Using nuclear energy to get the most out of Alberta's tar sands

A “WHITE PAPER” FOR DISCUSSION

BY:  COSMOS  M. VOUTSINOS

Lethbridge,  AB

Revision 1, January, 2007

Phone: 1- (403) 331-2212

Copyright: Cosmos Voutsinos

This discussion paper was first released in printed form on September 11, 2006 for review and comment. Subsequently it was provided to members of the McIntyre Collegium, a private club of influential conservatives who met in October at the Mcintyre Ranch in Alberta Canada. The paper was first posted on the Computare website on October 30, 2006 as Revision 0. Revision 1, January 2007, was posted on June 17, 2007.

 EXECUTIVE SUMMARY 

This book is intended to solicit effective leadership from Government, Industry and Academia, now that the problems described below have become perceptible and before they reach crisis proportions.

Our society is heading on a collision course with reality where, at the cross road, four serious situations converge. The text of this book provides details for each in a global context.  In summary they are:

a)    We have a continuously increasing population and in addition the so called third world countries are working to improve their standards of living to those of the first world. This places an enormous and continuously increasing demand on the world’s resources, especially on energy from hydrocarbons.

b)    We are experiencing a reduction in the availability of hydrocarbons. Although depletion will not be witnessed in our lifetime and perhaps not even for a couple more generations, we are witnessing the onset of a situation where our rates of production cannot keep up with the rates of increasing demand. Over the last decades the number and the size of new oil discoveries have been declining. Also the quality of newly developed oil fields is lower necessitating a much higher input of capital and energy per barrel of oil produced. Recent prices increases in this commodity seem to be forecasting what is coming ahead.

c)     We need to address the well known environmental problems concerning the increase of greenhouse gasses.

d)    A change in global energy infrastructure will require a massive amount of capital and energy input. It is estimated that the capital requirement for such a change is about US$120 trillion (2006). The energy that will be required must come primarily from hydrocarbons. It is estimated that we will need approximately 150 billion barrels of oil over and above our current increasing rates of consumption to allow for both supply and demand of this new energy infrastructure. Due to the enormity of the task, it is estimated that it will take a minimum of 50 years to complete. This means that if we decide to change our energy infrastructure today, the consumption of oil will not go down, but will start going up at a much higher rate for the next 50 years.

It is logical that the longer we wait to commit to this change the more expensive and difficult the change over process will become. As an illustration consider what a relatively modest increase in construction demand has done to construction costs at the tar sands.

The tar sands are perceived as a source of hydrocarbons, which will extend our supplies for several decades. They are more than that. The size, location and strategic timing of the exploitation of this resource can provide the energy and the financing needed for the change of our global energy infrastructure. The tar sands need hydrogen to upgrade the bitumen, about 5 Kg per barrel. In time, as more efficient ways are developed to produce hydrogen, hydrogen will start as the feed stock for upgrading, but it could also end up being a clean fuel itself that could be produced and shipped through existing assets.  The oil companies are on the vanguard of a marketing opportunity.  They will be able to keep increasing their production of oil for several decades, but will also place themselves in control of the next new fuel.

Alternative forms of energy will be needed for niche applications; however, only coal fired plants and nuclear plants can provide the bulk of energy that will be needed for hydrogen production. The tar sands can be the incentive for these two industries to compete and develop. The coal industry will have to develop low cost and low energy consumption processes for CO2 sequestration in solids. The nuclear industry will have to built Generation IV reactors that will not produce long lived radioactive wastes and can also burn the wastes produced by today’s generation II reactors.  The author of this book believes that nuclear power will prevail because of the relatively negligible amount of energy input/output for nuclear fuel and the speed with which it can fulfill environmental requirements.

The book shows in detail why nuclear power technology does not deserve all the negative press it gets. To many people it is seen at best as an alternative energy source to avoid greenhouse emissions. It is more than that. It is an energy source, which can not only develop the tar sands, but can also launch and sustain the hydrogen fuel era for future generations, sustainable far beyond the time boundaries of our dwindling fossil fuel supplies.

It is possible to have increases in population and allow third world countries to improve their standard of living, if we admit that our energy infrastructure needs to look different in 50 years from what it does today.  During this 50 year transition time, we will need to conserve energy and to give incentives to develop all other alternative energy sources.  Governments will have to stop all forms of subsidies and allow all forms of energy to compete on equal footings.  Commitments need to be made soon. 

INTRODUCTION

This book presents you with a proposal for an optimized model for the exploitation of the tar sands.  Although, the tar sands are a non-renewable resource, they contain more oil than all the worlds currently known reserves put together. (174 billion barrels close to the surface – second only to Saudi Arabia, and another 1.6 trillion barrels deep underground).  Our society is committed to exploiting this vast resource, and pilot projects have operated during the last 40 years.  Now an explosion in interest, investment and licensing is taking place, and therefore it is becoming imperative that policy decisions are made to define the goals, the targeted rate, the method, the sustainability, and the acceptability of the consequences of such an exploitation process. The proposed model intends to address these issues; however, let me take you through the thinking process that has resulted in the conclusions of the model presented.

If you get a string and fold it twice you get 4 strings. If you twist it to make a rope and then apply a force you will find that the strength of the string is no longer equivalent to four strings. It is more than four strings.  The extra strength comes from the synergy of the four strings working together. The same principle applies to an electronic board, where the strength of the board is far greater than the sum of the individual strengths of the various resistors, capacitors, transistors etc. 

The concept of synergy can be extrapolated to human beings. For example the higher the synergy of a sports team the higher is the strength of the team relative to the sum of the strengths of the individual players. The synergy concept can be expanded to companies, industries, cities and countries.  Empires were formed when they achieved high levels of synergy and collapsed when for some reason their positive synergy collapsed. 

In Alberta, we have a Province that exports a great deal of energy, yet there is not a synergy that would optimize, maximize and extend this resource. The main reason for writing this paper is to address this problem.

The oil industry has reported that it costs $10 to produce one barrel of oil.  This statement has been based on an economic analysis (cost/benefit) performed by the oil industry.  However, cost/benefit audits are not necessarily limited to financial nature only. For example energy audits will define how much energy we input for the production of a barrel of oil and how much energy we get out of it when we consume it, or how much energy goes into producing hydrogen and how much energy we can get out of this product.  Similarly, resource audits will define the relative amount of resources consumed per barrel of oil produced and thus optimize the production process, in order to conserve our resources. An environmental audit will define the type of feedstock or energy source that is preferred in order to minimize the pollution to our environment. A Semi-financial audit would also evaluate things like the cost and energy of oil and gas used to produce some fertilizers, pesticides and herbicides against the improved quantity and quality of crops, and hence lower commodity price to the public.

