An Inconvenient Talk

The Walrus

Dave Hughes’s guide to the end of the fossil fuel age

By Chris Turner

Dave Hughes is driving north on Highway 2. Headed out of Calgary, where he worked for thirty-two years at the Geological Survey of Canada, mapping the nation’s coal reserves. Bound for Edmonton, where he grew up and earned two degrees in geology. It’s not yet dawn, the sky deep black and the windows of his pickup truck like mirrors, the southbound lanes a line of smeared headlights as long-haul commuters make the trek the other way into the capital of the oil patch. Hughes sips coffee from a reusable mug, fighting back sleepiness. Just another commuter trailing a cloud of burnt dinosaur bones on his way to work.

Dave had to start out fifteen minutes earlier than the requisite ungodly hour so he could pick you up at your house. So you wouldn’t drive yourself. Save a few hydrocarbons, he’d joked. He’s a coal man, a geologist, and he always refers to the holy trinity of fossil fuels whose flames have stoked the past 200 years of industrial growth — coal, natural gas, and especially oil — in that same semi-technical way: hydrocarbons. Dave Hughes has a lot to say about hydrocarbons, mainly how there’s no possible way to keep running the engine of a modern global economy for much longer at the pace we’re burning them. Which is why you felt compelled to join him in the black chill of this late-autumn morning. Because that seems like a pretty big deal.

Dave came right to the curb out in front of your house, your personal chauffeur, because you said you were interested in hearing his talk a second time, and he’ll do his level best to bring his talk to just about anyone who asks. The Talk, he usually calls it, and you can tell it has been a proper noun in his head for a good long while now. Somewhere between that first lecture back in 2002 at the University of Calgary and the 155th, the one he’ll give later today at a Natural Resources Canada research facility outside Edmonton, it became his passion, his quiet crusade, his data-freighted inconvenient truth. The Talk. One hundred fifty-four times. Geoscience symposia and energy industry summits and sustainability conferences. The Greater Vancouver Regional District and the Nova Scotia chambers of commerce. A petroleum trade show in Inuvik and a renewable energy confab in Flagstaff, Arizona. The Canadian Institute’s Coalbed Methane Symposium and the annual conference of the Association for the Study of Peak Oil and Gas. The audiences vary, but The Talk only tightens, takes on layers, attains a porous firmness like sedimentary stone. It is crowded with hard facts, and it is intended to overwhelm audiences with its certainty. It’s a reality check, a doozy of a reality check, and Dave doesn’t have much time these days for anyone who won’t face this reality.

Talk No. 147 took place at an urban sustainability forum at the Westin Hotel in Calgary. That’s where you first saw it. The title slide read “The Energy Sustainability Dilemma: Powering the Future in a Finite World,” and identified its presenter as J. David Hughes. Since then, you, too, have come to think of it as The Talk, and its author simply as Dave. Dave was on the bill that day with such dignitaries as the mayor of Calgary and the premier of Alberta. The officials talked about how to turn this boom town into a place that was “all things energy,” but nothing they said had any real resonance after The Talk. When the provincial sustainable resources minister came up to congratulate himself for setting aside some new provincial parkland on the edge of the city, it was as if he’d just awakened from cryogenic freezing, blipped in from some ancient time long before the existence of the world described in The Talk.

The Talk is in essence a constantly updated survey of the state of the planet through a hydrocarbon geologist’s eyes. It plows methodically through reams of energy-geek data. World Conventional Oil and Oil Sands Reserves, 1980–2007. Energy Profit Ratio for Liquid Hydrocarbons. Canadian Gas Deliverability Scenarios from All Sources. The small-font notes at the bottom of each PowerPoint slide enumerate sources that read like a general anaesthetic in print form: BP Statistical Review of World Energy, Proceedings of the National Academy of Sciences, EIA International Energy Outlook. Pie charts and bar graphs with several rainbows’ worth of colour and an overabundance of italicized and all-capped words: “The absolute first priority,” that kind of thing. (By the way, it should be “to reduce energy consumption as soon as possible.”)

