Fossil Fuel Resources and Uses

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Today's enormous energy demands are mainly fulfilled by the use of fossil fuels. In 2000, they contributed to 85% ofthe energy consumption in the United States, and to 86% worldwide. The fossil fuels used are all different forms of hydrocarbons: coal, oil, and natural gas, all differing in their hydrogen to carbon ratio. To liberate their energy content and to power our electric plants, heat our houses, and to propel our cars and airplanes, the fuels must be burned, forming CO2 and water. Consequently, they are non-renewable. This means that on the human time-scale they cannot be naturally regenerated and are only available in a finite amount on Earth. The recurring question is: how much of these reserves are still available? Most estimates put our overall worldwide fossil fuel reserves as lasting not more than 200 to 300 years, of which oil and gas would last for less than a century. These forecasts however, are based on our present state of knowledge. The dynamic nature of the discovery and consumption rates of fossil fuels makes it difficult to provide any definite estimate. In fact, estimates have changed over the years, as new large oil deposits have been found, although the probability of finding new oil deposits is diminishing. At the same time, consumption and future needs are growing significantly. As our readily recoverable resources are finite, it is certain that we will face a real and unavoidable major problem.

In order to better understand how the available amount of supply of a given energy is determined, the notions of reserve and resource must be defined. In geological terms, and applied to fossil fuels, the reserve is the amount of material that can be recovered economically with known technology. A resource is the entire amount of the material known or estimated to exist, regardless of the cost or technological development needed to extract it. The amounts of energy contained in these categories change over time. Continued exploration and the discovery of new energy fields or advances in technology could transfer an energy source from the resource to the reserve category. The criteria of profitability can also change as market conditions change. This is especially well demonstrated in the case of oil price increases. Much oil that was formerly considered as "unrecoverable" because of high extraction costs can be profitably recovered when the price goes up and remains above a certain level and thus becomes categorized as "reserve".

Based on the foregoing, resource exhaustion is rather a question of unacceptable costs than necessarily actual physical depletion. It is also important to note that the reported reserves may vary greatly depending on the country and the prevailing political and economical conditions. The best example that can be given are the huge and abrupt reported increases in oil reserves in the late 1980s for several OPEC nations [13]. This occurred almost overnight, and was not the result of any major oil discovery at that particular time. Until then, OPEC assigned a share of the oil market based on each country's annual production capacity. However, during the 1980s OPEC changed the rules to also take into account the oil reserves of each country, leading most of them to promptly increase their reserve estimate in order to obtain a larger share of the market. On the other hand, the former Soviet Union used to publish wildly optimistic estimates of their reserves, probably to impress or mislead its cold war adversaries. Major oil companies also tended to exaggerate their reserves. Much re-evaluation is consequently taking place on a regular basis.

Coal and gas - due to their different availability and utility - have different markets, and their reserves also vary accordingly.

Historically, coal was the first fossil fuel to be used on a massive scale, and still represents today 23% of our primary energy source worldwide [14] (Fig. 4.1). In most industrialized countries coal has been replaced by oil, gas or electricity in household uses. Electricity generation is the one area where coal still plays a major role as an energy source in the industrialized world. It is the premier fuel, its share having remained almost unchanged for the past four decades. Worldwide, almost 40% of electric power is generated using more than 60% of

Coal

Coal 23,5%

Other

Combustible Renewables & Waste 10,9%

Nuclear

Coal 23,5%

Other

Combustible Renewables & Waste 10,9%

Hydro 2,2%

Nuclear

Natural gas

Total 10,230 Mtoe

Figure 4.1 Total world primary energy supply (TPES).

the global coal production. Many countries are heavily dependent on coal for electricity production, including Poland (95%), South Africa (93%), Australia (77%), India (78%), and China (76%) [15]. In the coal-rich United States, 92% of the domestic coal production is used to generate 51% of the country's electricity needs in giant coal-burning power-plants [16]. The heat created by coal combustion is used to vaporize water which, under high pressure and temperature, drives turbines connected to generators, the modern steam engines. Beside steam generation for electricity, coal is used mainly for industrial applications especially in steel and cement manufacturing.

