Time to be Honest about Our Energy Prospects

By Frank-Jürgen Richter

Business Times, June 4, 2014

The problem is not that there is not enough coal left underground; there is. But the task of lifting it, transporting it and using it depends on many other factors, most importantly on the continued availability of oil as a lubricant for all the machines involved in the supply chain, and as a fuel for transportation. It is reckoned that there are some 109 years of coal left under current consumption assumptions according to a new report by BP, an energy producer. Broadly that is in line with forecasts by the International Energy Agency (IEA) in Paris which also predicts the availability of other fuels.

Discussions about fossil fuel reserves start by aggregating firm and expected supplies from known and almost unknown sources, equating the resulting volume against fairly loose forecasts of economic activity including the assumption that rising costs will be accepted by consumers. While the EROEI (Energy Returned over Energy Invested) ratio logically suggests that the lifting of fuel will cease when it costs too much (that is, when EROEI becomes less than one) the reality is that the ratio needs to be calculated at the point of consumption, and not at the source. Take oil as an example. Oil is increasingly produced from smaller fields in deep offshore wells, or from wells in difficult climatic conditions. Their well-head cost will be high – but we ought to add in the costs of transportation to the refinery, transforming the crude oil, and then transporting the oil products to users. Well-head EROEI was 100:1 in the days of Texan gushers, but now it has fallen to below 10:1, maybe less. Some reckon the tar-sand oil of Canada has a ratio of less than 5:1. I wonder, after adding in the costs of pressurising and pumping this oil 3,500 km to the refineries of Louisiana along the Keystone XL pipeline, if the EROEI has turned negative!

Academics Ajay Gupta and Charles Hall, writing in Sustainability in 2011 state that the available data for EROEI calculations across the energy resource spectrum (oil and natural gas, coal, tar sands, shale oil, nuclear, wind, solar, hydropower, geothermal, wave/tidal and corn ethanol) are sparse and unreliable. Good analyses are important as politicians must guide nations towards a good future, and it is nonsense to blurt out that coal supplies will last for 109 years. The IEA by 2012 had accepted that globally we had passed the “peak oil” – that is, we had consumed half of all our known oil potential. The peak for gas supply might be 2014-2019, and the coal peak sometime later.

Of course, we can transform one source of fossil fuel into another (as with coal gasification), but this will come at a cost as no transformation is ever 100 per cent efficient. It is important to recognise in general terms that coal is used to power electricity generators or other heavy industrial needs, oil is used for most transport systems, and gas for space heating. Coal consumption is decreasing somewhat under international pressure to reduce CO2 output by using more acceptable fuels and by using more efficient machinery. Yet, if carbon capturing and sequestration (CCS) were available on a commercial scale, coal would be more acceptable.

Frank-Jurgen Richter is founder and chairman of Horasis, a global visions community.