Below a small article I submitted to 'Planners' Newsletter' as an item for discussion,
and a small discussion which followed.
'Planners' Newsletter' was an e-mail forum within Shell up until 2004.


Fossil Fuel Based Energy – Access and Climate: a Double Clamp

by Evert Wesker

In my view humanity faces a double clamp which needs to be resolved in the 21st century. On the one hand we are faced with a supply constraint when considering easily accessible energy sources, being fossil fuels (coal, oil and natural gas), while on the other hand we are faced with a potential climate problem due to the rapid change of the composition of the atmosphere due to human activities. In this article I write down some thoughts on it.

Economic theory leading us astray

Classical economic theory tells us that prices of commodities like metals and other mineable materials rise as they become scarce. When, due to this, prices rise there will be a market-driven impetus to dig deeper and access deposits previously thought too low grade to be economically accessed. When taken to its limit one might say that – up to a certain limit of feasibility – such materials cannot be exhausted. They are only redistributed over the Planet and can be reclaimed.

However, when applied to fossil fuels this concept is dead wrong. When lignite, coal, oil, natural gas or Uranium are being used to raise energy in some form, they no longer exist as an energy carrier. In classic economic theory mass balances are taken into account in some way. However, the second law of thermodynamics is not! Energy cannot be recycled; energy is – in the end – just lost to a heat sink, being the environment.

When looking at oil production in the 1950s, globally, oil was produced at an energy cost of about 2% of the contained energy. By the 1990s this number had risen by a factor of 10; we were only able to produce some 5 tons of oil for every ton consumed in its discovery and production.

The first clamp: Supply

And it is here where the first clamp comes in. Discovering oil, drilling, building production facilities, running these, transportation through pipelines, shipping, refining and finally distribution all require energy. As soon as the amount of energy required to produce useful energy carriers from fossil sources exceeds the energy contained in them it will be the "end of the line". The "overhead" exceeds the net energy availability. The net gain is negative. Even when the price of oil reached $1000 per barrel it wouldn’t make sense to produce it any more.

The annual discovery of oil rose from under 10 billion barrels per year in 1910 to over 40 billion barrels per year in 1962. After that year discoveries have fallen steadily to less than 10 billion barrels per year. At the same time consumption, driven by a rapidly growing world population and unsustainable consumption patterns in the western world, increased steadily to its present rate of over 20 billion barrels per year.

Is this problematic? One may say we have got coal as well in ample quantities. However, open pit coal mining requires quite a bit of energy (up to half of the contained energy in some cases). And where does this energy come from? Exactly: oil products. A similar story can be told about food production. The bread on your plate "used up" a five- to tenfold of its own energy content from fossil fuel sources. And meat? Multiply it by another factor of at least 5. So yes, it is highly problematic.

The second clamp: Climate

The only way out of this constraint – on the basis of a fossil fuel economy – is, apart from an expansion of natural gas or coal, going for sources more difficult to access: deep offshore, oil sands, coal to liquids. But they all require much more energy; their net energy gain in terms of available energy in energy carriers (fuels) is lower than in case of the "easy sources" like those in the Middle East. So the amount of CO2 emitted (unless one sequesters it – again, at an energy cost) will increase even further.

And then the second clamp comes in: the risk of a step change in the climate on Earth, possibly including "nasty surprises" like shifting precipitation zones turning cereal belts into (semi) deserts.

It all leads me to the conclusion that a fossil fuel based "business as usual" scenario is utterly unsustainable in the longer run. Either the supply ceiling or the climate ceiling (or maybe both!) will be hit at some point in time. A world with 9 billion people and a per capita energy consumption of the order of 6 kW (a typical contemporary western lifestyle) won’t be reached.

Looking at economics in another way

Various studies concluded that a sustainable world would require a maximum per capita energy consumption of something of the order of 1.5 to 2 kW. Currently the world average is 2 kW.

In economics much attention is given to labour productivity. It is easy to understand why, as it is the basis of prosperity. However, if one looks at the aspect of sustainability, a lopsided attention for labour productivity may lead one badly astray. If oil is produced very effectively, but the energy consumption is higher than the energy contained in it, the labour productivity of the oil workers can be terrific, but the net effect – as shown above – is even negative.

