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Bottom Up, Top Down

June 22, 2014 in Climate Change, EV News, Oil

Richard Heinberg Photo courtesy of Post Carbon Institute

Richard Heinberg
Photo courtesy of Post Carbon Institute

By Richard Heinberg, Post Carbon Institute

Those of us who have some grasp of the urgent dilemmas posed by climate change and peak oil face a terrible conundrum. The whole system of industrial civilization is moving toward collapse. How can we reverse course to avert an unprecedented series of crises that might entail massive human mortality and the more or less permanent crippling of planetary ecosystems? I can think of two broad strategies:

Top down. Convince the folks in charge that it’s in their interest to change directionthat is, to reorganize financial, food, transport, and manufacturing systems on a no-growth, low-carbon model. Advantage: this audience at least theoretically has the power to organize a comprehensive and rapid energy descent. Recall the rapidity with which the US re-organized its economy at the start of World War II. Disadvantages: the elites’ incentives are all in the current direction of growth-at-any-cost, many of the key players remain in denial about the nature and severity of the fundamental problems facing society, and social systems are structured to eject leaders who rock the boat.

Bottom up. Convince the general public to organize a change in direction from the grassroots. Communities could self-organize to lower energy consumption, create green jobs, and localize their economies. Advantage: this avoids the authoritarianism implicit in the first strategy. Disadvantages: it’s almost impossible to reach all or most of the general public unless you have a huge megaphone (which leads us back to the Top-Down strategy), the general public does not have the capability to quickly restructure large complex systems (finance, manufacturing, transport, etc.), and most people identify their personal interests with those of the collapsing system.

Transition Initiatives are making a valiant effort at a bottom-up strategy. Various prominent environmentalists have pursued a top-down strategy (most recently, PCI Fellow Bill Rees has published an important paper titled “Avoiding Collapse,” a last-ditch effort to awaken global policy makers).

It’s not at all clear that either strategy will succeed. If anyone can think of a third broad strategic approach, there are lots of us who would be keen to know of it.

Meanwhile, the least helpful thing I can think of to do right now is to identify with either the Top Down or the Bottom Up approach and then attack people pursuing the complementary strategy. Of course, tactics within these broad categories are always up for discussion and it’s fair to point out instances of incompetence in the application of tactics. But if we do have a chance at averting the worst forms of societal and ecosystem collapse, that chance probably lies in cooperation among actors pursuing different but complementary strategies.

This article is a repost (6-20-14), credit: Post Carbon Institute.

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IEA Says the Party’s Over, By Richard Heinberg, Post Carbon Institute

June 5, 2014 in EV News, IEA, Oil, Politics

Richard Heinberg Photo courtesy of Post Carbon Institute

Richard Heinberg
Photo courtesy of Post Carbon Institute

The International Energy Agency has just released a new special report called “World Energy Investment Outlook” that should send policy makers screaming and running for the exits—if they are willing to read between the lines and view the report in the context of current financial and geopolitical trends. This is how the press agency UPI begins its summary:

It will require $48 trillion in investments through 2035 to meet the world’s growing energy needs, the International Energy Agency said Tuesday from Paris. IEA Executive Director Maria van der Hoeven said in a statement the reliability and sustainability of future energy supplies depends on a high level of investment. “But this won’t materialize unless there are credible policy frameworks in place as well as stable access to long-term sources of finance,” she said. “Neither of these conditions should be taken for granted.”

Here’s a bit of context missing from the IEA report: the oil industry is actually cutting back on upstream investment. Why? Global oil prices—which, at the current $90 to $110 per barrel range, are at historically high levels—are nevertheless too low to justify tackling ever-more challenging geology. The industry needs an oil price of at least $120 per barrel to fund exploration in the Arctic and in some ultra-deepwater plays. And let us not forget: current interest rates are ultra-low (thanks to the Federal Reserve’s quantitative easing), so marshalling investment capital should be about as easy now as it is ever likely to get. If QE ends and if interest rates rise, the ability of industry and governments to dramatically increase investment in future energy production capacity will wane.

