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Re: SC57

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January 02, 2008 09:25PM
http://energybulletin.net/38716.html

What's new at the tar sands?

When the New York Times recently reported on falling exports due to rising consumption in the oil producing nations, the paper of record decreed that it is now time for Americans to pin their hopes on Alberta's tar sands. "More likely, experts say, [falling exports] will mean big market shifts, with the number of exporting countries shrinking and unconventional sources like Canadian tar sands becoming more important, especially for the United States." It behooves us to keep track of what's going on at the tar sands in so far as the "official" story now states that well-being of the world's most voracious oil consumer depends on steadily rising synthetic crude output. A close look reveals that all is not well along the Athabasca River............

.............Hughes' presentation at ASPO-USA's Houston conference describes Canada's "exploration treadmill" in which more and more drilling has found less and less gas (see the slides on pp. 9-13). As in any Red Queen problem, you must run faster and faster just to stay in place. If gas drilling decreases, production levels will eventually plummet as existing gas wells become depleted. Once gas production takes a tumble, it is likely that output will never again reach the bumpy plateau level of about 17 billion cubic feet/day that was sustained from 2003 until the beginning of 2007.

Lower natural gas production over time in the WCSB will constrain production at the oil sands unless Canada decreases exports to the United States, thus freeing up more gas for mining and SAGD extraction. The NEB's announcement reveals just how absurd the situation has become. "Another contributing factor [to lowered drilling rates] is investment in oil and oil sands development, which competes for investment capital with natural gas drilling."

Increased investment in the tar sands is hampering investment in the natural gas upon which production at the tar sands depends! To make matters worse, decreased exports to the United States would result in less revenue available for natural gas drilling, which would lead to lower production rates ... and so on.

Additional natural gas for powering tar sands production in the future could arrive via the proposed MacKenzie pipeline, which would carry the gas to Alberta from the Northwest Territories.
The Mackenzie line could deliver as much as 1.9 billion cubic feet of gas a day from fields in the Mackenzie Delta, on the Beaufort Sea north of the Arctic Circle, to southern markets in Alberta, the rest of Canada and the United States...

Estimated costs for the line have more than doubled since 2004, when its backers assumed it could be built for C$7.5 billion. At C$16.2 billion, Imperial has said the line may be too expensive to be profitable and has looked for government concessions that could reduce risk and financing costs and boost returns.
The contentious environmental assessment for the pipeline has been ongoing for over four years now. Combined with the soaring cost estimates, the environmental concerns make the MacKenzie more like a pipe dream as things stand now.

Production growth at the tar sands slowed considerably in 2007. It is hard to avoid the conclusion that natural gas availability at the tar sands is a disaster waiting to happen. Investment continues to pour in, but it seems that few analysts or reporters have taken a hard look at future tar sands production in light of declining natural gas production in the WCBS. Alternative energy sources such a nuclear or bitumen gasification are a long way off. Look for this emerging story to appear in press accounts within the next few years. Production of synthetic crude at the tar sands is not likely to provide the much longed for salvation that will keep American drivers on the road...............

Bush said that Ethanol and the Canadian Tar Sands would save our US Happy Motoring way of life. He was wrong on both counts.
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