Audits are different than studies. During an audit one compares one parameter against another and derives a conclusion based on actual facts. Studies usually are selective and biased in line with preconceived beliefs.  Someone selects only points which support his preconceived ideas, Based on this he draws his conclusions which can change subject to interpretation.

The list of possible audits seems endless, yet we, the public, have been informed only of the financial audits and some environmental studies performed by AEUB (Alberta Energy Utilities Board) and oil companies for their own use. Let me interject here that oil companies are not meant to be charitable organizations. They are profit-making machines for their stockholders.  That is their purpose and that is why we have them.  They are tools of our economy, and this is the modus operandi of capitalism –the system that we have chosen to live in.  It is not the job of the oil companies to produce studies, which are not directly related to their goals. Some of you might have read about the stockholders back in 1919 that took Henry Ford to court for raising the minimum daily wages to $5/day, and won their case. 

With regards to the Tar Sands exploitation process, the question that I am raising is that “if the oil companies are not obliged or responsible to perform audits not directly related to their purpose and if AEUB ( Alberta Energy Utility Board) has limited its expertise and focuses only on reacting to the oil industry’s activities, then who is responsible for initiating and performing independently the various necessary audits that would result in an orderly, optimized and sustainable form of exploitation?”  Prior to issuing a production lease and permit, as a minimum, I can think of at least four areas that should be audited, in addition to the economic audit. These include: Environmental, Energy, Conservation of precious resources and Water availability audits to ensure that not only the oil companies are benefited but also society as a whole.

These audits in more detail are:

Environmental Audit:  The oil industry is doing a fair job in restoring the disturbed land.  They replant trees and restore grasslands; they release buffalos, etc.  This restoration however covers only 20% of the disturbed land, based on oil industry reports of land used and land reclamation rates.   In addition, there are left behind settling basins and toxic ponds at an increasing rate.  It is reported that there is enough water in these toxic ponds to fill Lake Erie.  Yes, Lake Erie is a shallow lake, and this is likely an exaggeration by environmentalists, but the meaning of this message remains the same.   Meanwhile, the price of oil has increased from $30/barrel (when the financial audit was performed) to $60+/barrel. The targeted volume of projected oil produced, has also more than tripled for the next 10 years.  This means that both the oil company’s profits and future royalties to Governments will likely more than double. Consequently, there should be plenty of available money to finance solutions to the above-mentioned problems.  What does it take to establish an infrastructure and set targets to be met?  What kind of technology should be used to stop the creation of toxic ponds?  The tar sands underlie ¼ of the area of Alberta. The oil companies mine 2 tones of tar sand per barrel of oil from pits down to 200 ft deep. These scars, according to environmentalists, are large enough to be visible from the moon. Our Government is accelerating the issue of permits and leases to the oil companies, while nothing is there to indicate that the overall potential for environmental problems is acknowledged or addressed by anyone.  The cost of restoring the land represents less than $1/barrel produced. Yet, when the feasibility stage of the development was completed, the price of oil was about $20 per barrel and the volume was that of a pilot plant only.  Now the price is at $60/barrel and the volume of oil produced is multiplying exponentially, along with the environmental gap. It does not seem to be appreciated that what was an acceptable environmental impact during the developmental scale of production is not acceptable and it can be disastrous under full production scale. Not addressing these problems now, raises the possibility of a damage of gigantic proportions.  Is this acceptable to our Government? Is this what we plan to leave for the next generation of Albertans?

Resource and Energy Audit: The oil industry reports that it consumes 1000 cubic feet of gas for every barrel of oil produced. Some of this gas is burned to produce heat and electricity and the rest is stripped of its hydrogen to help convert the bitumen into crude oil.  Both these processes are consuming surplus natural gas as if it was a by-product of very little value.  Instead of burning it up in stacks (flaring it) they use it. From the resources point of view we are burning a valuable and relatively cleaner form of energy to produce a more polluting fuel. From the economic point of view, we are squandering a resource that will be needed for a long time to produce fertilizers and pesticides for our agriculture, (our food).  From the energy point of view how much energy is consumed to produce one barrel of oil (and also how much more potential energy is wasted) and how much energy do we get out of it when we consume it.

Another process used at the tar sands removes some carbon from the bitumen in order to enrich its hydrogen content and to produce crude oil. This process produces a large quantity of Coke and Asphaltene as by-products which are both accumulating on the site, instead of enriching them with hydrogen and thus producing more crude oil per unit of bitumen extracted.

A Syncrude executive stated last June  (the Globe and Mail) that if we want increased production of oil we would have to accept increased rates of release of carbon products to the atmosphere. Is this correct? Should we then assume that there is no alternative, or is this how an oilman sees it.  We should not expect the oil industry to look at other forms of energy on its own. However, an unbiased, balanced and well-informed audit could provide much different conclusions and efficiency in resources and energy used up in the tar sands.  Who is examining for alternative sources for energy and for hydrogen production and how can we provide an incentive to the oil industry to adopt the needed changes?

Water availability audit: Based again on oil industry reports, it takes about 3 barrels of water to produce 1 barrel of oil. Even if some water is recycled it still makes a great impact on the availability of this resource.  Right now Syncrude gets about 1% of the average annual flow of the Athabasca River.  (It actually gets more water but it returns a portion of it back to the river along with some contaminants). Considering that the Syncrude process consumes half as much water/barrel produced than other companies, when all the newly issued permits have resulted in producing oilfields, the removal of water from Athabaska will likely exceed 10% level of its average annual flow, within the next few years. Such an impact will take place while the tar sands development is still at its infancy level. What will be happening when it reaches maturity? What will happen if the natural weather cycle of our planet reduces the amount of water available in this area?  The oil companies are spending a great amount of capital up front. We cannot come afterwards and tell them that there is not enough water for them, to continue with the production process, for which they have been licensed. 

In this paper the audits for energy, resources and environmental analysis have been performed qualitatively and quantitatively based on reported or derived data.  These audits, although not exhaustive, were performed to a depth level sufficient to reach some conclusions.  For the water availability audit we have just scratched the surface, as this topic is beyond the capability of the author.  There will be needed a major undertaking of a multidisciplinary group to address this area and to establish the forecasted quantities of available water, and hence to adjust the rate of demand. Perhaps, a water pipeline and/or desalination might be needed to ensure water sustainability in the tar sands development.

This paper also includes an analysis of alternative available energy forms, available world oil pools and consumption rates, an analysis of the claims for atmosphere warming gases, a novice evaluation of nuclear power, and it places the hydrogen dream into perspective.