In 2004, the world coal production (hard coal and brown coal) amounted to 5.5 billion tonnes, China being the main producer with almost 2 billion tons, representing about 35% of global production, followed at some distance by United States, but far ahead of India, Australia, and others [17]. The largest future increase in coal production will come from increasing electricity demand in China, India, and other developing countries in Asia.

Our reserves of coal are still large and geographically widely dispersed. Economically recoverable proven reserves are close to one trillion tons, representing about 170 years of supply at the current rate of consumption. The largest deposits are concentrated in the United States (27% of the proven reserves), Russia (17%), China (13%), India (10%) and Australia (9%) [17] (Fig. 4.2). The amount of coal in the world is so huge that even nations with a small percentage of the proven reserves can be major coal exporters. This includes South Africa, Indonesia, Canada, and Poland. The global coal resources are estimated at more than 6.2 trillion tons [4] (Fig. 4.3), but given the size of already-known reserves there is for now, little incentive to engage in extensive exploration to find new exploitable reserves.

The quality of coal and the geological characteristics of coal deposits have as much importance as the actual size of a country's reserves. Quality of coal can vary widely from one region to another. The classification depends mainly on caloric value, carbon and water content, which itself depends on the degree of maturity of a given coal deposit. Initially, peat (the precursor of coal) is converted into lignite or brown coal - both coal-types with low organic maturity. With exposure to high pressure and temperatures over millions of years, lignite is progressively transformed into sub-bituminous coals. Lignite and sub-bituminous coal are lower grades of coals which contain higher concentration of water. They are softer, friable materials and have a low energy content, between 5700 kcal kg-1 and 4165 kcal kg-1 for sub-bituminous coal, and less for lignite. They burn with smoky flames at a lower temperature. As the process of maturation continues, these coals become harder, forming bituminous or hard coal. Under the right conditions, further increase in maturity can lead to the formation of anthracite, the rarest and most desirable form of coal, representing less than 1% of the known coal reserves. Anthracite and bituminous coal, the highest grades of coals, have the lowest water content. They burn at high temperatures with no or little smoke and ash formation, have a high caloric value (>5700 kcal kg-1), and are suited for industrial coke production.

Figure 4.2 World coal production in 2004. Source: BP Statistical Review of World Energy 2005 and IEA coal information 2005.
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Figure 4.3 Proven coal reserves distribution. Source: BP Statistical Review of World Energy 2005.

Beside the caloric value and water content, the amount of impurities such as sulfur plays an increasingly important role as environmental regulations become more stringent. In the United States for example, many electricity generators switched to lower grade sub-bituminous coal from the Rocky mountains (which contains up to 85% less sulfur than higher-grade bituminous deposits in Eastern States) to reduce acid rain-inducing SO2 emissions and comply with the new environmental laws [16]. Because coal consumption (in tonnes) per kilowatt-hour generated is higher for sub-bituminous than for bituminous coal, the shift to Western States coal is projected to increase the tonnage consumed per kilowatt-hour of electricity generation. Despite this drawback, and the fact that coal must be transported over longer distances, the switch was also made easier because of the much higher productivity and low cost of coal extraction in Western coal mines, which are operated as open-pit surface mines as compared to underground mining in the Eastern United States. Surface mining, which accounted in 2000 for 65% of the coal extracted in United States and about one-third in the rest of the world, is also safer (in China alone, yearly, thousands of miners perish in coal mine accidents). However, it is only economical when the coal seam is near to the surface and the amount of overburden that must be removed is limited. A majority of the coal (especially hard coal) reserves are too deep and must be mined underground. Increasingly, highly mechanized processes called "room-and-pillar" and "longwall" mining are used, which have nonetheless a lower productivity than surface mining. Worldwide, about two-thirds of the coal is still extracted from underground mines. Coal mining is a dangerous and physically demanding occupation which also involves many health hazards. The socio-economics of underground coal mining are also a major factor in how much coal resources will be indeed recoverable in the future.