What needs to be taken into account, and will in my view become much more important, is resource productivity. This implies that economies need to cut back drastically their use of energy, their use of materials and their transport needs. It will require an entirely different way of thinking by economists. Labour productivity is not prime (although a certain minimum level is required to enable sufficient wealth) but resource productivity is of prime importance.

This presents a dilemma for Shell, as it is a ton/hr business. Shell is a high labour productivity, and material and transport intensive, business. Moreover, the current trend of bringing more "difficult" oil resources into production is often at loggerheads with a high resource efficiency.

One may think of a conversion of Shell from an oil company into an energy company, in which the sustainable energy part slowly replaces the fossil energy part. But that is much more easily said than done. (In an appendix I list some energy sources and a very brief description of their advantages and drawbacks. I also add a list of some interesting reading material for those interested.)

Some concluding thoughts

With many essential resources depleted (oil, natural gas and high grade ores), no civilization however competent will be able to make the long climb from primitive conditions to high-level technology. In that respect, the current human civilization endeavour may well be a one-shot affair. I agree with the implicit message of Martin Rees in his book "Our final century". If we fail, we would do so in an irreversible way.

I end with a question to think about: What would be Shell’s place in a resource productivity driven world?
 

Appendix: Alternative energy sources, advantages and drawbacks.

First some "non-CO2 non-sustainable" energy sources; their advantage is a much lower CO2 emission (the mining operations, extraction and transport of Uranium / Thorium).

  • Uranium reactors. Light Water Reactors are the most common type of nuclear reactor. In itself these are reasonably safe, although mishaps are possible. However, the produced radioactive waste is a big concern. Moreover, in order to use the fuel more efficiently, reprocessing to extract Plutonium (Pu-239) is required. This opens the possibility of (mis)use of this material for nuclear explosives. Secondly, the production of mixed oxide elements is very costly. The same objection, to an even higher degree, applies to Fast Breeder Reactors. Finally, the Uranium mining operation to provide the initial fuel is non-sustainable.
  • Energy from Thorium. This idea is some 10 years old. In an accelerator, protons are collided with Thorium 232 nuclei to produce Uranium 233 (beta decay via Protactinium). Uranium 233 is a fissile isotope, so it can be used as a fuel. It is much more difficult to use it as a resource for nuclear explosives than in the case of U-235 or Pu-239. It also is safer, as Chernobyl-look-alike incidents are not possible. This process could also be used to get rid of Plutonium and other trans-Uranium waste. However, it probably is a very high cost option.

Fusion options

  • Deuterium + Tritium fusion. In a magnetic confinement, a hot plasma containing D and T is allowed to react to produce Helium and high energy neutrons. Research in this field is ongoing and there are still many problems to be solved. The "breeding" of Tritium is one of them. One extra drawback is the fact that the neutrons produced can be employed to breed Pu-239 from natural Uranium, thus opening doors towards nuclear arms proliferation. And again, it probably is a very high cost option.
     
  • Borium + proton fission. Another option is the reaction between Borium-11 and a proton producing 3 Helium nuclei. No neutrons are produced. On the other hand, the ignition temperature for this reaction is higher than in case of D + T fusion, due to the much higher Coulomb barrier. This option is being researched. It is probably one more very high tech and very high cost option. It has some distinctive advantages when compared to all the other nuclear options, so one could say that the jury is still out in this case.

A non-conventional fossil option

  • Methane hydrates. The amount of methane enclosed in gas hydrates is enormous – a multitude of the total recoverable fossil fuel resources. There are quite some issues which cast doubt on the feasibility of exploiting gas hydrates. First of all it will still mean CO2 production – although less than e.g. coal. Another much greater concern is the controllability of its exploitation. How does one melt the gas hydrates and subsequently catch the Methane without (massive) leaks? Up to now no feasible scheme is available.

