Published in the Telegraph Journal April 29, 2013
Original title “Our Energy Dilemma.”
Title below used by the editor
Why Extreme Energy Won’t Last
Keith Helmuth
The historical facts of our energy situation are clear. Since the early days of the 20th Century the development of modern societies has been based on a huge injection of hydrocarbon energy. This sudden and unusual injection of energy must realistically be understood as a temporary subsidy.
At the beginning of this hydrocarbon era, large deposits of oil and natural gas were easily accessible. The energy return on energy investment for early oil wells was often 100 to 1. This means 100 barrels of oil could be extracted using the energy of only l barrel of oil.
This ratio steadily dropped as the deposits of easily accessible oil were depleted. In recent years the ratio has plummeted. Increasing amounts of energy are required to produce new oil as it becomes harder and harder to extract from deeper, less accessible, and lower quality deposits. The ratio is now down to approximately 18 to 1 worldwide. The ratio for North America is down to 15 to l. Alberta oil sands extraction is down to 5 to 1, and perhaps much lower; some calculations put it at 1 to 1.
This rapidly declining ratio of energy return on energy invested is the fundamental reality of our energy situation. Energy science analysts and biophysical economists now calculate that 5 to 1 is about as low as the ratio can go before oil extraction is no longer a profitable investment. At 3 to 1 they calculate the oil industry will come to a stand still. Energy corporations will no longer be able to earn a profit and investment will stop. This is simply the logic of our economic system.
There is no obvious work-around for this future energy scenario. There is simply nothing in the energy picture that can replace the oil subsidy on which our society now runs. As this subsidy is depleted and becomes economically inaccessible, the whole energy basis of our society will change. The big question is, change to what?
Meanwhile, the push is on to forestall the sunset of the hydrocarbon economy by moving to extreme energy. Extreme energy is defined by the extraordinary measures required for its extraction compared to conventional energy. These measures include deep-ocean drilling, drilling in remote sites such the Arctic, surface mining of tar and oil sands, and horizontal hydraulic fracturing (fracking) of deep shale formations. This extreme energy extraction includes both oil and natural gas.
Extreme energy is to conventional energy what extreme sports are to conventional sports. Extreme energy, like extreme sports, involves high risk. Failure is often catastrophic. In extreme sports the individual participant suffers the damage of failure. With extreme energy, however, the damage of failure is suffered by the larger environment, economy, and society.
Extreme energy requires a complexity of technology and a level of risk management that must necessarily become more and more intense as hydrocarbon resources become increasingly difficult to extract. Technology and risk must be pushed to more and more extreme levels in order to keep up the flow of oil required by our current economy.
Some experts in the field now warn that extreme energy systems are being pushed beyond operator capacity for safe and effective management, and significant failures can, therefore, be expected. (See Drilling Down: The Gulf Oil Debacle and Our Energy Dilemma by Joseph A. Tainter and Tadeusz W. Patzek.)
We are currently locked into a rapidly ascending spiral of complexity and risk, that will likely lead to more events like the Deepwater Horizon explosion and the BP Macondo Gulf well blowout. More pipeline failures, more oil and LNG tanker accidents, and more surface and ground water contamination from fracking can be reasonably expected. Evidence is accumulating that fracking can trigger earthquake activity. Fracking and natural gas extraction routinely leak significant amounts of raw methane. Methane is a potent greenhouse gas. Habitat and health damage is increasingly associated with extreme energy installations.
The intensity of this extreme energy spiral will continue to mount as we approach the limit of its economic profitability. When energy return on energy investment no longer returns a profit, the spiral will subside, or perhaps collapse. An unforeseen shock to this extremely complex and highly vulnerable energy system could trigger a collapse. Hopefully, we can manage a subsidence, but the possibility of a collapse cannot be dismissed.
Is the path of extreme energy our only way into future? Both the current Government of Canada and the Government of New Brunswick are acting as if it were. Alberta now has everything riding on the oil sands. A pipeline bringing Alberta crude to the Bay of Fundy is seen as a good way for New Brunswick to cash in on the economy of extreme energy while it lasts.
The current NB Government is fully engaged with the prospect of shale gas fracking and the royalties it hopes to realize, even though the long-term aftermath costs to Government may largely offset, or even wipe out, the royalty gains. Short-term rationality may be trumped by long-term costs, but we don’t know because Government has not done the risk analysis or made the calculations on aftermath costs – costs that will continue long after the last well is pumped dry.
The short-term view on oil and natural gas is easy to understand, but it treats the question of extreme energy as if it was here to stay, and we know for sure it is not. We don’t know how much longer we can depend on it, and we don’t know if we should prepare for a gradual subsidence or a catastrophic collapse. But we do know we better start preparing.
Herbert Stein, a noted economist and chairman of the Council of Economic Advisors under US presidents Nixon and Ford, once said, “If something can’t go on forever, it will stop.” This bit of folk wisdom has become known as Stein’s Law, and is often expressed as, “Trends that can’t continue, won’t.”
As we launch more and more into the era of extreme energy, Stein’s Law increasingly confronts us. We can run extreme energy right out to the end and then hope for the best, or we can start now to scale back while we still have a cushion that enables us to make different energy plans for the future. The big question is will civic, political, and business leadership raise their sights from making the most of extreme energy in the short-term to making the most of sustainable energy for the long-run?
Keith Helmuth is a member of the Woodstock Sustainable Energy Group