Once the coal has been extracted from the mine, it must be moved to the power plant or other location of use. Because it is a bulky commodity, it is expensive to transport. The world coal industry is dominated by production for local use; more than 60% of the coal used for power generation is consumed within 50 km of the mining site. This is made possible by a widespread geographical distribution of coal. Currently, only about 12% of coal is traded internationally.

During the past 20 years, coal prices have declined steadily as productivity for coal extraction and transportation has greatly improved. The nominal price for coal used in power plants has fallen from $50 per ton in 1980 to less than $35 in 2000 [5]. At the same time, environmental consideration for increasingly "clean" coal can become expensive for the end-user. Due to the large reserves and large number of producing countries the coal market will, however, remain very competitive.

Though coal is generally seen as a major fossil-fuel source for the long term, its use presents significantly greater environmental challenges than oil or gas. Upon combustion, it produces significant levels of pollutants such as sulfur dioxide, nitrogen oxides and particulates, as well as heavy metals such as mercury, arsenic, lead, and even uranium. This is the reason why coal bears the image of being a "dirty" and polluting fuel, bringing to mind images of black smoke rising from chimney stacks. Today however, this view is slowly changing, and with proper processes and treatments, coal can be burned quite cleanly and efficiently. Problems arising from emissions were initially alleviated by building tall chimney stacks to improve dispersion following the old diction: "The solution for pollution is dilution". This is a view of the past. Technologies to reduce to acceptable levels or practically eliminate emissions - especially particulates responsible for smoke and dust as well as SO2 and NOx inducing acid rains - are now commercially available and progressively applied, mainly in developed countries, and this has led to a dramatic decrease in pollution levels.

The emission that is now at the center of the concerns is CO2, because of its potential as a greenhouse gas. Compared to oil and gas, coal produces the highest amount of CO2 for the unit of energy generated. To reduce this emission, efforts are under way to improve the thermal efficiency of coal-fueled power-plants (vide supra). Ways to capture and sequester CO2 from coal-burning power-plants and other industrial sources in subterranean cavities, various geological formation or in the seas, are also being developed. As discussed later (Chapters 10-14) instead of sequestering, chemical recycling of CO2 to methanol offers a new feasible, long-range solution. This also provides economic value to the recycled carbon source for fuels and feedstocks. Complying with environmental and health regulations is necessary, but should not increase substantially the overall cost of power generation from coal to the point that it becomes prohibitive and uncompetitive in the market place.

Petroleum oil-derived gasoline and diesel fuel are the fossil fuel products most widely used in our daily lives, and which we are most familiar with. Oil production increased rapidly after World War II, making it the dominant energy source over the past half-century (Fig. 4.4). Close to 30 billion barrels of oil were produced in 2004, representing 35% of the world's total primary energy supply (TPES) [14] -far more than coal (23%) and natural gas (21%). Renewable energy sources accounted for about 14% of the global energy supply, with nuclear energy providing the remaining 7%. Today, the world is using a staggering 82 million barrels of oil every day, representing the content of more than 50 giant supertankers each the length of three football fields. In a span of two days, we consume today as much oil as the yearly oil production in 1900. The U.S. itself consumes about 25% of that oil. The amount of crude oil produced has increased from 58 to 80 million barrels a day between 1973 and 2002. However, the share of oil in the TPES after the two oil crises of the 1970s has decreased from 45% to 35%, mainly in favor of natural gas and nuclear power. Regardless, we are still extremely dependent on oil as the economic prosperity of our modern society is closely related to the availability of abundant and relatively cheap oil. Oil - and all products derived from it - are also essential for our daily lives. Worldwide, about 6% of oil is used as the feedstock for the manufacture of chemicals, dyes, pharmaceuticals, elasto-

Figure 4.4 Oil production. Based on data from BP Statistical Review of World Energy 2005.

