Shale Plays, commentary, Association for

the Study of Peak il and GasUSA, August 10, 2009, http://

www.aspousa.org/index.php/2009/08/lessons-from-the-

barnett-shale-suggest-caution-in-other-shale-plays/.

22 Arthur Berman, World il Editor Fired ver il Shale

Columns, Petroleum Truth Report, November 5, 2009,

http://petroleumtruthreport.blogspot.com/2009/11/world-oil-editor-red-over-shale.html .

23 hio Valley Environmental Coalition, High Resolution

ountaintop Removal Pictures, http://www.ohvec.org/

galleries/mountaintop_removal/007/.

24 Richard Heinberg, Blackout: Coal, Climate and the Last

Energy Crisis (Gabriola sland, BC: New Society, 2009).

25 Leslie Glustrom, Coal: Cheap and Abundant: Or Is It? Why

Americans Should Stop Assuming that the US Has a 200-Year

Supply of Coal, February 2009, [email protected].

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26 U.S. Energy nformation Administration,Annual Energy

Outlook 2010 Early Release with Projections to 2035, DE/

EA-0383(2010), December 14, 2009, http://www.eia.doe.

gov/oiaf/aeo/index.html.

27 assachusetts nstitute of Technology, The Future of

Coal: Options for a Carbon-Constrained World (Boston:

assachusetts nstitute of Technology, 2007), http://web.

mit.edu/coal/The_Future_of_Coal.pdf.

AcknowledgmentsCover art by ike King. Design by Sean cGuire. Layout by

Clare Rhinelander.

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