By: Maurice B. Dusseault
Summary
The United States reached its peak oil production in 1970. World production of conventional oil*1 will likely peak around 2004-2005, and competition for oil resources will become more intense. Does the United States have reasonable alternatives to increased imports from the Middle East, South America and Africa?
An alternative exists in the Canadian heavy oil*2 deposits. There is enough oil in these reservoirs to provide over 100 years of full energy security with no foreign imports to the United States and Canada. The technology to do this economically has been developed in the last 20 years.
Oil Consumption
World
conventional
oil
production
will
soon
peak:
all
major
land
basins
have
been
explored,
new
large
discoveries
are
increasingly
unlikely,
and
per-barrel
finding
costs
are
rising,
driving
discovery
rates
down*3.
Offshore
oil
does
not
represent
salvation:
deep
offshore
projects
will
contribute
8-15%
to
conventional
oil
reserves,
these
projects
are
expensive,
and
only
large
finds
can
be
developed
profitably.
In
developing
countries,
demand
will
continue
to
rise
for
the
foreseeable
future.
New
technologies
and
higher
oil
prices
will
affect
the
rate
of
decline,
but
it
is
unlikely
that
the
coming
decline
in
conventional
oil
production
will
be
reversed.
Aggressive
conservation
could
reduce
demand,
as
happened
temporarily
in
1977-1980,
but
continued
global
economic
development
will
increase
it;
therefore,
energy
sources
other
than
conventional
oil
will
be
required.
Natural
gas
will
help
fill
the
gap,
but
that
too
will
peak
and
decline,
likely
within
15-20
years.
Why is US consumption important? American daily consumption is about 17 million barrels, or 22% of world supplies; Canada consumes less than 10% of the US rate. The US imports one-third of its natural gas, all from Canada, and more than 50% of its oil, with Canada the largest foreign supplier to the US. Saudi Arabia and Venezuela (#2 and #3) supply about 15% and 14% of US oil imports, and Canada supplies about 16-17%. Incidentally, Canada imports oil on the East Coast of Canada, but overall, Canada produces about 2.2 million barrels per day, and our net exports are about 700,000 b/d, although our gross exports to the US are about 1.6 million b/d. Thus, most US imported oil comes from politically unstable countries via long and potentially vulnerable sea transportation routes. This is of concern to the US.
Canadian Oil and Canadian Technology
Could Canadian oil possibly meet all of US needs? Because of the vastness of Canadian heavy oil deposits and the stability of the country, the answer is yes. Alberta and Saskatchewan heavy oil and bitumen resources are massive: the total resource is estimated to be around ~2.5x1012 (trillion) bbl. It seems that about 25% of this can be extracted, and many believe that 40% will be attainable with emerging and future technologies. These simple facts lead to a dramatic conclusion: Canadian heavy oil resources can provide about 100 years of secure oil supply at 100% of current consumption rates. Also, Canada is a stable, democratic, and developed society, and land access means pipelines, rather than more vulnerable supertankers.
At an oil price of US$25/bbl, about 20-25% of Canadian heavy oil can probably be extracted profitably using existing technologies. These technologies include:
- Cold heavy oil production with oil sand, now producing 460,000 barrels per day in Canada
- Steam-assisted gravity drainage, with many large projects recently initiated
- Pressure pulsing, an emerging aid to production that is already commercialized
- Mining, which has already produced more than two billion barrels of oil and which can be used to access the shallowest 6% of the total resource (perhaps another 50-75 billion barrels from mining alone)
- Vapor-assisted petroleum extraction and in situ combustion using horizontal wells, both still at the conceptual stage
These advances have removed technological barriers to increased production, but sustained rapid expansion of heavy oil production will need price stability and environmental vigilance. Heavy oil is rich in carbon: coking and hydrogenation*4 are needed to convert it into a product that can be refined into gasoline and diesel fuel. This requires numerous large heavy oil upgraders, and these expensive facilities must also remove sulphur and heavy metals (Ni, V, Ti) safely during processing. Upgraders generate solid wastes such as coke, and some production technologies (e.g. mining, producing oil with sand) generate mineral tailings and wastes that must be disposed of properly.
Thermal production technologies require that up to 40-50% of operating expenses be spent on heat. The current heat source is natural gas, which is valuable as a resource in its own right as well being a hydrogen source for upgrading. Many interesting energy trade-offs are possible in this area.
Most of these issues appear to have been solved with existing environmental and refining technology, and heavy oil production can be increased rapidly if needed.
American Energy Policy
North
America
is
not
running
out
of
oil;
it
is
only
running
out
of
cheap
conventional
oil.
Possible
solutions
include
conservation,
alternative
energy
sources,
increasing
imports,
or
production
from
non-conventional
oil
resources.
The
vast
Canadian
heavy
oil
deposits
represent
an
economically
attractive
option;
these
deposits
are
already
being
exploited,
and
because
of
recent
technological
advances,
more
rapid
development
is
feasible.
This
option
could
provide
a
secure,
land-based
energy
source
for
the
US
and
Canada
for
the
foreseeable
future.
Development
of
the
Canadian
heavy
oil
deposits
should
be
the
cornerstone
of
any
American
policy
that
seeks
to
guarantee
a
stable,
secure,
and
economic
long-term
petroleum
supply
for
the
United
States.
Canadian
politicians
and
technical
experts
should
acknowledge
this,
and
study
its
implications
carefully.
It
will
be
one
of
the
most
economically
interesting
and
important
issues
to
arise
in
this
generation.
Footnotes:
*1.
Conventional
oil
is
defined
here
as
oil
having
a
gravity
of
>
20¼API
or
a
reservoir
viscosity
of
<
100
cP.
API
=
American
Petroleum
Institute.
¼API
is
a
measure
of
density:
a
value
of
10¼
(API
is
equivalent
to
the
density
of
water,
and
is
a
very
heavy
oil.
A
light
oil
would
have
a
value
of
35¼API
to
42¼API,
and
this
would
be
a
very
light
hydrocarbon
with
low
viscosity,
and
a
specific
gravity
of
perhaps
0.71
-
0.75
*2.
Heavy
oil
is
defined
here
as
all
oil
<
20¼API
gravity,
or
all
oil
with
a
viscosity
>100
cP.
One
may
assume
that
in
heavy
oil,
natural
flow
rates
cannot
sustain
economic
exploitation,
and
improved
oil
recovery
methods
must
be
used.
The units cP are centipoises, an expression of viscosity (or Òthickness). The viscosity of water at room temperature is 1 cP (centipoises). Glycerine in a bottle has a viscosity of 500 cP. Liquid honey has a viscosity of 15,000 to 50,000 cP. Roof tar has a viscosity of 50,000,000 cP. Heavy oil has a viscosity from 100 cP to 10,000 cP. The oil being mined in the oil sands by Syncrude has a viscosity of 500,000 to 1,000,000 cP.
*3. Deffyes, K. 2001. Hubbert's Peak, Princeton University Press, NJ. (A "must-read" if you are interested.)
*4. Hydrogenation means H must be added; the cheapest source is CH4, also the principal component of natural gas.