mers, paints and a multitude of other products. These petrochemicals provide many of the necessities of modern life to which we became so accustomed that we do not even notice our increasing dependence on them. The consumption of petrochemicals is still growing at a significant pace. The bulk amount of oil however, is used as fuel for heating, generation of electricity, industrial uses and predominantly as transportation fuels (Fig. 4.5). Transportation, which accounts for about two-thirds of the oil consumed [18] in the United States and almost 60% worldwide [14], is by far the most oil-dependent sector in our modern economy. Automobiles, trucks, buses, locomotives, agricultural machinery, and ships all rely on gasoline or diesel fuel. Air transport would be unthinkable without refined jet and aviation fuels. More than 95% of the energy used in transportation comes from oil. Its use in the transportation sector is growing inexorably, with little immediate prospect for short-term alternatives. In the developed countries, the transportation sector accounts for virtually all new growth for oil demand, while power generation and domestic and industrial uses are being switched increasingly to natural gas and to some degree to alternative fuels. Global demand for oil is currently rising at about 2% per year. From 77 mb per day in 2000, forecasts predict that the world oil demand in 2010 will be 96 Mb per day, reaching 115 Mb per day in 2020 [5]. If these estimates are correct, some 700 billion barrels of oil would be necessary from 2000 to 2020 to satisfy the growing demand. Considering that a cumulative total of about 900 billion barrels have been produced between the beginning of oil exploitation in the 1850s and today, this is a staggering amount. The question that must be raised is: will we have enough resources to cover the demand, and from where do we obtain all this oil?

Industry 20,1%

Non-energy use

Other sectors 16,5%

Transport

Industry 20,1%

Non-energy use

Figure 4.5 World oil consumption by sector (2002). (Source: Key world energy statistics 2004.)

Other sectors 16,5%

Transport

The good news is that there are still sufficient oil reserves to satisfy the demand, at least during the next few decades. However, most of this oil will come from the politically unstable Middle-East and other areas. There is considerable uncertainty about the amount of oil that exists worldwide and the proportion of this resource that can be economically recovered. Numerous estimates made by various assessors such as the World Energy council, IHS Energy, Organization of Petroleum Exporting Countries (OPEC), United States Geological Survey (USGS), Oil and Gas Journal and others reported current proven oil reserves ranging from 950 to 1100 billion barrels [5]. Current global oil production is about 30 billion barrels per year, so known reserves in 2004 represent only about 30 to 40 year supply. In practice, there has been little decline in estimated reserves, with most assessments showing indeed increases. Proven reserves, instead of being depleted, as a matter of fact, have almost doubled during the past 40 years. This is due to the fact that the nature of oil reserves is very dynamic, depending on many factors. New oil fields were discovered, increasing the amount of proven oil reserves, while rising oil prices make formerly uneconomical oil sources economical. Technological advances can increase the amount of economically recoverable oil. On the other hand, with a growing world population, which has now exceeded 6 billion and is still growing (it may reach 8-10 billion by the mid-21st century), and increasing standards of living around worldwide, the demand for oil will continue to expand. Oil will not be exhausted overnight, but market forces will inevitably drive prices up as demand will surpass supply, creating a true and lasting oil crisis.

In recent history, there have been three distinct periods in oil supply versus demand involving oil-producing and oil-consuming countries. The period from 1960 to 1973 was one of rapid economic growth and burgeoning oil demand. Wealth in developed countries grew by 90%, energy demand by a similar amount, and oil demand by 120%. The transportation sector boomed and oil also cut deeply into coal's markets as a heating fuel. Worldwide, oil demand rose from some 20 million barrels per day to almost 60 million barrels per day. Many developed countries produced little primary energy or had static or declining production. They became heavily dependent on imports mainly from OPEC countries, especially from the politically unstable Middle East.

The oil price shock resulting from the 1973 crisis reinforced by the Iran/Iraq war of the late 1970s, had profound effects. It abruptly ended a period of extremely rapid growth and prosperity. The world was stricken by high inflation, trade and payment imbalances, high unemployment, weak business climate, and low consumer confidence. The 1973 crisis introduced a new period of oil market development, which lasted until the mid-1980s. It was characterized by vigorous efforts by the importing countries to reduce their dependence on oil. During much of this period these efforts were governed by high oil prices. In the first half of the 1980s, however, prices responded to the weakening market as oil supplies increased and demand continued to reflect the oil-savings measures achieved since the mid-1970s. New oil fields also went into production in Alaska and under the North Sea, weakening the monopoly of the OPEC cartel. Nuclear energy, natural gas and coal replaced much oil in electricity generation and energy-savings measures were widely introduced.