"Sustainable" options

  • Solar energy. The potential is enormous. The resource base is 120.000 TeraWatt. However, when one considers the required investments for really massive scale photo-voltaics, one comes to the conclusion that this is also a very long shot. The energy investment to build photo-voltaic cells shouldn’t be underestimated. For small scale it is not very relevant, but if one thinks of scales in the order of many GigaWatts it is a different story. Then this becomes a constraint. One cannot say to all electricity users: "Please switch off all devices for a year, because we now start the production of photo-voltaic cells to cover your needs". The price is still an issue. Much work is still needed to get it down to more acceptable levels. Solar heating is a totally different story. That is quite cheap and totally feasible.
     
  • Wind energy. This is currently the cheapest form of sustainable energy. At islands in trade wind areas it already can outcompete power from diesel engine power stations. Although promising, it is not without problems either. "Not in my back yard" is one of them. Also migration routes of birds should be regarded. The maintenance of off-shore installations is another issue.

For both wind and solar energy at some point in time (when over 20% of the energy requirement is covered by them), a large scale energy storage system is required. What this should look like is by no means trivial. Should it be Hydrogen? Or pumped hydro? Or super capacitors? The jury is still out here as well.

  • Biomass. Biomass looks good from a recycling point of view. However, the space requirement is quite large. If one imagines a field of Elephant Grass (3000 ton dry biomass per km² per year) the net energy production on a continuous basis would be about 1 MW per km². So, for The Netherlands about 100,000 km² would be required. What should be looked upon are bio-waste streams associated with agricultural production and turn the stuff into biofuels.
  • Hydropower. Small scale hydropower is benign and totally feasible. E.g. some quite small villages high in the hills of Nepal were provided with electricity in this way. On the other hand, large scale hydropower is not environmentally benign. It disrupts river eco-systems and often floods valuable land (an example is the Aswan Barrage in Egypt).

From this very brief overview, one can see that turning the world economy onto sustainable energy will be a difficult and long job. There is no "cheap and easy" solution.

Secondly, it becomes clear once more that the resource productivity must be increased dramatically to avert major problems in the course of the coming century.
 

Background reading material

Books touching upon (the need for) sustainable development

  • "Hubberts Peak, The Impending World Oil Shortage" by Kenneth S. Deffeyes (Princeton University Press, 2001, ISBN 0-691-09086-6)
     
  • "The Party is Over" by Richard Heinberg (New Society Pub., 2003, ISBN 0865714827)
     
  • "Our Final Century" by Martin Rees (Random House Group Ltd., 2003, ISBN 0 434 008 095)
     
  • "Sharing the Planet", Edited by Bob van der Zwaan and Arthur Petersen – Pugwash Netherlands (Eburon Academic Publishers, 2003, ISBN 90 5166 986 0)

Books about earth sciences and the evolution of life

  • "New Views on an Old Planet" by Tjeerd H. van Andel (Cambridge University Press, 1994, ISBN 0-521-44755-0)
     
  • "Rare Earth, Why Complex Life is Uncommon in the Universe" by Peter D. Ward and Donald Brownlee (Copernicus, 2000, ISBN 0-387-98701-0)
     
  • "The Life and Death of Planet Earth" by Peter D. Ward and Donald Brownlee (Times Books, 2002, ISBN 0-8050-6781-7)
     
  • "Oxygen, The Molecule That Made the World" by Nick Lane (Oxford University Press, 2002, ISBN 0-19-850803-4)



It Was Not a Lack of Stones that Ended the Stone Age

(F1670) Michiel Groeneveld, SIEP-EPT, Rijswijk

Evert Wesker started a discussion on fossil fuel based energy (N1498). However, my take is somewhat different, as I see great opportunities for a company like Shell in his double clamp.

The starting point of this discussion is the competition between fossil fuels and Renewables in a carbon constraint future. Hydrogen is a possible bridge between these two sources. See Figure 1.

