25 comments on The Energy and Environment Round-Up: October 31st 2007
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The Tar Sands:
It is becoming accepted belief among informed investors that the current "dig in the mud" method of extraction of oil from the tar sand cannot be economically viable, and is an ecological catastrophe.
The only hope for the industry is if some type of advanced "in situ" extraction method, such as the "toe to heel" injection method will work:
http://canada.theoildrum.com/node/2907?nocomments
Potential investors south of the Canadian border are needless to say, waiting with baited breath on what little they can learn about the progress of this type of extraction. If any of our Canadian friends are close to the ground on this, please give us an update.
I do know this: Friends I have in the financial community are starting to get "gold fever" in relation to Canada. I have heard friends as far south as Atlanta who are suddenly looking at Canadian bonds, the Toronto Stock Exchange, Canadian real estate, Canadian currency....the smell of possible money (and a possible upcoming bubble) are in the air. I haven't seen this kind of excitement since the birth of the China boom. Canadians, watch your wallets, it's Halloween and the vampires are coming! :-)
RC
Luckily I don't live out there but we will most definitely feel the shrapnel all the way to here. Though, my pension will enjoy the influx of US dollars from all those suckers looking to try and get rich.
Everyone does understand the following about the tar sands (Its not oil sands) Just to be sure.
-- only 20% is minable, the rest is too deep.
-- steam injection is being attempted in some places for in situ. Problems with that are water and fuel to heat it to steam. There is a request on the board to build a nuke plant to make that steam. But the amount of water required will be more than the volume of flow of the Athebasica River.
-- Estimates are that the most that can be produced from the tar sands is 3mb/d. The Ghawar field requires some 3,000 wells, image trying to put down that many at the tar sands as steam injection. Safe to say impossible.
So it may be that there is a huge potential of oil from the tar sands, but at what rate of extraction, at what envronmental cost, at what economic cost?
Richard Wakefield
London, Ont.
No one is ahead of their time, just the rest of humanity is slow to catch on.
Richard, your points are well taken.
However, the money is flooding in from somewhere:
http://www.tsx.com/HttpController?GetPage=QuotesLookupPage&DetailedView=...
Petrobank, the owner/developer of the "heel to toe injection" method of tar sand oil extraction has gone from under $5 at the end of 2005 to over $50 today. What would that do for a fella's pension fund? :-)
To you main points:
"-- only 20% is minable, the rest is too deep."
Absolutely correct. I don't think anyone now believes that "mining" the tar sand in a conventional way is viable or sustainable.
"-- steam injection is being attempted in some places for in situ. Problems with that are water and fuel to heat it to steam. There is a request on the board to build a nuke plant to make that steam. But the amount of water required will be more than the volume of flow of the Athebasica River."
Again, I think that is absolutely correct. The current methods of steam injection does not seem viable. The tar sands are running on stranded natural gas. This is being depleted fast enough even with current production rates (which are tiny compared to North American liquid fuel consumption), and would be gone quickly IF production could be ramped up, which is not possible at this time due to the expense of labor and machinary.
"-- Estimates are that the most that can be produced from the tar sands is 3mb/d. The Ghawar field requires some 3,000 wells, image trying to put down that many at the tar sands as steam injection. Safe to say impossible."
Using the current methods, I again think you are absolutely correct. So why is the excitement still there? You last couple of sentences capture it all...
"So it may be that there is a huge potential of oil from the tar sands, but at what rate of extraction, at what envronmental cost, at what economic cost?"
That is the question. The potential is indeed so great, effectively adding another third to the URR of the world to date if it can be extracted efficiently.
The problem reminds one of the birth of the steel age...no one saw steel in vast quantity as viable....and then the Bessemer process changed the industry almost overnight, and revolutionized the world.
Is the Petrobank process that radical? If it is just another "in situ" extraction method, no. But if it can work cleanly without massive additions of water or outside fuel, and can extract even 50% to 60% of the tar sand oil, including the deeper stuff, this is one of the great revolutions in the energy industry in our lifetime. And yes, we would be glad to plant 3000 well pairs in Canada to keep the party going, that is a safe assumption. Impossible?
Which way would you bet your money?
Roger Conner Jr.
RC
In real estate the catch phrase is "location, location, location". For energy production the catch phrase should be "time, time, time" Do we have the time to build up for the tar sands to be more than a trickle. Will depletion start before that can be ramped up. There is one hellova lot of FF being used to start the process of development there. Maybe there is time, maybe there isn't. We'll try though.
The other big question mark is money. Is there the money to do this development? If a crunch comes due to the mortgage meltdown, and maybe a credit card meltdown in the works, would there be the capital available?
I'm sure once the dust settles there will be continued extraction from the tar sands, at a level that will be useful to those who use it.
But we are so much now living on a knife edge.
Take a good look around. We may be living in the last days of the peak of this civilization. A not only a once in a lifetime experience, but a once in a epoc experience.
My betting of money is on personal preparation. The GSHP goes in next summer. Both the Fed and Prov governments offer $9,000 in rebates if you put one in. Now that is government money well spent.
Richard Wakefield
London, Ont.
No one is ahead of their time, just the rest of humanity is slow to catch on.