Other items from the report should be equally capable of inducing policy maker freak-out:

The shale bubble’s-a-poppin’. In 2012, the IEA forecast that oil extraction rates from US shale formations (primarily the Bakken in North Dakota and the Eagle Ford in Texas) would continue growing for many years, with America overtaking Saudia Arabia in rate of oil production by 2020 and becoming a net oil exporter by 2030. In its new report, the IEA says US tight oil production will start to decline around 2020. One might almost think the IEA folks have been reading Post Carbon Institute’s analysis of tight oil and shale gas prospects! This is a welcome dose of realism, though the IEA is probably still erring on the side of optimism: our own reading of the data suggests the decline will start sooner and will probably be steep.

Help us, OPEC—you’re our only hope! Here’s how the Wall Street Journal frames its story about the report: “A top energy watchdog said the world will need more Middle Eastern oil in the next decade, as the current U.S. boom wanes. But the International Energy Agency warned that Persian Gulf producers may still fail to fill the gap, risking higher oil prices.” Let’s see, how is OPEC doing these days? Iraq, Syria, and Libya are in turmoil. Iran is languishing under US trade sanctions. OPEC’s petroleum reserves are still ludicrously over-stated. And while the Saudis have made up for declines in old oilfields by bringing new ones on line, they’ve run out of new fields to develop. So it looks as if that risk of higher oil prices is quite a strong one.

A “what-me-worry?” price forecast. Despite all these dire developments, the IEA offers no change from its 2013 oil price forecast (that is, a gradual increase in world petroleum prices to $128 per barrel by 2035). The new report says the oil industry will need to increase its upstream investment over the forecast period by $2 trillion above the IEA’s previous investment forecast. From where is the oil industry supposed to derive that $2 trillion if not from significantly higher prices—higher over the short run, perhaps, than the IEA’s long-range 2035 forecast price of $128 per barrel, and ascending higher still? This price forecast is obviously unreliable, but that’s nothing new. The IEA has been issuing wildly inaccurate price forecasts for the past decade. In fact, if the massive increase in energy investment advised by the IEA is to occur, both electricity and oil are about to become significantly less affordable. For a global economy tightly tied to consumer behavior and markets, and one that is already stagnant or contracting, energy constraints mean one thing and one thing only: hard times.

What about renewables? The IEA forecasts that only 15 percent of the needed $48 trillion will go to renewable energy. All the rest is required just to patch up our current oil-coal-gas energy system so that it doesn’t run into the ditch for lack of fuel. But how much investment would be required if climate change were to be seriously addressed? Most estimates look only at electricity (that is, they gloss over the pivotal and problematic transportation sector) and ignore the question of energy returned on energy invested. Even when we artificially simplify the problem this way, $7.2 trillion spread out over twenty years simply doesn’t cut it. One researcher estimates that investments will have to ramp up to $1.5 to $2.5 trillion per year. In effect, the IEA is telling us that we don’t have what it takes to sustain our current energy regime, and we’re not likely to invest enough to switch to a different one.

If you look at the trends cited and ignore misleading explicit price forecasts, the IEA’s implicit message is clear: continued oil price stability looks problematic. And with fossil fuel prices high and volatile, governments will likely find it even more difficult to devote increasingly scarce investment capital toward the development of renewable energy capacity.

As you read this report, imagine yourself in the shoes of a high-level policy maker. Wouldn’t you want to start thinking about early retirement?

This article is a repost, credit: Post Carbon Institute.

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What Happened to My 13 Billion Barrels?

May 22, 2014 in EIA, EV News, Oil

By Richard Heinberg, Post Carbon Institute

Richard Heinberg Photo courtesy of Post Carbon Institute

Richard Heinberg
Photo courtesy of Post Carbon Institute

In 2011, the Energy Information Administration (EIA) of the US Department of Energy commissioned INTEK Inc., a Virginia-based consulting firm, to estimate how much oil might be recoverable from California’s vast Monterey Shale formation. Production of tight oil was soaring in North Dakota and Texas, and small, risk-friendly drilling companies were making salivating noises (within earshot of potential investors) about the potential for an even bigger bonanza in the Golden State.