As mentioned above, our society is committed to exploit the tar sands.  To build an oil field, an oil company is making a large initial investment in an installation that remains a producing asset for about 30 years. Therefore it becomes vulnerable to changes. On the other hand we have proponents of different forms of energy, which resent the oil industry, and conversely, the oil industry considers as competition any other forms of energy.  On top of this chaos we have groups of environmentalists, some of them informed some others misinformed and dreaming.  Under these circumstances, it is natural that the seriousness of these environmental problems or the introduction of different forms of energy is vigorously debated by the oil industry.  Are the risks greatly exaggerated or conversely are they underestimated? This is what this paper is analyzing.

Following this present auditing process it was concluded that all these conflicting positions are not only wrong, but also that they serve no one.  In fact I can argue that in reality there is no conflict for the long term. To quote from Thomas Homer Dixon from his book “the upside of down” : “Energy is society’s critical master resource, when it is scarce and costly everything we try to do, including growing our food, obtaining other resources like minerals or fresh water, transmitting and processing information and defending ourselves becomes harder”.

The interests of all alternative energy proponents, those of the oil industry, those of the environmentalists, those of the Government and those of society as a whole, can be made to coincide.  One has to look at reasonable incentives for each group, both short and long term and to try to accommodate them.  This, I believe, is the intent and the purpose of the proposed model.

If this model is implemented, the Governments of Canada and Alberta will be called to make choices that will depend on the courage to practice long-term thinking and to make bold, courageous anticipatory decisions at a time when problems are perceptible but before they have reached crisis proportions.  If successful in convincing you of the benefits ahead, I believe that Alberta, based on the timely and strategic strength of the tar sands, will be spearheading a new era where society will be able to continue its growth uninterrupted, where a lot of environmental problems will come under control, where alternative energy proponents will have a chance to contribute to an increasing energy thirsty world, and where oil companies will secure a healthy growth in the production of hydrocarbons, while they begin to view themselves as energy providing companies for many centuries after the depletion of the hydrocarbons. This is expected to bring a real prosperity of a very long duration to our Country and our Province, while at the same time we will be helping the world.

While performing the audits for this paper, we discovered one of the greatest forms of pollution; greater than green house gases, greater than the Chernobyl accident, or the Exxon Valdez oil spill. As the information technology is expending the amount of “misinformation” has literally exploded. This is the real pollution. Eloquent individuals pretend to know more than what they do. Theories are repeated until they are perceived as facts. Catch words become current important topics.  The confusion permeates across all segments of our society, and although we debate things to death, we seem to draw a lot of conclusions on misinformation.  This is becoming our biggest enemy.

To avoid repeating misinformation, this paper has limited itself to drawing conclusions only based on undisputable facts.  It was prepared without any loyalty to any particular industry, government or sector of society.  I do hope that this goal has been achieved.

PART 1: THE ENERGY DEMAND PICTURE

1.1          THE ELECTRICAL DEMAND – THE WORLD

The world’s demand for electrical energy in 2005 was 320 billion kWh/day.  This translates to a built capacity of power stations of about 16 billion kW, including stand-by capability.  To put it further into perspective, this capacity of power plants can be achieved by either one of:

a) 8 million wind mills the size of the ones we have in Alberta running 24 hours/day year round

b) 16,000 to 20,000 large power stations of coal, oil or nuclear fired plants running continuously

c) 2 trillion square feet of solar panels assuming that the sun shines every day

The problem is not only that these numbers are very big.  World demand for electricity is increasing so fast that these big numbers are doubling themselves every 55 years.  This means that during the next 55 years we will have to build about 40,000 new power plants. 20,000 new ones, plus 20,000 more stations to replace the currently aging power plants (the lifetime of a power plant is about 40 years).   We will need to build on the average about 750 large power plants per year over the next 55 years.  The investment associated with such a growth, calculated at an average of  $1.5 billion per plant comes to about  $1.125 trillion per year for the next 55 years, (in 2006 dollar value).

1.2       THE ENERGY DEMAND FOR TRANSPORTATION AND INDUSTRY NEEDS

THE OIL PICTURE – THE WORLD

The world’s demand for oil in 2005 was approximately 80 million barrels/day.  Here again, the problem is not only that this number is very big, but also, that our demand is increasing so fast that it is to double every 40 years.  The recent price increases of oil did not happen because we are running out of oil. Not yet.  It has been because the increase in the production capacity of crude oil is not keeping up with the increases in demand.   In 40 years we will need 160 million barrels/day, and perhaps in 80 years it will be 320 million barrels/day. The capital investment that will be needed by the oil companies to meet this demand becomes astronomical. In the tar sands it currently stands between $7 and $11 billion for a production facility of about 100,000 barrels per day. This variation depends on the duration and timing of the construction project. We will get to this later.

From the 80 million barrels of oil consumed by the world per day, approximately two thirds is used to make fuel for cars, trucks, airplanes, farm machinery, and construction equipment.  One third is used to make car tires, plastics, and industrial products. This industrial demand (which represents one third of our consumption now) is increasing at a higher rate than the demand for transportation fuel oil.  New capital projects undertaken for the increased production and refining of oil, as well as new capital equipment and construction for new power plants, plus the increased need of industrial plants needed to manufacture the needed equipment all require oil for the energy required to built them.  If we add all the additional industrial demand, over the next two decades, the increased demand for (a) alternative power sources,  (b) power plant components (c) metal mining, refining and processing, the projected industrial demand will easily become 50 to 60% of the total oil consumed in 2006.

THE GAS PICTURE – THE WORLD

In addition to oil, in 2005 the world consumed 2.7 trillion cubic meters of natural gas.  The demand for this commodity is increasing faster than either oil consumption or electrical demand.  The demand for natural gas is doubling every 30 years. The USA again consumes about ¼ of the world’s total.    Natural gas is used for electricity producing power plants, for making fertilizers, pesticides and herbicides for agriculture, for residential and industrial heating, and for an extensive inventory of other industrial applications.  The above stated world consumption of 2.7 trillion cu ft. does not include a significant amount of natural gas that is either wasted by burning it up in stacks in refineries and in oil producing wells, called “FLARING”, as a by-product of oil production, or by burning it at the tar sands sites for the production of electricity, heat, and steam needed for the production of oil called  “UTILITY GAS”, or by stripping the hydrogen out of the gas for feed in the “hydro cracker” and “hydrotreater” plants, again for the production of oil.    Natural gas is the cleanest form of hydrocarbons when burned.  However, both processes burning and stripping produce a lot of CO2 that is released to the atmosphere. As stated before, the oil industry is using about 1000 cubic feet of natural gas for every barrel of oil produced.

1.3       CONCLUSION ON ENERGY DEMAND

Based on the above rates of consumption, as well as the rates of increase of this consumption, it seems that humanity’s current way of life is heading in a collision course with geology. Such an accelerated pace of consumption is clearly not sustainable.