The mid-1980s brought an end to the decrease of oil imports. Until the end of the 1990s, with low oil prices for much of the period and steady economic growth, oil consumption has risen again and net imports of oil-importing countries are now much higher than they were in the early 1970. The bulk of additional imports continues to come from the Middle-East, Russia, and other producers.

Oil prices increased sharply in recent years, reaching the historical height of more than $70 per barrel in 2005, fluctuating presently in the range of $50 to $75. It can, however, in the foreseeable future reach even much higher levels. While experiencing temporary dips, with diminishing resources and increasing demand, the future trend seems inevitable. Several factors, including increased oil consumption in Asia, especially from the fast-growing economies of China and India, reduced spare capacity in producing countries as well as political uncertainties threatening oil production in the Middle-East, Venezuela, Nigeria and others, have contributed to this and will continue to affect the market significantly.

As can be seen in every market, the supply and demand mechanism regulates the price of oil. The supply can be artificially manipulated by decreasing or increasing the oil production and to affect prices (as OPEC does frequently). This has serious consequences on the economies of oil-importing countries, but the process is reversible. It also accelerates the importing countries' efforts to find alternative solutions to the use of oil, which is contrary to the short-term interest of many oil-producing countries. Regardless, the inevitably permanent and irreversible decline in world oil production due to depletion of oil resources will have a lasting and devastating effect on our modern societies for which we must plan and prepare ourselves and find solutions to overcome the problems.

Presently, the Middle-East is the epicenter of many of the "oil battles", because it has the largest oil reserves in the world. Except for Russia, the top five countries in terms of oil reserves are in this region. They are Saudi Arabia, Iraq, Iran, United Arab Emirates, and Kuwait. Although the Middle-East contains about 62% of the world's oil reserves [17], it produces at present only about one-third of the oil. Oil is cheap to extract in the Middle-East, and production costs are among the lowest in the world (i.e., less than $2 per barrel). This compares with a cost of some $8-10 to produce a barrel of oil in the North Sea [5]. Saudi Arabia has the world's largest oil reserves, and is the largest oil producer. Given its proven reserves of some 260 billion barrels, Saudi Arabia could produce 8 million barrels per day for 75 years without the discovery of any additional reserves. The largest oil field ever found is the Ghawar field in Saudi Arabia, which contains about 7% of the known world oil reserves. There are almost 60 oil fields in Saudi Arabia, but oil is being produced from only a few. Together, all of the Saudi oil fields contain about one-fourth of the world's oil reserves. Not only are these oil fields huge, they are also highly productive. Saudi state-controlled Aramco, the world's largest integrated oil company, accounted for 11.7% of the world's oil production in 2000. In contrast, the largest western oil company, ExxonMobil accounted at that time for only 3.4% of world oil production [5]. Having more than half of the world's remaining oil reserves concentrated in a relatively small geographical area in the Middle-East has significant economic and geopolitical consequences (Fig. 4.6). The market share enjoyed by the Middle-Eastern countries is even increasing because fewer significant new oil fields are discovered elsewhere. Some predictions suggest that, by 2010, this region could supply as much as 50% of the world's demand.

The rate of new oil discoveries has dropped mainly because most of the areas of the world have already been explored. From the hot Arabian deserts to the freezing arctic circle and the depth of the seas, exploration has gone to the most re

Middle East, 61.7%

South and Central America

Europe and Eurasia, 1

North America, 5

South and Central America

Europe and Eurasia, 1

North America, 5

Saudi Arabia, 22.1%

United Arab Emirate, 8.2% Others, 2.3%

Saudi Arabia, 22.1%

United Arab Emirate, 8.2% Others, 2.3%

Total: 1189 billion barrels

Figure 4.6 Regional distribution of world oil reserves in 2004. Based on data from BP Statistical Review of World Energy 2005.

mote and inhospitable parts of the world in search of oil. The last major oil discoveries have been in the North Sea and Alaska's North Slope. Today, it seems unlikely that there will be other similar new large oil discoveries. One of the remaining promising regions is the South China Sea which, because of territorial disputes over ownership between several countries, has not been fully explored. However, it seems highly unlikely that it will replicate another Middle-East. The Caspian Sea region has also large reserves, although their amounts may have been overestimated and they are increasingly exploited.