INTEK obliged with a somewhat opaque report (apparently based on oil company investor presentations) suggesting that the Monterey might yield 15.4 billion barrels—64 percent of the total estimated tight oil reserves of the lower 48 states. The EIA published this number as its own, and the University of Southern California then went on to use the 15.4 billion barrel figure as the basis for an economic study, claiming that California could look forward to 2.8 million additional jobs by 2020 and $24.6 billion per year in additional tax revenues if the Monterey reserves were “developed” (i.e., liquidated as quickly as possible).

Image courtesy of Post Carbon Institute

Image courtesy of Post Carbon Institute

We at Post Carbon Institute took a skeptical view of both the EIA/INTEK and USC reports. In 2013, PCI Fellow David Hughes produced an in-depth study (and a report co-published by PCI and Physicians Scientists & Engineers for Healthy Energy) that examined the geology of the Monterey Shale and the status of current oil production projects there. Hughes found that the Monterey differs in several key respects from tight oil deposits in North Dakota and Texas, and that currently producing hydrofractured wells in the formation show much lower productivity than assumed in the EIA/INTEK report. Hughes concluded that “Californians would be well advised to avoid thinking of the Monterey Shale as a panacea for the State’s economic and energy concerns.”

On May 21 the Los Angeles Times reported that “Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national ‘black gold mine’ of petroleum.” The EIA had already downgraded its technically recoverable reserves estimate for the Monterey from 15.4 to 13.7 billion barrels; now it was reducing the number to a paltry 0.6 billion barrels.

What happened to all those billions of barrels of oil? Of course, the resource is still there. The Los Angeles Times article quotes Tupper Hull, spokesman for the Western States Petroleum Association, as responding, “We have a lot of confidence in the intelligence and skill of our engineers and geologists to find ways to adapt. . . . As the technologies change, the production rates could also change dramatically.”

However, technology comes with costs. The current tight oil boom in North Dakota and Texas would not have happened absent the context of historically high oil prices. But even with oil at $100 per barrel, the EIA now thinks only a very small portion of the Monterey formation’s oil resources can be produced profitably. Maybe with oil at $150 or $200 per barrel that percentage would change. But how high an oil price can the American economy bear before it falls into recession? Evidence suggests that $100 per barrel oil is already acting as a brake on economic expansion.

The new EIA estimate is a welcome note of realism in a California energy discussion that had veered into hyperbole and wishful thinking. Can we now begin a reasoned discussion about our energy future? It’s late in the game, but better late than never.

This article is a repost, credit: Post Carbon Institute.

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Export Stupidity, By Richard Heinberg, Post Carbon Institute

March 27, 2014 in EV News, Oil

Richard Heinberg Photo courtesy of Post Carbon Institute

Richard Heinberg
Photo courtesy of Post Carbon Institute

Congress is holding hearings this week on the possible lifting of a US oil export ban instituted in the 1970s to promote national energy self-sufficiency and has invited a number of “experts” with dubious ties to the oil and gas industry to explain to them why it’s such a good idea. Following Russia’s near-annexation of Crimea, American politicians are intent on undercutting Russian president Vladimir Putin’s greatest geopolitical asset—his country’s oil and natural gas exports. If the US could supply Europe with large amounts of fuel, that would reduce the Continent’s dependency on Russia while depriving Putin of needed revenues.

Lawmakers from both parties are also using the hearings to urge the Obama administration to speed up natural gas exports as a hedge against the threat of a conceivable Russian cutoff of gas supplies to Ukraine and other countries. Four Central European nations—Hungary, Poland, Slovakia and the Czech Republic—have already made formal requests for US exports.

There’s just one tiny problem with all these fervent desires and good intentions. On a net basis, the US has no oil or gas to export.