In the Times best seller “Collapse” Jared Diamond suggests that our problem is not only that the human population of our planet is increasing, it is not only that the average age of human beings is getting longer, it is also that the so called third world countries, desire, aspire and are working towards achieving a first world status quality of life.  These three put together place an enormous impact on our resources, and as we are using them today (major squandering), simply put, it cannot be sustained.  As an example, during 2005 two million new cars were put into the streets of China alone.  This rate increases the number of Chinese drivers at a rate of about 70% per year.

While analyzing and evaluating Jared Diamond’s point, the following proof was obtained: The USA presently is consuming 25% of the worlds produced hydrocarbons, yet it comprises only 5% of the word’s population.  This high consumption rate is almost necessary in order to maintain a first world status and quality of life.  Similar level ratios apply to all developed countries. For the rest of the world to achieve a similar first world status, today’s demand of 80 million barrels/day becomes 1,200 million barrels/day i.e. 15 times. This kind of exponential increase in the demand clearly is not sustainable and indeed confirms a collision course with geology.  The same analogy applies, whether the analysis includes hydrocarbons,  electricity demands or both.

The above conclusion makes it obvious that our world either will have to slow our progress considerably and hence the improvements in the quality of life of all humanity, or otherwise we will have to find more efficient ways to use our resources.  This in turn, leads us to the thought that if we could start soon to include an optimized use of alternative energy forms, perhaps we could sustain our growth rates and quality of life.  Whether we recognize it or not, this is not an issue of “if we want to”, we have no choice in this matter.  Similarly, we have no choice on whether we like some or all-alternative forms of energy. We do need them all and very urgently. The only choice that we have is to decide whether we want to survive and to define the applicability and proportion of each energy form.

Of course, the talk of alternative forms of energy is an anathema to the oil industry.    They have spent billions of dollars to develop oil fields around the world.  They are planning some 100 billion dollars of new capital spending on the tar sands this decade to establish cash producing assets. Their fears should be understood and appreciated.  However, as we will see further on in this paper, not by choice, but by necessity, we will have to continue using an ever-increasing amount of hydrocarbons for several decades even if we chose today to branch into other forms of energy. Recognition of this fact hopefully should ease the oil industry’s fears and make them more cooperative to the idea of timely change of energy infrastructure.

Let us assume for the moment that there is a technology that we can change to, for our future electrical energy needs.  The change over period will involve a long fifty years, just for this change to be completed.  We will have to replace all the currently operating power plants, which due to limited capacities for construction and manufacturing will take about 30 years.  Then we will have to build the additional capacity to meet the increased demands of humanity that we will be experiencing in 30 years from now.  This will take another 20 years to complete.

We must appreciate that it will take a lot of extra energy to change our current energy infrastructure.  Much of that will come from the burning of hydrocarbons. The quantity of resources that will have to be mined, transported, and processed and the industrial demand for energy over and above the normal demand will need oil.  This will push to the limits all existing and planned expansions of the oil industry over the next 50 years and more.  The cost of construction of oil fields, up in the tar sands has gone from $7 billion to $11 billion for a facility that produces about 100,000 barrels/day. That is because of the limits in our capacity to produce faster. This results in longer construction periods and delays in manufacturing, both of which increase the costs and the interest carry over (see 3.2 (a) interest carry over).  Right now, there is a waiting period of two years just to get delivery of the components to construct a simple windmill, like the ones we have in Alberta.

At this point in history we know that sooner or later a day of reckoning will come. Hydrocarbon-based products and plastics are used for manufacturing our industrial components.  Hydrocarbons are burned to mine and transport resources and to build our industrial facilities.  The picture should be clear.   A vastly increased amount of oil will need to be consumed in order to create and build the new energy infrastructure while meeting the current energy demands and phasing out the old infrastructure.  The higher the price of oil is the more expensive becomes the option of changing our energy infrastructure.  Conversely, the less time we have available to construct the new infrastructure the higher its cost will be. We witnessed this recently with the skyrocketing costs at the tar sands.

The same story unfolds for the transportation industry.  If we start converting private cars today, to other forms of energy, the consumption of oil will not go down. It will keep going up for several decades until the new infrastructure is built, the change over becomes entrenched and old cars are phased out.  It is estimated that just to replace the supply side requirements of gasoline in the US for private cars; it will take an investment of at least $2 trillion. How much of this amount will be for the cost of energy, and how much of this energy will come from hydrocarbons?

One third of the hydrocarbons consumed today go to make some 500,000 industrial products. This demand will be increasing and doubling on the average every 25 to 30 years, during the changeover period.

11,000 airlines in the world will need a long time to replace all their airplanes to burn the new fuel.  A long time and vast amounts of oil will also be needed to convert not only the supply side of the new fuel but also the consumption equipment: cars, industrial machines, trains, ships all of which are designed to burn petroleum products.

Look at what happened in the tar sands by pushing a relatively modest increase in demand for new construction, while we still have available a reasonable amount of construction capacity.  The price for a 100,000 barrel/day plant shot up 57%. What will happen when the last minute we realize that we need to change our entire energy infrastructure on a panicky basis?

Based on environmental, financial, energy and resource points of view, there is no incentive to change only car fuel while we continue to burn coal in our power plants.  The earlier that we start the changeover process for our energy needs the easier and cheaper it will be. Attacking the forthcoming energy crisis with a better light bulb or conservation seems to me more like an unrealistic dream.  The answer is to design a sustainable system of energy production that will include all available energy forms.  The challenge then will be to define the particular areas of applicability for each energy form.                                             

If one looks at the oil industry more carefully, instead of avoiding other forms of energy, oilmen have the incentive to encourage the introduction of new energy forms, because this will guarantee them a spectacular growth over the next 50 years, and a slower but steady and manageable increase in demand thereafter, until hydrocarbons are depleted.

I have calculated that for humanity to change its energy infrastructure we will need to use an approximate amount of 150 billion barrels of oil equivalent, over and above our normal consumption, and an investment of 120 trillion dollars (2006). The change over time will take about 50 years.

Furthermore, an explosive growth in the demand for the new form of energy is guaranteed over several centuries.  This new form of energy will present a new market that will require the size, ability, management skills, deep pockets and infrastructure similar to that of the oil companies.

(Definition: Depletion of hydrocarbons is defined for the purpose of this paper as the time at which the lifetime of an oil field will be less than 30 years, and thereby will not be economical to develop.)

In summary, we are riding on a time bomb.  We are experiencing a high demand for all forms of energy and that demand is increasing exponentially. We know that our current resources of hydrocarbons will sooner or later be depleted. We also know that we will need an enormous amount of extra energy and about 50 years to change our current infrastructure and our dependence on hydrocarbons. That energy at this point in our history mostly comes from hydrocarbons.  Approaching depletion before we start looking for alternatives is clearly the wrong way.  The only encouraging indication that we have had so far comes from the oil company B.P.  They have started interpreting B.P. to mean “Beyond Petroleum”.  This is not enough. If we admit that we will need to have a different energy infrastructure in 50 years, we need to start now.