Fossil fuel sources are abundantly available in the earth (see Figure 2) and, as Evert points out, we are quickly depleting the easiest and thus cheapest part of them. Technological development has led to a decreasing cost of producing oil and gas, of transporting them cheaply across the globe and using them increasingly more efficient for generation of heat, power, cold and e.g. chemicals. This trend will not stop. Moreover, the 'unconventional' fossil resources like heavy oil, stranded or contaminated gas are being developed at the moment. So apparently these sources start to compete again (for the third time: first before 1920; second during wars like Germany in the 1940s and South Africa during Apartheid; third after the oil price shock in the 1970s). So in my opinion Hubbert's peak (see http://www.hubbertpeak.com) is true, but only for 2% of the available fossil resources. And even for those resources we keep improving, initially only 10% of the available oil was recovered, nowadays ca. 30%.

The real constraint on fossil fuel is of course the climate change concern. Given the growing population in the world and improving energy efficiency the energy supply has to increase still an order of magnitude. Can that be achieved?

The sun gives us in principle more than enough energy so it is a matter of affordability, overall energy efficiency and thus of technology. Costs of solar and wind are rapidly decreasing (see Figure 3). The energy required to make the equipment is rapidly decreasing as well (for a windmill today ca. 3 months, for a PV ca. 3 years). Evert points to limitations for biomass as an energy crop. Even today, food and fiber produce biomass (waste) as by-product, that as energy feedstock is equivalent to today's oil production. So food production can be a net energy exporter, if food and biomass-for-energy production are properly integrated.

Another huge source of energy is geothermal. Mining heat from the earth by water circulation through a man-made reservoir is indeed not Renewable, but the effect on the temperature of the earth is nil. And of course, this 'fossil' source is carbon-free. Again we need to develop technology to make this resource cheaply available, but as this industry is immature the learning curve can be steep!

So in my mind we can develop technologies that will deliver enough and cheap energy for the long term future if we are willing to invest enough money to drive the learning curves. However, our climate is already changing and we need to start action now. History has shown that we can act fast if the perceived problem is big enough, phasing out CFK for the hole in the ozone layer and banning lead from gasoline was possible in a decade.

The intermediate solution is CO2 storage or CO2 mineralisation. CO2 storage in oil reservoirs has been practised – also by Shell – since 30 years. Several projects already store CO2 in geological formations, e.g. the Sleipner project in Norway. Agreed that we need to learn a lot more about the risks involved, especially for on-shore storage. If CO2 separation is integrated in the value chain, the cost (in terms of energy and $) can be low. Separation costs are high from flue gases, but not if integrated with coal gasification, for instance. Furthermore, CO2 storage in coal seams in the Netherlands can co-produce significant amounts of gas (methane) at the same time (potentially more than the Groningen field). Ultimately safe is mimicking nature and converting CO2 with abundantly available minerals like olivine into solid carbonates. This is also an exothermic reaction, producing more heat. If fossil fuels are converted at source into hydrogen and CO2, where CO2 is sequestered and Hydrogen is distributed like today's natural gas, our gas infrastructure can be converted step-by-step into an energy infra-structure that combines decarbonisation of fossil fuels, as well as transporting and buffering Renewables (see Figure 4).

So in my opinion this change in energy feedstocks, coupled to climate change, is an enormous opportunity for Shell. We need to convince our shareholders and stakeholders – and foremost the youth – that the energy business will growth rapidly. And so we need to change our Shell image, from a sunset company paying dividends to the risk-averse older shareholders to a company that invests in a rapid growing, clean, carbon-free energy supply. Thus Shell is their hope for the future. Shell can choose to lead us from stone age to bronze age by innovation.


An Enormous Opportunity?
Yes. However, failure is not an option.

(F1671) Evert Wesker, Shell Global Solutions, Amsterdam

Michiel Groeneveld replied (F1670) to my contribution Fossil Fuel Based Energy – Access and Climate: a Double Clamp pointing out that Hubbert's peak (see http://www.hubbertpeak.com) is of relatively limited importance. He pointed at very large non-conventional fossil fuel resources and the ample opportunities to convert the present fossil fuel economy towards an economy based on sustainable / renewable energy.