Sure, our nation produces a lot of these fuels, and the amounts have been growing in recent years. But the United States remains a net importer of both oil and natural gas. Let me repeat and emphasize that: the United States remains a net importer of both oil and natural gas.

In 2013, the US produced about 7.5 million barrels of crude oil per day, but imported just about as much. While the nation’s rate of domestic production is currently surging, it will likely top out at about 1.5 mb/d above current rates and then start to decline. The likely speed of the decline is a matter of some controversy: the Energy Information Administration forecasts a long plateau and slow taper, while our in-house analysis at Post Carbon Institute indicates a sharper drop-off. Either way, it is extremely unlikely that America will ever again be a net exporter of oil.

Last year the United States produced 24.28 trillion cubic feet of natural gas, an all-time record amount. However, we still imported 2.5 tcf of gas (11 percent of total consumption). The trend in US gas production rates has leveled off and (according to our in-house analysis) is likely to begin declining in just the next few years, just about the time new liquefied natural gas (LNG) export terminals will be ready for business.

To be sure, extraordinary claims have been made for America’s oil and gas potential, now that the industry has unleashed fracking and horizontal drilling technologies on shale formations in Texas, North Dakota, Pennsylvania, and elsewhere. But, as I argued in my book Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future, those claims are wildly overblown. A far more accurate assessment of the industry’s prospects comes from its own premiere publication, Oil & Gas Journal, which reports asset write-downs approaching $35 billion among 15 of the main shale operators. The Journal cites “. . . recent analysis by Energy Aspects, a commodity research consultancy, showing 6 years of progressively worsening financial performance by 35 independent companies focused on shale gas and tight oil plays in the US.” This worsening financial performance comes despite production growth and a general shift of drilling activity away from dry gas and toward higher-profit liquids (crude and NGLs) since 2010.

Oil & Gas Journal cites analysis by Ivan Sandrea, an OIES research associate and senior partner of Ernst & Young London, suggesting that, “Unless financial performances improve, capital markets won’t support the continuous drilling needed to sustain production from unconventional resource plays.” Sandrea forecasts that “Parts of the industry will have to restructure and focus more rapidly on the most commercially sustainable areas of the plays, perhaps about 40% of the current acreage and resource estimates. . . .”

So, just what are we supposed to export?

In fact, talk of oil and gas exports is being driven not by excess production capacity or geopolitical acumen, but rather by old-fashioned profit seeking. The US oil industry currently is frustrated by a mismatch between the petroleum grades increasingly being produced domestically (light crude from the Bakken and Eagle Ford plays) and the grades our refineries are tweaked to accept (heavier grades of crude, for example those from Canada’s tar sands). A lifting of legal constraints on exporting US oil would help refiners and producers sort out this temporary mismatch.

Meanwhile the American natural gas industry is suffering under low domestic gas prices, a problem for which the industry has only itself to blame. During the last few years, shale gas companies over-produced in order to upgrade the value of their assets (millions of acres of drilling leases), thereby driving prices down below actual costs of production. If some US natural gas could be exported via LNG terminals now under construction, that would tend to raise domestic prices. However, this would also undercut promises of continuing low prices that the industry has repeatedly made—promises that have lured the chemicals industry to rebuild domestic production facilities and that have enticed electric utilities to switch from burning coal to natural gas—but hey, those were just words.

This is what all the oil and gas export fuss is really about. As for the notion of making Vladimir Putin quake in his boots in fear of a tsunami of American crude and natural gas—forget it. Putin is indeed probably quaking right now, from laughter.

Perhaps America should instead consider exporting stupidity. It’s a commodity we seem to have in surplus.

This article is a repost, credit: Richard Heinberg, Post Carbon Institute.

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The Peak Oil Crisis: A Review of Richard Heinberg’s ‘Snake Oil’

August 23, 2013 in EV News, Oil

By Tom Whipple, Post Carbon Institute

Image courtesy of Post Carbon Institute

Image courtesy of Post Carbon Institute

Richard Heinberg has been following and writing about peak oil for a long time. In the last decade, he has published 10 books on peak oil and related resource depletion topics as well as given some 500 lectures warning about the hard times ahead. The subtitle of his recent book, “How Fracking’s False Promise of Plenty Imperils Our Future” captures the theme of Snake Oil in a lucid phrase. This is an angry book, for it is intended as a rejoinder to the avalanche of half-truths and optimistic estimates concerning the future of our energy resources which have filled our media in the last few years.