PART 2: THE ENERGY SUPPLY PICTURE

2.1   ELECTRICITY PRODUCING POWER PLANTS TODAY

The types of electricity producing power plants, which are available today, include four types of mature energy technologies and four developing technologies:

Mature Technologies

1)         Hydroelectric energy: Product of rain cycle – Primary heat source the sun’s nuclear fusion

2)         Coal Energy: Product – fossil of photosynthesis over thousands of years- primary source sun’s nuclear fusion (1)

3)         Natural Gas: Product – fossil of photosynthesis over thousands of years- primary source sun’s nuclear fusion (1)

4)         Oil Energy: Product – fossil of photosynthesis over thousands of years – primary source sun’s nuclear fusion (1)

Developing Technologies

5)         Solar energy: based on photovoltaic conversion – primary photon source, the sun’s nuclear fusion (1)

6)         Biomass: based on photosynthesis over one year – primary source the sun’s nuclear fusion (1)

7)         Wind power: balancing the earth’s differential heat absorption – primary source the sun’s nuclear fusion (1).

8)         Nuclear energy: product of earth mined nuclear isotopes- primary source

             man made nuclear fission (2)

Notes:(1) nuclear fusion: the combination of hydrogen atoms to form helium (sun)

          (2) nuclear fission is the breaking of a heavy metal atoms (mined on earth)

All of the above plants are based on proven technologies. Plants belonging to mature technologies are the predominant producers of electricity today, while plants belonging to developing technologies produce a small fraction of the world’s electricity demand. Note that regardless of which technology is used for our power production, all are based on some primary form of nuclear reaction.  An interesting form of energy has been developed at the tar sands (Syngas) but this can only be used  in the tar sands context. The costs associated with this form of energy are calculated separately because of particular conditions.

2.2    ECONOMIC ANALYSIS OF AVAILABLE POWER STATIONS

Some plants cost more to construct while others cost more to operate.    Similarly, some plants are more efficient at producing electricity than others.  The way to calculate the cost/benefit of every plant is to obtain the total cost of the plant by adding:

A power plant usually has a lifetime of about 40 years.  It produces power for 40 years minus the down time for maintenance, repair or refueling.  The electricity it produces over its productive lifetime is calculated in terms of kilowatt-hours (kWh). This means kilowatts produced over the total operating number of hours.  Then the sum of all the costs above is divided by the sum of all the kWh produced to obtain the cost/kWh of every plant.  This number is very important in order to compare the cost of electricity produced by the various technologies, because as we will see below, there is a great variation among the various plants with regards to capital and operating costs, as well the efficiency with which they produce power.

Prior to 2005, when the prices of oil increased, and  before the enforcement of Kyoto protocol created the carbon market, the relative cost /kWh of all these plants were as follows, listed with increasing cost:   

At first these numbers would be surprising. For example, how can solar power cost so much more since the sunlight is free, or how can wind power be the same as nuclear since everybody is told about how expensive nuclear power is, while again the wind is free. The answer for the former is that the capital cost of solar panels is so high relative to the power they produce that it takes all their operating lifetime to pay it back.  With regards to the later, nuclear plants produce electricity with such high efficiency and so low operating cost that it negates the high original capital input costs.  A detailed analysis is provided later in this paper.

After the prices of hydrocarbons increased (doubled) and the Kyoto Carbon market came into effect the relative cost/kWh became as follows, listed again with increasing cost:  

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Table Notes:           

*** Different plants require different amounts of oil for their construction and operation. For example a hydro plant requires a great deal of work by bulldozers to move earth and to build the dam. Bulldozers burn oil. Similarly biomass plants require the use of fertilizers and pesticides, both of which are product of hydrocarbons. To mine and transport coal again, requires an extensive amount of oil. Hence these plants are sensitive to the doubling of the price of oil. This relative sensitivity is listed in column #2. A high price jump is observed in the fossil fired (coal, oil & gas) power plants. Notice that natural gas plants are more sensitive to oil price increases than oil fired plants. This is because gas plants have lower capital construction costs and hence a relatively higher operating cost/kWh than oil. 

Column #3 shows the additional cost that is imposed by the Kyoto protocol for the so-called “Carbon market”. This is why lobbies in the USA have caused the USA to abstain from signing this protocol.  For the last 25 years the USA has relied heavily on coal-fired plants, which are the highest polluters.  The prices listed in column #3 were calculated more than a year ago. Since then the carbon cost has increased by 500%.  

Column #4 shows the relative total cost now ( 2006).  It includes: the cost of the power in 2004, the additional cost/kWh that would result from the increased price of oil and the cost of pollution.  

Column #5 lists the pollution that is released to the atmosphere as grams of CO2 per kWh of electrical power produced. It is interesting to note that solar power is more polluting than Biomass, Wind or Nuclear are less polluting than a Hydro plant that requires the burning of an extensive amount of oil to build the dam.  This is because as we will see later, the existing solar panels are very inefficient converters of energy.   Column #5 also includes additional information relative to the energy input for both the construction of a plant as well as its operation. CO2 is produced when we consume hydrocarbons to produce energy.  The relative amount of CO2/kWh is directly proportional to the energy equivalent we input in a power plant, for both construction and operation, for every kW of electrical output produced – i.e.: plant relative energy utilization efficiency. The higher the number is, the lower the efficiency becomes for power production.

2.3       INDIVIDUAL PLANT ANALYSIS

There are several features particular to each plant that makes it more or less suitable for certain applications, and more or less suitable for environmental reasons.  Let’s examine them individually:

2.3.1    Hydro power

This is a mature energy that once operational provides electricity with a very reliable, lowest cost, low pollution power plant.   Its high capital cost and high pollution, during its construction, is followed by zero cost for fuel and zero pollution over its operating lifetime.  It produces electricity very efficiently. All the above make hydroelectric power unquestionably the best option for a public utility.

The only problem is that most potential sites have already been used and there are very few sites left to exploit. Once a site has been identified, a plant will likely be built.  Environmental groups instead of opposing it will do better to identify any potential environmental problems, and to pressure their government to provide solutions.

The Utility that operates the plant is passing its costs to the consumers of power, and it realizes significant margins and profits to finance solutions to any properly identified potential problems. 

Success to solving any environmental problem depends on the good will of Government and the Utility, as well as the approach taken by environmental groups.  It has nothing to do with the technology of the hydroelectric plant itself.

Hydropower is best suited for base, peak and stand-by load operations.  As stated earlier, during construction, it consumes a significant amount of oil to run the construction equipment and this gives it some sensitivity to increases in the price of oil.  For tar sands based power, this plant is not suitable because it does not produce any waste heat as a by-product of its electricity production. Large quantities of such waste heat are necessary for the production of oil.

