Grist gets it – Congress doesn’t

A great comment on Grist – green energy creates jobs. More than fossil fuel expansion. Those who support jobs for Americans should be supporting renewable energy. Congress, are you listening??!?! Why won’t you act to renew tax credit for renewables?

Reading around on reactions to the latest oil shale hubbub, I keep seeing conservatives saying that greens against dirty energy development are opposing “American jobs.”

It’s important that everyone involved in fighting oil shale — and other drill-and-burn energy policies — understand something simple: the U.S. energy sector has very low “labor intensity.” That is to say, fossil fuel exploration, drilling, and refinement is capital-intensive and energy-intensive, but it doesn’t create many jobs.

A dollar spent on efficiency or renewables creates more jobs than a dollar spent on fossil fuel development.

So it’s the fossil crowd that opposes American jobs. If they wanted to create jobs, they’d support putting people to work transitioning the U.S. economy away from fossil fuels.

Arctic oil dreams

The USGS published a survey on oil and gas resources in the Arctic, summarized by the New York Times:

The assessment, which took four years, found that the Arctic may hold as much as 90 billion barrels of undiscovered oil reserves, and 1,670 trillion cubic feet of natural gas. This would amount to 13 percent of the world’s total undiscovered oil and about 30 percent of the undiscovered natural gas.

I am unclear on the definition of “undiscovered” oil reserves, or how they are estimated, but let’s put that aside for now and assume these numbers are spot-on. Let us also assume that these estimates are actually exact:

The world currently holds 1.24 trillion barrels of proven oil reserves and 6,263 trillion cubic feet of proven natural gas reserves.

Current world usage is listed in the article as 86 million barrels per day. Thus “proven” reserves will last 39.48 years. Assuming that the Arctic “undiscovered” oil, at 90 billion barrels, is 13% of the “undiscovered” recoverable oil, then this amounts to 692.3 billion barrels, or another 22 years at current usage. The sum of those two, which should be all the recoverable oil that exists in the world, gives 62 years of oil, at current usage.

This might sound like a lot, but it implies business as usual, then one day there is no more oil. No gasoline, no diesel, no asphalt for roads, greatly reduced feedstocks for the chemical plants. This is not how it would play out of course. And this type of calculation misses a very important point. All of the discussion today about oil prices talks about “spare capacity”. That is capacity to pump. The RATE at which oil can be delivered is what is going to be the issue in the future. The oil in the future is going to have to come from more, smaller, geographically separate wells and fields. This means far more infrastructure would be required to have it all pumping at the same time, so that current rate of usage could be sustained. This includes workers as well as equipment. There is simply not enough capacity to begin production on too many fields all at once, especially those that are in deep water, or in extreme conditions (or both).

Also working against the ability to maintain a constant rate is the problem of decline in mature fields. To take the most extreme example, Ghawar produces around 5 million barrels per day. When it begins to decline (and it may have already started), it is reasonable to assume a 4%/yr decline. Well, that works out to 200,000 barrels per day that needs to be replaced the first year, then 392,000 in the second year, 576,320 in the third year, and so on. Those numbers are very daunting, as a field over 100,000 bpd is pretty large, and to have multiple ones of that size come on stream year after year is asking quite a bit.

So my belief is that there is no way that worldwide production can keep at current levels when Ghawar begins to decline. Cantarell, the world’s third largest field is in decline, as is Burgan in Kuwait. There may be fields as large as Cantarell in Iran that have not been developed yet, but I think politics will keep them from rapidly coming on line. So, even a swarm of smaller fields may not be enough to keep supply at current levels. So I think that this report should be a reminder that the future of oil will be a scramble to find it in more inhospitable places, and much harder and more expensive work to produce it, in ever shrinking quantities. We need to be planning for this future now. As T Boone says, we cannot drill our way out of this.