The future way to increase the oil reserves is to use unconventional oil sources which will play an increasingly important role. Oil is considered unconventional if it is not produced from underground hydrocarbon reservoirs by means of production wells, or if it needs additional processing in producing synthetic crude. Unconventional oil sources include: oil shales, heavy oils, tar sands, coal-based liquids, biomass-based oils, processed gas liquid (GTL), and oil obtained from the chemical processing of natural gas.

Tar Sands

Among the unconventional oil sources, recovery of oil from tar sands is being expanded the most rapidly. Tar sands, as the name suggests, are deposits of sands containing a high-sulfur tar known as bitumen or very viscous heavy oils. They are formed when, by erosion, an oil field is brought to the surface and the lighter components evaporate, leaving an almost solid tar behind. Therefore, in a way it can be considered as a "dead" oil field. There are tar sands deposits all around the world, but the larger ones are located in Canada and Venezuela. Canada's Alberta province contains two enormous deposits: Athabaska and Cold Lake (Figs. 4.7 and 4.8). Of the 2.5 trillions barrels of crude bitumen at these locations, about 12% (or 300 billion barrels) is thought to be recoverable. This is an amount comparable to the present proven reserves of Saudi Arabia. In Venezuela, over 1.2 trillion barrels of bitumen is thought to exist in the Orinoco belt and Maracaibo sedimentary basin, of which 270 billion barrels are presumed to be economically recoverable with current technology [5]. The potential for unconventional tar sand oil depends

Druschba Trassen Fotos
Figure 4.8 Suncor oil sand plant in Alberta (Courtesy of Suncor Energy Inc.).

largely on production costs. In order to thermally extract oil from these heavy tars, large amounts of natural gas are needed. In Canada, due to massive investments and technologic innovations, the operating costs (using in-situ recovery) fell from $22 to less than $10 per barrel between 1980 and 2003, making this unconventional oil supply competitive with the conventional oil [2]. In 2004, one million barrels of oil were processed daily in the Athabaska region. With ongoing investments, the production should reach 2 million barrels per day within a decade. Decreasing cheap natural gas resources in that region, however, represent increasing concern.

Oil Shale

If a tar sand deposit can be considered as a "dead" oil field, then oil shale beds can be considered as "unborn" oil fields. Oil shale is a source rock that never sank deep enough for the organic matter to produce petroleum oil. Shale oil indeed neither contains oil nor shale, and the name was probably given in order to attract investments. It contains kerogen, a solid bituminous material that can be used as a substitute for crude oil. When kerogen is heated at high temperature, thermal cracking occurs producing oil which can be refined to petroleum distillates.