2.3.2    Nuclear Power

This is a developing form of energy that has had a bumpy road.  Society has developed a nuclear allergy for reasons that, as we will see, have nothing to do with the technology itself. (See below facts and fiction about nuclear power).  Its capital costs are compatible to hydropower.  It produces electricity very efficiently.

The nuclear fuel is a highly condensed form of energy and its cost is extremely low.  A cylindrical shape the diameter of a human finger x ¾ inch long can produce enough power to meet the needs of 100 houses for one year. This low volume of fuel requires a small amount of oil to mine, refine and manufacture, and therefore nuclear fuel is virtually immune to increases in the price of oil or uranium. Mine, process and manufacturing of nuclear fuel contributes negligible amounts of CO2 to our atmosphere.  The quantity of CO2 grams/kWh listed in column 5 above is for the American type of reactors that burn enriched uranium. The Canadian reactor burns natural uranium and its CO2 emissions are closer to 1.3 grams/kWh.

The costs of radioactive waste management and plant decommissioning are also included in the analysis above on the cost/kWh. As the industry matures these costs should be expected to decline, as newer and improved fuel cycles and types of plant are built.  See facts and fiction about nuclear power.

The amount of oil required, for the construction of a nuclear plant, is similar to any large industrial installation or power plant such as coal or oil fired, and this is included in the table above.  Note however, that coal and oil fired stations have a higher sensitivity to oil price increases because of the fuel they consume during their operation. Column #2 of the table above depicts the total amount of oil sensitivity that includes capital as well as operating consumption of oil.

On the basis of total Grams of CO2 gas released to the atmosphere per kWh of electricity produced: wind power produces twice as much CO2 as nuclear, biomass 3 times as much, solar and hydro plants 30 times as much, natural gas 36 times, oil 48 times and coal 70 times more than nuclear. That makes nuclear the cleanest form of energy on the basis of gas emission to the environment.

Currently available nuclear plants don’t like to have their power fluctuating according to a variable demand.  They can be designed to meet variable load demands. Therefore they can be used for any type of load: such as base, peak or variable loads.  For an industrial utility in the tar sands, a nuclear plant is particularly suited as it can provide not only electricity but also a phenomenal amount of heat, hot water, low or high temperature steam, and hydrogen through simple electrolysis, or by adding steam and heat to the electrolysis process to improve the production of hydrogen gas from water. Ideally a nuclear plant in the tar sands would operate at peak load continuously. The type of load may vary between electricity production, steam production, or lastly in terms of importance making of hydrogen. In addition, a continuous supply of heat will be available for hydro-transport.

Finally, but not lastly, a nuclear plant due to its extremely low operating cost (not capital cost) can produce part-time superheated steam for the SAGD process (Steam Assisted Gravity Drain) and electricity for heat tracing (heating the pipes with electric heaters) of long, thermally insulated,  pipelines. Of course all the above production comes with negligible gas emissions.

Nuclear plants spaced at 40 km apart can form a grid that will power all tar sand locations for all their needs: SAGD, bitumen mining, upgrading of bitumen, heating the ore, hydro-transport heating, industrial power, pipeline power etc. Once the 40 km tar-sands site has been depleted from bitumen through the SAGD or the strip mining process, the nuclear plant could continue operation with the production of hydrogen. Hydrogen will be used either for upgrading the bitumen or to be piped to the developing markets South and East.

2.3.3    Wind Power

The windmills that we have in Alberta produce 2Mwe (2,000 kW) of power when they run at maximum load. In Southern Alberta, they seem to be running about 60% of the time but their capacity factor averages to 35%. During their construction stage, wind mills consume a small amount of oil and an average amount of capital. This is a developing technology, and already there are pilot projects for 5 MWe windmills that may improve on the performance of the current units.

During operation, the wind is free and the cost of maintenance and repair is low. This makes wind power a very desirable form of power production.  The only serious problem of wind power is its reliability of power production. Electricity cannot be stored; it has to be produced, as consumers need it.  If there is no wind there is no power. This requires a significant percentage of other power plant capability to be standing by, and ready to produce power during windless periods.  This makes wind power suitable for base loads, only where there is a significant amount of stand by capability.  The power utilities tend to limit the number of wind farms because their irregular OFF and ON cause instability in the power grid.  Alternatively, over the long term wind power should be a source for the production of hydrogen, through electrolysis. Hydrogen can be stored and pumped through pipelines. The wind mills that produce hydrogen will not need the extra expense of stand by capability power production, nor will cause any instabilities to the grid.

Another problem of wind power is that some people don’t like the look of a wind mill farm. However, in an increasingly hungry world for energy, they will get to love them, as low pollution and efficient energy production will become more important factors.  As of the writing of this paper, the author has not encountered any adverse reports for livestock or crops affected by windmills.  This makes this power technology suitable for double use of a farm as a crop or livestock farm and as a wind farm.

Currently, there is a 35,000,000 kW capacity in Europe and 7,000,000 kW in North America. The fast growth of windmill construction in N. America is now above the available manufacturing capacity and this forces a two-year waiting time to source its components. This waiting time is expected to get worse as oil industry, other power technologies and industry as a whole get on an expansion mode.

2.3.4    Biomass Power

A lot of noise has been made lately about biomass products such as biodiesel, and alcohol (ethanol) production. In some places multimillion-dollar investments are discussed, while the Saskatchewan Government is giving tax incentives to farmers to participate. Let’s examine it more carefully.

First of all, we know that photosynthesis, the process that captures the sun’s energy in plants, is not a very efficient process.  The hydrocarbons that we are consuming today are a fossilized, condensed form of energy that has captured the sun’s powered photosynthesis over thousands of years.  Biomass crops (corn canola etc.) are capturing photosynthesis for only one year at the most.

Second, we know that growing crops requires the use of fertilizers, pesticides and herbicides all of which are produced from hydrocarbons.  Then seeding, harvesting and transporting bulk volumes of crops and distilling or processing require the consumption of oil.  The best ratio that has been achieved, so far, is the production of two gallons of ethanol, or three gallons of biodiesel from canola, for every one gallon of oil equivalent used.

This means that a serious dependence on hydrocarbons will continue to exist for the production of either biofuel.  This also means that we will have a 50% dependence of the price of biofuel to the price increases in oil. Finally, consideration has to be given on the amount of water that is required as input for every litre of biodiesel or ethanol produced.

What then does this all mean? Biomass is not a hoax. It seems to have some definite benefits to humanity; however, it does not provide a sustainable solution to the increasing energy needs. On the electricity production front, biodiesel will make an excellent stand by and peak load capability.  It can stretch the hydrocarbon reserves to three times as long (since 1 gallon oil produces 3 gallons of biodiesel). Its use allows for the reduction of sulphur in diesel fuel, cutting down on a key cause of acid rain.  The only disadvantage is that power plant based on biodiesel will have comparable cost/kWh to oil fired stations.

