In my previous post I introduced this document.
It is an 86 page report done by the US Army Corps of Engineers on “Energy Trends and Their Implications”.
In actuality, it turns out to be a document warning us of the very real scenarios of peak oil, and peak natural gas. It also turns out they have divided the world into “oil pessimists” and “oil optimists”… apparently, they fall more on the pessimist side of things.
I’ve had some time to browse through the entire report… so I want to point out some sections relating to their views on Canada.
#1: They are very keen proponents of a Natural Gas pipeline from Alaska and Northern Canada… it is referred to often as a way to delay the inevitable decline in Natural Gas supplies. The benefit of a pipeline being that it reduces the need to ship LNG by freighter, which is very expensive, time consuming and inefficient.
#2: The Tar Sands: They don’t miss the boat on the tar sands… in fact they go quite in depth into why it is both a blessing and a curse.
All of these non-conventional sources of oil have significant problems associated with their production. In many cases it takes as much or more energy to produce synthetic oil as can be derived from the product itself.
Mined bitumen production is forecasted to reach 1.56 million barrels per day by 2012. The production process results in two barrels of waste water for every three barrels of oil produced. Roughly two tons of oil sands must be dug up, moved, and processed to produce one barrel of oil. It should be noted that the production in Athabasca is based on the use of natural gas as the energy source. Canadian natural gas is becoming significantly more expensive and is being depleted.
In total, the Corps estimates oil production from Alberta to reach about 2.25 mbpd by 2012. In comparison, Canada consumed 2.3mbpd in 2004.
(From the same EIA site linked above, we see that they predict Canada’s current Natural Gas “production will completely deplete reserves in 8.6 years. (as of 2005)”… that’s 16% of US Natural Gas supply. Gone. by 2012… so barring any other new fields being opened, that will be it)
#3: Domestic Activism and Nationalism… the report recognized the growing trend of, shall we say, liberalized views on Canadian oil and gas exports. Their words:
There is also a growing movement in Canada that feels they should preserve what natural gas they have for their domestic market. Thus we see pipeline exports from Canada dropping and they need to be replace by another source of supply.
I would love to know where they came up with this notion… not that I think it is untrue. I think it is completely true, and encouraging in fact… I’d just like to know their sources. Unfortunately, for that particular point, they site no specific reference.
#4: On Liquified Natural Gas (LNG) imports:
The desirability and demand for natural gas will continue to increase, but it is price sensitive and cannot be the panacea for solving the nation’s long-term energy needs. There are significant natural gas reserves in the United States, but it is a limited domestic fuel source because in many cases its exploration and production is off limits. This leaves the nation with the choice of importing ever increasing amounts of natural gas through pipelines from Canada or relying on large volumes of imported liquefied natural gas (LNG). It is unlikely that imports from Canada will increase; therefore the choice must be to import LNG.
Funny enough, they may get this LNG through Canadian ports anyway, as we are already building many LNG ports, especially on the East Coast. There is also one being built in Kitimat, BC… you can read the Kitimat LNGs Environmental Assessment review report here.
I would also personally like to see one built in my hometown of Port Alberni BC as we are very similar in Geography to Kitimat, and also much closer to the US market, and existing infrastructure that would take Gas into the Washington State and California areas.
The Corps report emphasizes this point:
The Gulf Coast is likely to see new terminals built without firm supply commitments. On a regional basis, terminal capacity should not be a problem. If no terminals are approved in the Northeast, projects in Eastern Canada could fill in the supply gap. The near term issue is not a concern with having too few terminals, but with having too little LNG supply.
#5: Uranium: Here’s a mind bender of a factoid:
One of the two domestic uranium enrichments plants that were privatized in 1998 was shut down in 2001 due to the large amounts of enriched uranium imports from former Soviet Union countries and other Western European nations at subsidized rates. The United States may soon be in the position of importing 90 percent of its enriched uranium supply. New fuel sources include uranium and plutonium manufactured from scrapped nuclear weapons.
I suppose there is some comfort to be taken from nuclear weapons being decommissioned and their nuclear energy being used for electricity instead.
on Canada… Canada, along with Australia, are the two main suppliers of raw Uranium to the United States.
Worldwide resources are estimated at 5,000 million pounds at $30/lb and 6,500 million pounds at $50/lb. About 31 percent of the low cost reserves are located in Canada….However, there is no shortage of world capacity to supply uranium at this time. Development of new plants is growing very slowly, with much nuclear power generating capacity projected to shutdown over the mid term.
#6: On Renewables:
Renewables tend to be a more local or regional commodity and except for a few instances, not necessarily a global resource that is traded between nations. One of these instances is the purchase of hydroelectric power from Canada.
They are likely referring to the massive amount of electricity sold to the United States from Hydro plants in Quebec, Ontario and BC. My own feeling is that as Canadians move to renewable energy, demand to use our own renewable resources will of course increase… so availability of renewable energy for export may decline.
That said, the Canadian and US power grids are completely intertwined… so “seperating” exports boils down to politics and market forces rather than “seperating” our two systems in any meaningful way. This *could* mean that we have an opportunity to work *with* the Americans to develop renewable energy and feed it into the North American grid as a whole. Cooperation is good. Unfortunately, I simply don’t see that happening at the Government level, which is where it needs to happen. And I don’t see public support for this as being high, especially in Canada, where Canadians would likely see it as America “stealing” our resources.
Canada has huge opportunities to develop massive amounts of wind, solar and hydro energy. As long as Canadian needs were met first, I’d be first to say that the United States be the first in line to get the surplus (for a price, of course… all is fair in love and capitalism ;))
Certainly plenty of food for thought in that report….