Considerations on Hubbert's peak

I want to expand a bit on the discussion on oil and other fossil resources. Michiel stated that the Hubbert's peak story is only true for about 2% of the total of the fossil energy resources. But if one takes a look at the total of about 330 trillion barrels of oil equivalent on which this 2% assessment is based, one can see that 60% is gas hydrates and 30% is coal.

There is currently no feasible way to exploit methane hydrates within sight – not even on the horizon. The technical tasks at hand are really daunting. Just consider that gas hydrates within a sediment or a rock bed have to be melted to retrieve the Natural Gas in a controlled fashion, so as to avoid massive leaks.

In my article I also mentioned the large availability of coal. But again, if it is exploited on a massive scale without carbon dioxide sequestration (with sequestration the 'clean fossil' option), we will encounter 'the climate ceiling' at some point in time.

When looking at the remaining 10% of the 330 trillion barrels oil equivalent, we are looking at the oily part of the fossil fuel resources. At the moment, almost half of the conventional oil discovered has been produced. By means of enhanced oil recovery techniques it will be possible to get more out than the other half – possibly up to triple the quantity. However, these extra efforts – in general – only will start when an oil field is entering its 'normal' depletion phase. Then its lifetime is expanded to a considerable extent. But they will cost extra energy, and the production will still tail off, albeit (a lot) slower. We are looking at a skewed Gaussian profile. So, in my view the Hubbert story is valid when looking at conventional oil resources. And we are then talking of 20% of the total – not 2%.

The other 80%: non-conventional resources

Onwards then to the non-conventional oil resources (A well known example is the Athabasca tar sands operation). Unconventional oils as replacement for conventional oil share the characteristics that it dramatically increases the CO2 intensity of the oil industry, marked by an increase of own emissions. Sequestration can remedy that, but one is left with quite a severe penalty as to the energy and 'atom' efficiency of hydrocarbon production. Secondly, if one wants to expand the production from non-conventional sources, it will take a lot of time. Just imagine that a decision is made to expand the oil production from the Alberta resources to 10 million barrels per day – a Saudi Arabia look-alike production figure. That would take 50 Athabasca tar sands operations. How much time will it take to build the mining infrastructure, the immense logistics (the trucks, the conveying belts, the pipelines, etc.)? It would take decades.

In the meantime, if the world goes on in a business as usual mode, the demand for oil products would go up. Can non-conventional resources fill the gap left by conventional resources dropping off slowly in such a scenario? Can coal to liquids plus sequestration do it? Do NG and coal-bed methane help? Yes, to quite an extent. However, I think supply constraints can only be evaded if the resource productivity all over the world is increased to a considerable degree.

Other ways out

Biomass was mentioned as an indirect source of solar energy. Using waste products of agriculture deserves considerable attention. In principle, they may provide quite a bit (on paper, all) of our energy needs. However, don't underestimate the logistics required in such schemes.

Michiel also mentioned geothermal energy. The amount of contained heat inside the Earth's crust is immense. Imagine harvesting the heat content of one cubic kilometer of hot rock by cooling it down by 50°C. It would be equivalent to 2.5 million tons of oil equivalent. So, yes it is immense. However, it will take quite some effort to get it out at a reasonable pace, and it is a one-shot extraction operation, as the average thermal heat flow across the Earth's crust is about 60 milliwatts per square meter. Extraction of heat from the geothermal heat flow is only feasible at volcanic hot spots (e.g. on Iceland or along the Pacific 'ring of fire').

Finally, Michiel gave an overview of what can be done. And I agree that this is a way to go. That is why I made a small summary of energy sources at the back of my first contribution, as extra food for thought.

So, an enormous opportunity? Yes. Going for rapidly growing, clean, carbon-free energy (after a transition period)? Yes. A challenge, while contemplating that the days of cheap and easy energy are over? Yes. To all (young, but also the old ancient breed) technicians and scientists it will present a great and interesting job.

However, with the potential for supply difficulties and the constraint presented by the risk of a step change of the climate on Earth during the transition period in mind, I cannot escape reminding everybody of the analogy with Apollo 13; this is a one-shot affair, so failure is not an option.