 On the transportation front, ethanol blend in gasoline of 5% will require in Canada alone production of 1.25 billion liters of ethanol per year, which will conserve about 500 million liters of hydrocarbons oil equivalent per year. That is not a small contribution for an emerging technology.  Gasoline blended with ethanol burns cleaner than regular fuel and this should play an important role in smog reduction. Canada has large sections of farmland in the prairies; the farmers are now suffering for markets. What could be better than to start growing agricultural products for energy and on top of that to add few wind mills on the large tracts of farmland.  The only adverse effects to this energy form is that developing an infinite market for corn (ethanol) and canola (bio-diesel) will create shortages for other grains and the cost of bread worldwide will more than triple. Also, the burning of bio-fuels releases to the atmosphere methane (CH4) which is 23 times more efficient at creating green-house warming. (see part 4.0).

At this time there are only designs for power stations based on crop derived biodiesel. As far as the tar sands are concerned a biomass-powered station should be able to produce electricity, heat, and hydrogen through electrolysis. The cost of such an operation however would be similar to an oil fired plant.  A biomass-fired power plant would likely be used for peak load uses, and as a stand by station.  It cannot take the role of primary energy provider due to limits in available farmland, its dependence on hydrocarbons for its fuel production and the emissions of green house gas methane (CH4).

2.3.5    Coal fired power

This power plant represents a mature technology. Right now it is the most predominant type of plant in the world.  It is however the heaviest polluter and its costs per kWh are no longer as competitive as it used to be.

It has been a good base load energy provider and it has had some significant improvements that have brought under control the acid rain products.  Its high pollution component now is mostly the emissions of environmental warming gases such as CO2 and CH4.

Ideally, this type of plant either should have its CO2 production sequestered or be discontinued as soon as alternative energy stations become available. Their elimination might take 20 to 30 years. Thereafter the coal industry could concentrate and adapt to using coal for gasification or to produce pure hydrogen.  Coal mixed with lime and water can produce hydrogen and CO2.  Then the CO2 is combined with minerals that capture CO2 and sequestered in the form of rock. In this manner large quantities of CO2 can be removed from the atmosphere and stored in solid rocks.  A more recent development examines the possibility for sequestering CO2 and producing top soil.

Sequestration of the CO2 is a relatively new field that will evolve over time. Technologies to reduce CO2 emissions are not expected in North America until  a 2017-2020. One thing is certain, sequestering CO2 will drastically increase the already high cost of power from coal.

One other negative point for coal power is a relatively unpublished area. The coal itself contains traces of radioactive elements (radon gas, uranium and thorium). Although these traces are small, the volume of coal burned is large and hence the emissions of radio-nuclides from coal plants not only is very high but also they are not controlled in any plant.  In the USA they found that radiation absorbed by the public from coal fired stations in 2006 was about 100 times more than radiation absorbed from nuclear plants. (Here the reader must also factor in that in the USA there many more coal fired stations than nuclear stations).

This area could have some significant developments. The ultimate decision maker will be the cost/kWh that will permit the production of power without the gas emissions to our environment.

 2.3.6   Natural Gas fired plants

Natural gas is the cleanest form of hydrocarbons.  A power plant fired with natural gas produces electricity with the highest efficiency of any other power plant.  Its capital cost is very low, and the construction time is very short. Its only problem is the cost of gas it consumes.  It is no wonder then that it has become the preferred type of power station now in the tar sands even for base load use. The oil companies due to their proximity can get this commodity at “preferred” rates which correspond to about 25 % of its actual cost. This type of plant however, is so versatile that it would make an ideal power plant for peak loads, during the energy transition period, and as a stand by capability provider thereafter. 

The sensitivity of the price of gas seems to follow the price for oil.  Consequently, it is expected that the public utilities will have the financial incentive to be switching soon from gas-fired stations to other technologies.  The problem will persist whenever the user utility does not pay the full value for this commodity.

Natural gas is too valuable a commodity to be burned for electric power, for the production of heat, or for the stripping of its hydrogen.  All these functions can be performed much more efficiently by other means in terms of macro-economics, in terms of conservation of resources, and in terms of energy efficiency.

2.3.7    Oil fired Plant

This is a mature technology.  Oil fired plants have served humanity well, and it will continue to serve for several decades as we will be entering the transition period for energy during which they will be slowly changed from base load duties, to peak load duties, to stand by load duties, and finally elimination altogether.  This type of plant is versatile enough to meet all these load demands.

Oil fired power plants are very sensitive to the increases in the price of oil.  By limiting their duties to stand by they will provide a reliable alternative, which will be able to perform equally well for stand by base loads or for peak loads.  These plants are not suitable for the tar sands due to environmental and cost factors.

2.3.8    Solar Power

Solar power is a developing technology, and as such it should be given the opportunity to develop.  As it stands right now, this technology is a very inefficient user not only of capital input, but also of energy input.  The basic problem of solar power is centered on the fact that photovoltaic conversion of sunlight is energy inefficient (total energy input/output) with today’s means.

Today’s solar panels produce about 20 Watts per square foot.  This means that the experimental solar power station in Leipzig Germany, with its 33,500 solar panels (12 square feet each) could be replaced by only two wind mills like the ones we have in Alberta.

To construct the solar panels, the mining, transportation and a complicated processing of materials is required, but then the power it produces is so low the cost/kWh becomes astronomical, even if the sunlight is free and environmentally perfectly clean. To pay back the cost of the panels with energy produced it takes about 32 years assuming sunshine every day, and this does not include the cost of batteries and a system for storing the power produced.

This seems to be the basic reason, why solar power plants do not exist except in experimental cases. But there are some positives to this energy.  Small scale power in remote areas, although expensive is very reliable in charging batteries.  Also, in cities, where an adequate supply of stand by power capability already exists for cloudy days, the placement of solar panels on top of buildings, instead of roof materials, will not only decrease the electricity bill, but at the same time it will give the industry the opportunity to perhaps develop more efficient solar panels.

2.3.9    Oil Shale

This is included here because of extensive interest in the past.  As Savage (1967) notes the term oil-shale is a “promotional term” of organic marlstone. It is a very diluted source of organic material that costs at least 4 times the costs of extracting and processing the tar sands, has 1/6 the energy contained in coal and 1/3 the energy contained in municipal trash.  It has yet to prove that it can be recovered with a positive energy input/output ratio.