As the evidence accumulates that man is destroying the atmosphere by ever-increasing carbon emissions and bankrupting his economic systems by continued reliance on increasingly expensive oil, realistic appraisals of our true energy situation are being lost. In recent years, numerous institutions which should know better, major universities, and widely respected publications have joined the chorus talking about “energy independence for America” and a century of oil and gas just waiting to be tapped.

Snake Oil starts with a review of the fundamentals that most “peakists” have come to understand and accept. Peak oil is about the rate of supply, not estimated size of underground resources. There is a lot of oil and gas still in the ground, but only a small percentage will ever be extracted at prices people can afford to pay. Production from existing oil fields is declining by 4-5 percent annually and demand is increasing by about a million barrels per day (b/d) each year. To keep the lid on costs, the world will have to come up with 5 million b/d of new oil production each year for the foreseeable future.

It takes energy to produce energy, so when you spend more than you get back it is time to quit extracting. As the Middle East gets hotter, both physically and politically, oil exporters are consuming an increasing share of their own production to keep their people cool and off the streets. These and other underlying realities are largely ignored by those enamored with recent (admittedly impressive) gains in US oil production and optimistic talk of billions and sometimes trillions of barrels of oil waiting to be produced.

Heinberg acknowledges that the fracking boom has produced some spectacular numbers, with US oil production increasing by 766,000 barrels b/d in 2012 and likely to do about the same this year if current trends continue. The problem, of course, comes from projecting this spectacular growth into the more distant future. There are simply too many factors, especially rapid decline rates and lower initial production, rates as the best drilling locations are used up.

The heart of Snake Oil is directed at countering the optimistic projections for production of oil and gas by hydraulic fracturing (fracking). Fracked oil and gas production is simply another albeit expensive, resource that will climb to a peak and then deplete away just like all the others.

Using the work done by two independent geologists—Arthur Berman of Texas and David Hughes of Canada, who have extensively analyzed the production of fracked oil wells across the US—Heinberg and his associates conclude that “shale gas and oil wells have proven to deplete quickly, the best fields have already been tapped, and no major new field discoveries are expected; thus with average per-well productivity declining and ever-more wells (and fields) required simply to maintain production, an “exploration treadmill” limits the long-term potential of shale resources”.

With per-well production decline rates of between 81 and 90 percent in the first 24 months, wells must be constantly replaced by new ones just to keep production flat. The higher production gets, the more new replacement wells have to be drilled. Before the end of the decade, this bubble will collapse on its own accord and fracked oil and gas production will begin dropping. As usual there are disputes as to just when this downturn will begin, but the best available analysis suggest that four or five years from now will be the time period when fracked oil peaks in the US and a few years later for gas.

The analysis shows that decades of abundant fracked oil and gas production is simply not in the cards that we see today.

An interesting chapter in the book deals with just who has benefitted from the shale boom. Although thousands of jobs have been created and some landowners have profited handsomely from lending their property for drilling, local governments have yet to fully comprehend the damage that boom towns have done to their communities and that heavy trucks have done to their roads. Service companies that sell equipment performing the actual fracking have done well, the drillers, include large ones such as ExxonMobil, who assume the ultimate risk have been losing money on natural gas and only some are making money on oil due to the high prices.

Heinberg concludes that the real winners, however, are the investment banks that have earned huge fees for raising the money that has fueled the boom.

The book is clearly a contribution to the literature of peak oil for it updates recent developments and does an effective job in separating reality from the hype of the financial media.

Heinberg leave us with two somewhat contradictory thoughts:

  • Hydrocarbons are so abundant that, if we burn a substantial portion of them, we risk a climate catastrophe beyond imagining.
  • There aren’t enough economically accessible, high-quality hydrocarbons to maintain world economic growth for much longer.

Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future is published by Post Carbon Institute

This article is a repost, credit: Tom Whipple, Post Carbon Institute,

Richard Heinberg

July 18, 2013 in EV Star of the Week

Richard Heinberg Photo courtesy of Post Carbon Institute

Richard Heinberg
Photo courtesy of Post Carbon Institute

Peak oil author, speaker and activist, Richard Heinberg is the star of the week.  Mr. Heinberg is the leader of the peak oil movement.  With the price of oil back in the headlines, peak oil will once again be back in the headlines as well.  World leaders may want to reread that peak oil book.

Mr. Heinberg is the senior fellow at the Post Carbon Institute (PCI):  The PCI website lists Mr. Heinberg’s most famous books:

  • The End of Growth: Adapting to our New Economic Reality (June 2011)
  • Blackout: Coal, Climate, and the Last Energy Crisis (2009)
  • Peak Everything: Waking Up to the Century of Declines (2007)
  • The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism and Economic Collapse (2006)
  • Powerdown: Options and Actions for a Post-Carbon World (2004)
  • The Party’s Over: Oil, War and the Fate of Industrial Societies (2003)

This is the PCI mission statement: “Post Carbon Institute provides individuals, communities, businesses, and governments with the resources needed to understand and respond to the interrelated economic, energy, environmental, and equity crises that define the 21st century.  We envision a world of resilient communities and re-localized economies that thrive within ecological bounds.”

 Mr. Heinberg is a great teacher.  Watch the video:

It is time for cities, states and countries to begin the serious transition away from oil.  Peak oil is reality, and we are living it.  The world economy is set on a course to bust, due to the limits of oil supply.  We can plan.  We can change course.  The greatest waste of oil resources is in the use of petroleum to power vehicles.  There are alternatives.

Video courtesy of Post Carbon Institute

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Alaska’s Coal: Flashpoint for Coming Climate Battles, By Richard Heinberg, Post Carbon Institute

July 3, 2013 in Climate Change, Environment, EV News

If there is any place on planet Earth where we should dig in our heels against expanded coal mining, it is surely Alaska. Imagine the environmental travesty of ships by the hundreds laden with coal dug from pristine Arctic tundra, bound for power plants in smog-choked Chinese cities. It’s not happening yet, but there are plenty of people working to make it so.

Source: EIA

Source: EIA

Here’s the back-story.

Coal is the most carbon-intensive of the fossil fuels, and our planet has enormous amounts of it. However, as I explained in my 2009 book Blackout, the vast majority of the world’s coal will never be mined for purely practical reasons: it’s too deeply buried, it’s in inconvenient places (under seas or cities), the seams are too thin, or the quality of the resource is too poor to justify the effort.

The world’s nations have been digging up coal for over two centuries now, and have naturally picked the low-hanging fruit first. Most of Europe’s minable coal is gone; meanwhile the United States has largely depleted its best anthracite and eastern bituminous reserves and is relying on ever-lower-grade western bituminous and sub-bituminous coals.

China is currently burning half the world’s mined coal, depleting domestic reserves so quickly that a peak and decline in extraction rates is likely before the end of this decade. China and India are both heavily reliant on coal as their main energy source, and both are set to begin importi increasing amounts. the entire sea-borne international coal trade currently amounts to roughly a billion tons; in comparison, China burns 4.1 billion tons, almost all of it from domestic mines. By one estimate, China’s coal demand is likely to reach 7 billion tons per year by 2030. As both China’s economy and its appetite for coal grow, there is potential for the international coal trade to double, triple, or even quadruple.

Predictably, nations capable of exporting coal are eyeing China and India as huge new markets. Indonesia is China’s biggest existing supplier, while Australia is the world’s largest exporter overall.