The Talk is all kinds of policy-wonky. Your eyes could glaze over. You could even miss the two slides Dave always says are the only ones you must remember. The first is a single-line graph depicting “World Per Capita Annual Primary Energy Consumption by Fuel 1850–2007,” which climbs by 761 percent over its 157-year timeline and flips from 82 percent renewable biomass (mostly wood) at the 1850 end to 89 percent non-renewables (almost entirely fossil fuels) at the 2007 end. The second critical slide has three line graphs in horizontal sequence, all tracking curves that begin in 1850, around the time humanity started drilling for oil in a serious way, and then spiking impossibly high at the right-hand, 2007 termini of their X axes. Global population today: 5.3 times global population in 1850. Per capita energy consumption today: 8.6 times that of 1850. Total energy consumption today: 45 times 1850’s.

You could also miss the way these figures resonate with The Talk’s voluminous data on oil and natural gas and coal reserves. You could miss how our current trajectory obliges us to rely on hydrocarbons for 86 percent of our projected primary energy needs in 2030, and how that fits with the strong case Hughes makes that the global hydrocarbon peak (the point at which global energy supply will begin an irrevocable decline, making the energy price shocks of the past couple of years start to look like the good old days) is estimated to occur nine years before that date.

Here’s the upshot: if you plan to drive a car or heat a house or light a room in 2030, The Talk is telling you your options will be limited, to say the least. Even if you’re convinced climate change is UN-sponsored hysteria or every last puff of greenhouse gas will soon be buried forever a mile underground or ducks look their best choking on tar sands tailings, Dave Hughes is saying your way of life is over. Not because of the clouds of smoke, you understand, but because we’re running out of what makes them.

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Brain power can meet the energy crisis

The Guardian

By Larry Elliott

Back in the 1970s, North Sea oil was seen as the saviour of the British ­economy. The money would be spent modernising industry so that it could play in the big league with the ­Germans, the Japanese and the ­Americans. Instead, we spent the money on ­unemployment benefit and tax cuts. The industrial ­renaissance never happened.

By the time the oil started to run out, financial services were the next big thing. The City would be Britain's unique selling point, we would pay our way in the world through banking, insurance, arranging bids and deals and by being better speculators than our rivals. With the banks bust and the financial sector in a state of petrification, we are now going to find out what life is like without artificial stimulants.

Dreamland

It won't be nearly as much fun as the years of living in a dreamland, but stripping away the pretence that there is some easy, painless solution to Britain's long-standing problems represents the first stage to recovery.

Britain has no shortage of talented people. There is plenty of creativity and always has been; the problem is that it has not always been channelled in the right directions. If ever there was a moment to remedy that systemic ­failure, it is now, because this crisis has only just begun. The first phase involved banks; the second phase will be energy.

Oil prices nudged above $60 a barrel briefly last week before falling back on news that inventories are high and that demand for crude is set for its biggest fall this year since 1981. An oil price at these levels looks suspiciously high amid the first fall in global gross domestic product since the second world war, although there are possible explanations. One is that commodity traders believe there will be a more rapid recovery in the global economy than anybody is expecting. A second is that the money central banks are pumping into financial markets through quantitative easing is spilling over into speculation. Third, and most worrying, the days of cheap oil may be a thing of the past. If this is the true explanation, there will be serious consequences.

In the post-war years, there has been a clear link between oil prices and global growth: the long boom of the 1950s and 1960s was an era when crude was dirt cheap; all four major recessions (1974-75, 1980-82, 1990-92 and 2007 to now) followed a spike in oil prices.

The last trough in oil prices occurred at the end of the 1990s, coinciding with the dotcom bubble and talk in the US of the new paradigm economy. Since then, the trend has been inexorably up, with supply struggling to keep up with strong demand from the mature markets of the developed world and the big emerging economies such as China and India.

Chris Sanders, of Sanders Research Associates, traces the origins of the current crisis back to the turn of the millennium, when the fall in production from the big finds of the late 1970s – Alaska, deepwater Mexico and the North Sea – ended the era of cheap oil.

A serious recession in the wake of the dotcom bubble was only averted because policymakers – Alan Greenspan in particular – manipulated interest rates to create another unsustainable boom. This did not mean the problem had been solved; indeed, putting it off for another day simply meant the problem grew bigger. Seen from this ­perspective, what we are witnessing is not the early stages of a new bull market, but a ­temporary lull in a much longer ­crisis that will see recovery hampered by high and volatile energy prices. Indeed, the volatility of crude over the coming years is likely to be as damaging as the fact that fuel will be becoming steadily more expensive.