2.3.10  Energy Conservation

This is included here because a lot of published articles allege that energy conservation alone could solve our energy problem.    Energy conservation can delay the day of reckoning, but when a commodity is depleted, you simply cannot conserve what you don’t have.  That is not to say that we can ignore energy conservation. On the contrary, at this stage of humanity we need to conserve and optimize every type and form of energy until we have completed the switch to a sustainable form of energy, while hopefully, there would still be enough hydrocarbons left to supply industries for making plastics, tires, fertilizers and other industrial products.

2.3.11  Syngas

Syngas is a form of energy that can be used in areas with rich carbon deposits. It is particularly applicable at the tar sands because of the very large quantity of COKE and ASPHALTENE that are produced as by-products of the oil upgrading process. The bitumen at the tar sands has low hydrogen content. In order to produce crude oil out of it, the percentage of hydrogen content must be increased by about 30%. 

One process to increase the hydrogen content, quite common today, is to extract hydrogen from natural gas and add it to the bitumen (hydro-treat) to enrich it and produce crude oil. This generates a high percentage of the CO2 gas emissions to the atmosphere, and consumes a lot of natural gas. It has been estimated that the bitumen requires 5 kg of hydrogen per barrel of crude oil produced.

Alternatively, the hydrogen content can be increased by removing carbon from the bitumen (coking) thereby increasing  the percentage of hydrogen in the bitumen until it reaches the proportion of crude oil consistency. This removed carbon accumulates at the site as coke and asphaltene.  (Asphaltene is coke with a very small percentage of hydrogen).   Suncor and Syncrude are using this process and it is reported that combined they have been producing and storing about 3 million tons of coke per year. Both coke and asphaltene contain about 7% sulfur and traces of other chemicals similar to coal.

Oil companies in the tar sands have developed a process to gasify coke and asphaltene. This gasification process produces “Syngas” or synthetic gas which is  very rich in hydrogen.  Syngas can then be burned in a power producing turbine. Most CO2 or sulfur produced in this burning can be trapped and does not go up the stack. Consequently, these two by-products can be burned in an environmentally acceptable way to produce power and heat.  This is the good news.

The bad news is that a turbine that burns syngas  (IGCC process) does not exist as yet. This development is expected in the next ten years.  The other bad news  is that the gasification process produces massive amounts of CO2 and there is not an acceptable sequestration process either. This development is also expected in the next ten to fifteen years. With these two issues assumed to be  technically possible, the deciding factor becomes techno-economics.

First of all, upgrading the bitumen with the addition of hydrogen (hydro-treating) converts 100% of the bitumen extracted into crude oil.  On the other hand  upgrading the bitumen with the removal of coke converts only 70% to 80% of the bitumen extracted into crude oil.  The rest is coke. Since Alberta gets paid royalties for barrels of crude oil shipped, the oil companies can extract 20% to 30% more bitumen without occurring extra royalties.  The coke produced is considered a waste of no value. The Alberta Government looses 20%-30% of potential oil, extracted as bitumen, but not converted into crude oil. Certainly there should be a value put on the coke that was not converted to crude oil and consequently not exported with no earned royalties. Should this cost adjustment take place fully, the cost of coke will jump 13 times, from $0.03/kWh (estimated now) to $0.4/kWh (which is close to the cost of fuel for a coal fired station).

A second consideration is that each major gasification plant will cost about $2 billion, making power generation from syngas more capital intensive and will also place increased demands on already scarce engineering manpower and transportation infrastructure in the tar sands regions.

A third consideration is that during the next ten to fifteen years when acceptable CO2 sequestration is developed, it will dramatically increase the cost of power production from Syngas, and place a high demand for electricity consumed during the sequestration process. Until this process is developed the combination of coke gasification and syngas burning will be producing 820 grams of CO2 per kWh of power produced.  This is more than twice the amount of CO2 produced today from coal fired stations.

A fourth consideration also involves the CO2 sequestration process. Although this process has not been developed on a large scale as yet, small scale experiments have indicated that  sequestration as it is known today, cannot be 100% successful. Even with sequestration of CO2, the syngas production and burning will still produce 150 grams of CO2/kWh.  This corresponds to about half of the emissions today from the burning natural gas without sequestration. If we add the cost of penalties form CO2 emissions in syngas production, according to Kyoto protocol, then the real price of producing and burning syngas will hit the roof.

All these economic penalties will likely result in the oil companies adopting a system of pumping the CO2 gas underground. This form of sequestration brings a new dimension to environmental concerns. This heavy gas (CO2) could escape from the underground storage with serious consequences.  On August 26, 1986, 1700 people and several herds of cattle were killed by a CO2 release at Cameroon’s Lake Nyos.  Unlike nuclear wastes, which are solids buried underground and are toxic for 10,000 years, CO2 (waste gas) pumped underground must be stored forever.  Problems arise because CO2 is a gas which can escape necessitating that the integrity of the underground storage has to be guaranteed for ever despite movements of tectonic plates, and possible earthquakes, accidents or acts of terrorism.

Up to 2004 it was believed that syngas power would cost as low as 6.1 cents/kWh. In 2006 this has become a little more than coal at 11.8 cents/kWh and sequestration could drive this price quite higher. This cost of burning syngas is much higher than what oil companies need to pay now for alternative energy forms.  The long term problem of producing syngas from coke and asphaltene is economic.  However, some short term improvement in CO2 emissions can be achieved with this process.  Therefore, this process should be used only as a temporary measure, until a permanent solution is found for both the production of power and the clean upgrading of the bitumen.

Power production and hydrogen production – through electrolysis of water – can be produced using many alternative energy forms. For example using wind or nuclear can produce all the hydrogen needed to upgrade the bitumen with negligible  amounts of CO2 emissions to our atmosphere.

2.4 THE AVAILABLE SUPPLIES OF GAS

The estimates for world reserves vary so much that the information was considered to be unreliable.  We therefore concentrated to examine only Alberta. Even this picture raises significant questions.

Just five years ago gas reserves were listed to include:

Now gas reserves are listed to include:

Note: TCF stands for Trillion Cubic Feet

This means that all gas reserves in the tar sands are only sufficient to supply the entire world’s gas demand for one year.    That is 2.7 Trillion Cubic Meters or 92.6 TCF.  For how long will natural gas at the tar sands supply our needs, with or without the local consumption of the oil companies?

These numbers are produced by AEUB and as a result the oil companies are now starting to look for alternatives.  Unfortunately however they are looking at the coal reserves, the burning of which produces a greater  amount of CO2.

As things stand now there are two ways to take care of the CO2 emissions.  One is to go the hydrocarbon route by introducing a massive CO2 sequestering system that will prove useful only for the next 100 years or so. The other way is to go to some alternative form of energy that will prove to be sustainable for few thousand years. 

2.5   THE AVAILABLE SUPPLIES OF OIL

The table below shows the available oil reserves and production rates of each country in which an oil pool has been identified, as listed by the oil and gas journal and energy information administration for 2004.