12 March 2006

Go West Young Man

An old saying that applies to Eastern Canadians in times of a weak economy was to head West to find work. In particular this applies to the province of Alberta, which is the Canadian analogue to Texas in terms of both culture and fossil fuel resources. First it was to take part in ranching and farming. Later the oil was in Leduc and a new type of rush began. Then they found they could sell natural gas to the US Midwest and make a huge amount of money doing that. More recently, we have seen a huge spat of development on the bitumen deposits around Fort McMurray and in some other parts of the province. Of course I've ended up in Edmonton for rather different reasons: the large gas and oil commissions that the government receives has allowed it to invest (along with the federal government) in a $140 million dollar nanotechnology centre.

Dave over at The Oil Drum has made an excellent post explaining the problems that we should expect to encounter as conventional natural gas is exhausted and we have to turn to unconventional sources. The problems Dave details for American continental gas supplies is even more exaggerated in Alberta. Because of exports the rate of extraction here is much, much higher. As a result, depletion of natural gas should go over the cliff by about 2012. The DoE energy factbook for Canada lays it out:
In 2002, Canada produced 6.6 trillion cubic feet (Tcf) of natural gas, the third-highest level in the world behind Russia and the United States; the country also consumed 3.0 Tcf in 2002. Despite its high level of natural gas production, Canada’s proven natural gas reserves, 56.1 Tcf as of January 2005, only rank 19 th in the world. These reserves have decreased by 13.3% since 1996, and at current rates, production will completely deplete reserves in 8.6 years.
Alberta doesn't have a lot of alternative sources of energy to fossil fuels. There are certainly strong katabatic winds coming down off the Rocky Mountains. Some of the largest wind farms in Canada are located in southwest Alberta where the wind is so vicious the land is only suitable for ranching, not farming. However, as most people are aware wind has an immense intermittency problem and fairly low energy density. Alberta has no significant hydro or solar-electric resource. Technically it would be possible to produce biodiesel from the esterfication of Canola (rapeseed) which should become economic around $120 - 150 / bbl given current market rates for Canola oil. However, the use of arable land for biofuels will have to come at the expense of some other economic activity, most likely beef production.

This all raises the question, if this is now the boom, when is the bust coming? While Alberta is running a $10 billion a year provincial budget surplus, the bulk of that (~ 80 %) comes from natural gas royalties. At current extraction rates, we should expect conventional natural gas to exhaust itself by about 2012. That alone will have a big negative impact on the bottom line for an economy that is becoming increasingly unbalanced. Can coal-bed methane and sour gas pickup the slack? Moreover, what will the hydrogen source for the tar sands become? Without a source of hydrogen the frantic expansion in the tar sands begins to look ill advised. Catalytic cracking of the bitumen to strip off carbon (as practiced by Suncor) is an option but expensive, both in terms of product and CO2 production. Bitumen is already hydrogen poor in the first place, so you have to throw away a large percentage of your product and all you get for it is sulfur-laced coke.

8 comments:

Robert Schwartz said...

"Moreover, what will the hydrogen source for the tar sands become? "

Nuclear.

Nick said...

Wind, too.

But that assumes water. Where would the water for that come from?

Engineer-Poet said...

Crack to synoil and petcoke, export both.  Petcoke is a decent coal substitute, so long as you have the rail system to move it.

Robert McLeod said...

I've been over the whole electricity versus chemical production of hydrogen issue before:

Hydrogenation through Steam Reforming

Hydrogen: What source?

Oye'd to Carbon

Coal is a Hydrocarbon (Sort Of)

Ideally you might want to crack the bitumen and then gasify the coke to meet your hydrogen needs half-way. However, as I noted in the post the coke that they (Suncor) is producing is very high in sulfur. They're burning it anyway but I don't think they'll get away with that forever. Since you don't want to produce hydrogen sulfide via gasification all that sulfur has to be removed first, which adds expense.

Regarding the nuclear option, while I've looked at it, and seen what Aliaster Miller of Atomic Energy Canada has to say about it, I think nuclear will be scuttled on political grounds. When Total floated the idea last year Ralph Klein immediatly shot it down. That's a conservative government folks, and they've been in office since before I was born. People here don't like things they don't understand. They understand the chemical industry, even if its poisoning the environment; they don't understand nuclear power.

That said nuclear could do a lot to provide process heat and also steam for in-situ mining. Remember that most of the bitumen is buried too deep for strip mining. However it's still generally a loser for hydrogen production as my previous analysis shows.

Engineer-Poet said...

Wabash River doesn't have any difficulties with the sulfur in petcoke, and finds it cheap enough to ship from Venezuela.  As long as you're scrubbing sulfur anyway, is there a huge difference between 2% and 5%?

Nick said...

Don't all of these analyses assume a supply of plentiful, cheap water?

Right now there are a lot of farmers in the US losing the water they depend on to farm, because natural gas production is eliminating the groundwater. One of the problems with Colorado shale-oil is the scarcity of water.

Is there plentiful water that no one else needs, or will object to having used wholesale, in Alberta?

Robert McLeod said...

Nick,

Water is a real issue. Alberta certainly has more water than most of the great plains states but it's not that far off being a desert.

In the politics here, it seems that oil and gas trumps other users for water. It remains to be seen if that remains the case in the future. If the province was to push CO2 injection the water situation should improve, but there is only very limited tertiary recovery in Alberta as of yet.

E-P, Alberta has a lot of coal too. Why use low quality petroleum coke for steam plants if the real McCoy is cheaper and better? The one company (Suncor) that is producing coke right now is burning it but they're also producing clouds of sulfur dioxide in the process.

Engineer-Poet said...

The petcoke is a byproduct of the bitumen cracking, no?  It's free; it requires no further mining or other processing, and it has no inherent moisture.  This makes it attractive for some uses, no?

Oxygen-blown IGCC plants burn coal as slurry and maybe don't benefit from the dryness of petcoke (corrections accepted), but they scrub the fuel gas of sulfur and other contaminants before burning it.  They don't appear to be strongly affected by sulfur content, whether it's 3% coal or 5% petcoke.

While searching for the link above, I found that Wabash River is going to be used to produce SNG as well as base-load power.  Things are getting interesting in N. America.