Could American mining companies cash in on Asia’s coal addiction? That would seem to make little sense if, indeed, US reserves are depleting rapidly. But the coal industry’s priorities do not include line items like “ensuring a sound long-term national energy policy” or “preventing climate catastrophe.” Instead, decisions are made on the basis of simple corporate profit seeking. Low natural gas prices (caused by a temporary glut of shale gas production) have led power utilities across the United States to substitute gas for coal, thereby reducing coal demand. In addition, President Obama has just tasked the EPA with developing carbon regulations for US power plants—and the result will almost certainly be a decline in coal consumption. Suddenly US coal companies are capable of mining much more than they can sell domestically.

The obvious solution to this surplus of coal (from a business point of view) is to export it. Keeping the stuff in the ground might make more sense if the fate of future generations were top priority, but doing so wouldn’t help the balance sheets of companies that own mineral rights and mining equipment. And so plans are being drawn for coal export terminals in Oregon and Washington, so that Wyoming coal can find its way to Shanghai, Seoul, or Bangalore.

Coal Burning Power Plant, USA Photo courtesy of U.S. Geological Survey

Coal Burning Power Plant, USA
Photo courtesy of U.S. Geological Survey

Everyone who’s in the know about America’s energy prospects realizes that this is a short-term gambit aimed merely to raise domestic coal prices over the next few years. As a US Geological Survey study has shown, Wyoming’s coal production rates cannot be maintained at current levels much longer. Coal export terminals in Cherry Point and Longview in Washington, and Boardman in Oregon, if they’re built, will have only a brief period of usefulness—as will the LNG terminals being planned to export America’s shale gas.

This is where Alaska comes in.

We’ve depleted most of the planet; what’s left?  Of all countries, the United States has the most coal, and the majority of America’s coal resources are in Alaska.

In order to understand the significance of that statement it is essential first to grasp the difference between resources and reserves: the former refers to the total amount of coal present (as estimated using standard techniques of measurement and inference), while the latter describes the portion of the resource base that could profitably be extracted with current technology. Reserves are always a fraction of resources. While Alaska’s coal resources are immense, reserves have been assessed to be very small due to the fact that little coal is currently being mined there, and the logistical problems in expanding mining to new areas would be daunting.

The Arctic or North Slope region of the state boasts the most coal resources (the North Slope was the site of Alaska’s oil boom back in the 1980s, and, though oil production there has waned substantially, oil revenues still fund the state’s economy). BHP Billiton has coal exploration leases in the North Slope covering 1.75 million acres, though active exploration ceased a few years ago. Three other companies (Beischer and Associates, Xplore LLC, and St. George Ventures) are seeking access to 116,000 acres of coal deposits on state land in the Arctic.

Anchorage, Alaska’s largest city, is situated at the end of Cook Inlet; geologists estimate that up to 1.5 trillion tons of coal may be located under the waters of the Inlet. Additional coal is to be found on the west side of the Inlet, and still more on the Kenai Peninsula. Several mines have been proposed for these latter sites, though none has yet applied for a permit.

Smaller deposits are located in central Alaska and Matanuska-Susitna Valley.

Currently the Usibelli mine, located in the mountains of the Alaska Range roughly 300 miles north of Anchorage, is the state’s only active coalmine; it exports about a million tons a year. The coal moves by rail to the Port of Seward (roughly a hundred miles east of Cook Inlet and south of Anchorage), the majority of it bound for South Korea. But this is a proverbial drop in the bucket in terms of the state’s export potential.

Altogether, Alaska claims some 5.1 trillion tons of coal resources—five times the coal resources of China. In contrast, Alaska’s coal reserves currently amount to less than 3 billion tons, or just nine month’s worth of China’s current total consumption.

Soaring coal prices (driven by Asian demand) could drive that latter figure far, far higher.

It won’t be easy

Further exploration could transform more of Alaska’s coal resources into reserves, and many of the logistical hurdles that have prevented development of mining infrastructure in the past are capable of being overcome, at least in principle. Much of Alaska’s coal can be surface-mined, which is cheaper—though usually more environmentally destructive—than underground mining. Most of it is also located close to the sea, and Cook Inlet is a convenient site for future coal export terminals. Moreover, reduced sea ice (thanks to climate change) could make shipping from the North Slope practical.