To envisage this scenario, you don't have to accept that we are at – or close to – peak oil. There are many oil experts who have deep reservations about the notion that the moment of maximum petroleum extraction is at hand; they argue that rising prices will encourage exploration and make it viable for oil companies to extract crude from parts of the globe that were uneconomic at a price of $20-$30 a barrel. New and better technologies will be deployed to keep oil supply in tandem with demand.

Price signals

There is no doubting the economic validity of this case. Price signals do matter, and oil companies are far more likely to beef up their spending on exploration and new refineries if the oil price is $100 a barrel than if it is $10 a barrel. That's the good news.

The bad news is that even if the peak oil sceptics are right and there is plenty of untapped crude in the South Atlantic, Canada's tar sands or Central Asia, it is going to be more expensive to extract it. Oil has been critical to the development of industrial societies but energy firms, unsurprisingly, went for the oil that was easiest to get at and of the highest quality, since that meant low extraction costs and high profits.

In other words, the energy required to get fuel out of the ground was small; the energy return on energy investment (EROI) was high. But as companies have moved to tougher environments, the EROI on oil and gas production has fallen – one estimate is from 33:1 in 1999 to 19:1 in 2005. This global trend mirrors what happened in the US, where oil is still produced in large quantities but much less efficiently than it was 75 years ago. From an estimated 100:1 in 1939, the EROI for American oil production dropped to 30:1 by 1970 and 11:1 in 2000.

As Sanders puts it: "Today we are attempting to extract oil and gas in commercially viable quantities from offshore deposits that lie under more than 25,000 feet of water, rock and hot salt. It may well be possible to do so, but what is highly unlikely is that it will be possible to do so in sufficiently large flows to make a material difference to general prosperity. Another way of putting this is that economic growth rates are going to have to slow."

On the basis of what has happened in the recent past, we are likely to see oil prices on an upward trend but with wild gyrations. Frequent oil spikes when the global ­economy appears to be on the mend will be ­followed by a crash in prices as the impact of dearer energy raises business costs and bites into consumer spending power.

There is a silver lining to this cloud. Another half century of global growth at 5% a year powered by cheap fossil fuels would almost certainly be the death of the planet as we know it. But we are as ill prepared for the post-fossil fuel age as we were for war in 1939.

But we are at our best when we have our backs to the wall: let's ­establish a ­Bletchley Park for renewable energy schemes, where the best ­scientists work out how ­Britain will survive when the oil runs out. And let's do it now.

larry.elliott@guardian.co.uk

Moscow warns of future energy wars

Al Jazeera

Russia has warned that military conflicts over energy resources could erupt along its borders in the near future, as the race to secure oil and gas reserves gains momentum.

A Kremlin policy paper, which maps out Russia's main challenges to national security for the next decade, said "problems that involve the use of military force cannot be excluded" in competition for resources.

The National Security Strategy's release coincides with a deadline for countries around the world to submit sea bed ownership claims to a United Nations commission, including for the resource-rich Arctic.

The paper, signed off by Dmitry Medvedev, Russia's president, says international relations in the next 10 years will be shaped by battles over energy reserves.

"The attention of international politics in the long-term perspective will be concentrated on the acquisition of energy resources," it said.

"Amid competitive struggle for resources, attempts to use military force to solve emerging problems can't be excluded.

"The existing balance of forces near the borders of the Russian Federation and its allies can be violated," it added.

The document said regions including the Middle East, the Barents Sea, the Arctic, the Caspian Sea and Central Asia could all be at the centre of competing claims for resources.

Russia, the world's biggest natural gas producer, has already accused the United States, with which it shares a small sea border, of coveting its mineral wealth.

But Moscow is also finding its control over natural gas exports under threat, as the European Union seeks alternative supply routes that would bypass Russia and the Ukraine.

The country is also embroiled in a territorial dispute with Norway over claims to the Arctic sea bed, where around 25 per cent of the world's untapped reserves are believed to lie underneath the ice.

Global security threats

The National Security Strategy also pointed to the US and Nato as major threats to global security.

It criticised a US plan to deploy a global missile shield in Eastern Europe, which has already infuriated Russia.

"The opportunity to uphold global and regional security will substantially narrow if elements of the US worldwide missile defence system are deployed in Europe," the document said.

But it added Russia would pursue a "rational and pragmatic" foreign policy and avoid a new arms race.

The document said Moscow would seek an "equal and full-fledged strategic partnership" with Washington "on the basis on coinciding interests".