by Richard T. Stuebi
Unlike many in the cleantech community, I’m not averse to increased drilling for oil in the U.S.
I recognize that we’re not going to be able to leapfrog out of the corner into which we’ve painted ourselves over the past few decades, and that we’re going to need oil, gas and coal – and probably as much of it as we can prudently get, especially from domestic sources – for a long time to come as a consequence of the accumulation of our past decisions and investments regarding energy.
As the most thoughtful segment of energy sector observers frequently notes, our energy challenges in the coming decades are so significant that we’re going to need just about everything we have at our disposal to meet the challenges.
But, as Einstein said, “insanity is doing the same thing over and over and expecting a different result”, and betting our entire national energy strategy solely or at least mainly on increasing production from our fossil fuel resources is a losing proposition that will only further exacerbate the challenges we now face.
Furthermore, the opportunity may very well not be all it’s cracked up to be. For instance, last month the U.S. Geological Survey released a revised assessment of the remaining resources in the National Petroleum Reserve of Alaska – which you’ll no doubt remember has long been viewed by many to be the savior of all our energy travails.
Oops! Instead of a mean estimate of 10.6 billion barrels, it now looks like there’s really only about 900 million barrels up there to be recovered – less than 10% of what was formerly thought.
Now, that resource may still be well worth recovering; it’s certainly worth a lot of money. The environmental community is largely opposed to going for it, and maybe that position is too hard-line. Yet, it should also be recognized that there’s no panacea for American energy policy up there on the North Slope. After all, even if fully captured (which is implausible), 900 million barrels is only equivalent to less than fifty days of U.S. oil consumption – not exactly a history-altering development.
And, logic alone shows that there’s no panacea if all of the reasonable conventional oil/gas exploration possibilities are pursued. The planet is a finite sphere, and organic matter is not being transformed by geologic forces into fossil fuels as quickly as they are being depleted by manmade extraction and consumption.
Furthermore, as we all know, fossil fuel resources are not evenly distributed across the planet. While the U.S. is responsible for about 20% of global demand for oil, our national endowment of petroleum reserves only represents about 2% of total supply on Earth. Perhaps if we’re lucky, we might find an unexpected field somewhere on our property, possibly deep off our coasts (presuming we can avoid Deepwater Horizon Part II), but we can’t expect surprises to change our fortunes by an order of magnitude.
True, there are wild cards. We can supply the needs we currently meet with petroleum by utilizing other minerals. For instance, the U.S. clearly has immense coal reserves. To date, they have been used solely for power generation and industrial production (e.g., coking for steel). However, it’s been known for decades that coal can be converted into transportation fuels through the Fischer-Tropsch process. Coal could thus be a transitional source for moving the U.S. off reliance on foreign oil.
In addition, the U.S. has an immense quantity of so-called “unconventional” oil resources: stuff that doesn’t come out of the ground as crude, but which can be processed into fuels. The largest of these is the shale resources of the Piceance Creek basin in Colorado, Wyoming and Utah, which are estimated to contain over 1 trillion barrels of oil equivalent. (In case you accidentally missed that number, it’s over 1000 times bigger than the revised estimate of the resources in Alaska.)
There are other technological approaches: second-generation biofuels, electrification of vehicles and shifting electricity generation from fossil fuels, and so on.
Alas, the problem with alternative sources of transportation fuel is that they are both very capital intensive and have higher variable costs than conventional oil/gas production. Consequently, neither coal-to-liquids nor shale (nor other alternatives) will be pursued with vigor by the private sector unless there is greater certainty that oil prices will remain high enough for long enough to merit the enormous investments required. Given the oligopolistic oil marketplace, controlled by the OPEC cartel which can depress prices at any time (for at least awhile) by temporarily flooding the markets with the inexpensive-to-produce oil they now are fortunate to have (for at least awhile), no such certainty exists.
As a result, until then, under a status quo energy policy based primarily upon an overly simplistic “drill, baby, drill” mentality, these types of energy sources will not come to market.
Frankly, even then, these unconventional supplies of fuels are just delaying tactics. Whether one decade or five or ten, it’s only a matter of time before we are compelled to move to an energy system that is truly renewable and sustainable, as opposed to a system based on a “use it and lose it” premise.
Until we have the foresight and will to do something different, we’ll simply be stuck “over a barrel”.