Still, remaining obstacles are far from trivial, and substantial investments would be required. The North Slope is rugged, extremely remote territory, and workers can be lured there only by high wages. The abundant coal beneath Cook Inlet is likely to be exploited only by way of underground gasification, a technology that has remained in its experimental stage for decades. Subtract the North Slope and Cook Inlet subsea resources from Alaska’s total, and what remains is a relatively modest potential reserve base.

Potential Asian buyers are so far proving more of a hindrance than a help: most Asian power companies require a demonstrated production capacity of over one million tons per year before issuing a coal export contract, but no one is likely to pony up the investment capital required to start a mining project without an export contract in place. It’s a classic Catch 22.

In sum, it’s entirely possible that logistical and economic barriers will prevent the large-scale expansion of Alaskan coal exports. However, the side of the ledger headed “Why exports might grow anyway” needs only a single entry: “China.” That country has a famous propensity for buying up access to resources across the planet. Half of the oil currently being pumped from war-torn Iraq is Beijing-bound; China also has oil interests in Africa, South America, and Canada.

If China wants Alaska’s coal, what could stand in the way?

Time to say No

Only citizen opposition and government policy are likely to prevent what could otherwise amount to the pointless destruction of millions of acres of wilderness and a dramatic exacerbation of climate change—all for the purpose of short-term, unsustainable economic expansion halfway around the globe. Fortunately most national US environmental organizations have stated their opposition to the extraction and export of Alaska’s coal; the Sierra Club is notable in this regard. Several state and local environmental groups are also engaged in lobbying and protests.

There are many reasons to oppose coal mining in Alaska. Even current rates of mining and exporting coal are environmentally problematic: export facilities in Seward have bathed the surrounding community in coal dust pollution, which has been the focus of lawsuits by Trustees for Alaska, Alaska Community Action on Toxics (ACAT), and the Sierra Club. Aside from its impact on human lungs, coal dust darkens snow and ice. Mining and exports at 20, 50, or 100 times the present scale would spread coal dust far and wide throughout the state, exacerbating the Big Melt that’s already causing the rapid shrinking of Alaska’s glaciers and the disappearance of roads.

Recent years have seen bitter controversy over the prospect of oil drilling in the pristine Alaskan National Wildlife Refuge (ANWR) near the North Slope. Coal mining in adjacent regions would likely be far more destructive than oil and gas exploration. The coal would be surface-mined, entailing massive disruption of landscapes and untold impacts to wildlife.

It’s safe to assume that every increment of expanded mining would lead to a commensurate increase in atmospheric greenhouse gases. In fact, however, exporting coal from Alaska to Asia will have a disproportionately large climate impact due to the combination of additional transportation emissions, less efficient end use, and a lowering of incentives for Asian nations to seek energy alternatives.

The bitter irony for Alaskans would be that the local effects of coal-fueled climate change would be especially severe. Polar regions are warming faster than the rest of the globe, and Alaskans are already dealing with record heat waves, melting tundra, and rapidly changing ecosystems.

Environmental arguments alone often don’t win energy debates. Policy makers and potential investors must be made to understand that exporting coal from Alaska is highly risky from a purely financial perspective. True, coal is the world’s fastest growing energy source—for now. But, as nations begin to put a price on carbon emissions, that is likely to change.

Coal export boosters will likely point to the enormous scale of Alaska’s resources. But given realistic assessments of mining costs, the vast majority of these coal resources are likely to remain just that—resources, not reserves.

Further, export plans assume ever-expanding demand from China. But China’s economy is balanced on a knife-edge. There are good reasons to think that China’s energy demand may not expand in coming years at anything like the pace of the past decade. In that case, investments in Alaskan mining and port infrastructure could be stranded.

Export Alaska’s coal? Somebody’s probably stupid and greedy enough to try. But it’s a very bad idea, and we should say so.

This article is a repost, credit: Post Carbon Institute, Richard Heinberg,