In small quantities, oil shale has been extracted for a long time. By the 17th century, oil shales were being exploited in several countries in Europe. In Sweden, oil shales were roasted over wood fires, not to extract the oil but to obtain potassium aluminum sulfate, a salt contained in these deposits and used in tanning leather and for fixing colors in fabrics. During the late 1800s, the same deposits were used to produce hydrocarbons. An oil shale deposit at Autun, France, was exploited as early as 1839. The industrial-scale extraction of oil shale, however, began in Scotland around 1859. As many as 20 oil shale beds were mined at different times and, in 1881, oil shale production had reached 1 million metric tons per year. With the exception of the World War II years, between 1 and 4 million metric tons of oil were mined yearly from 1881 to 1955, when production started to decline and finally ceased in 1962. Other commercial operations exist in Brazil, Estonia, Russia, and China. From the early 1930s, production of oil shale increased until peaking at 46 million metric tons in the early 1980s, with Estonia producing 70% of that oil shale. Production of oil shale subsequently steadily declined to a low of 15 million metric tons in 1999. It was not because of a diminishing supply but rather due to the fact that oil shale could not compete economically with petroleum oil. The world's potential shale oil resources are enormous. Estimated at 2.6 trillion barrels, they have barely been touched. By far the largest known deposit is the Green River oil shale in the Rocky Mountains of the Western United States, that contains a total estimated resource of 1.5 trillion barrels of oil. In Colorado alone, the resource reaches 1 trillion barrels of oil. This represents only those resources that are rich enough in oil and close enough to the surface to be open-pit mined and therefore thought to be economically recoverable. Numerous pilot plants using different extraction technologies have been operated over the past decades in this region by oil companies such as Shell, Exxon, Amoco, Unocal, and Occidental. These projects however, were found to be uneconomical and were terminated. Unocal (now part of Chevron) operated the last large-scale experimental mining facility from 1980 until its closure in 1991, producing 4.5 million barrels of oil from oil shale, and averaging 34 gallons of oil per ton of rock extracted. The future development of the oil shale industry is clearly dependent on the availability and price of petroleum crude oil. When the price of extraction of oil from oil shale will be competitive with the price of oil from conventional sources either by technological improvements or higher oil prices, then shale oil will find a place in the fossil fuel energy market. The present level of oil prices is already prompting a renewed interest in oil shale. In Utah for example, Oil Tech Inc. has recently built a demonstration facility to extract shale oil from underlying deposits, claiming a production cost of less than $20 per barrel [19, 20]. Of course, very significant problems must be overcome, such as the large amounts of heat needed to process the oil shale and the great amounts of expanded shale rock left after extraction.

The highly successful development of the Athabaska tar sand resources of Canada could also serve as a model for the initiation and growth of the shale oil industry especially in the Western United States, as the characteristics and technologies for the exploitation of these two resources are similar.

Natural Gas

Global demand for natural gas has grown much faster than that for oil and coal over the past three decades. In 2004, the World natural gas consumption reached 2.7 trillion cubic meters, representing 21% of the world's total primary energy source (TPES) compared to 23% for coal and 35% for oil (Fig. 4.9). The United States alone accounts for about one-fourth of the global natural gas demand, and is the second largest gas producer after Russia. However, because of its huge demand, the USA is also the largest natural gas importer. The global market for natural gas is expected to continue to expand rapidly due to its still ample availability, cost-competitiveness, and environmental advantages over other fossil fuels. Natural gas is considered as a premium fuel. It has a high caloric value and is clean-burning and relatively easy to handle. For these reasons it is an excellent fuel for domestic use and heating. The bulk increment of natural gas demand will, however, come from new power plants. In the United States, from 2000 to 2002, virtually all the new electricity generating capacity constructed uses natural gas as a fuel. Natural gas has especially become the preferred fuel for the so-called "peak-load" power plants which use combustion turbines to operate the generators, and can be rapidly switched on or off following the vagaries of demand. Given the significant improvement in the efficiency of gas-fired electricity generation, the de facto natural gas consumption in electric plants has however, increased less rapidly than the amount of electricity produced. Beside its flexibility and cleanness, natural gas also has the advantage of adding the smallest amount of CO2 to the atmosphere per unit of released energy. Typical emissions are about 105 kg carbon Gcal-1 for bituminous coal, 80 kg carbon Gcal-1 for refined fuel, and less than 59 kg carbon Gcal-1 for methane (the major component of natural gas). The reason is that methane has a H:C ratio of 4, the highest of all hydrocarbons, and contains only 75% carbon by weight compared to some 85%

Figure 4.9 World natural gas production. Based on data from BP Statistical Review of World Energy 2005.

for crude oil and more than 90% for coal. Considering the growing concerns about global warming, a reduction of CO2 emissions by using natural gas is certainly a step in the right direction. However, one should bear in mind that methane itself is a very potent greenhouse gas, which has a global warming potential which is 23 times higher than CO2 over a 100-year period. Methane accounted for about 20% of the cumulative greenhouse effect from 1750 to 2000, the largest sources of anthropogenic methane being derived from livestock, rice fields, and landfills [21]. Oil and gas production were responsible for some 15% of the emissions, due mainly to leaks during natural gas transport. Pipelines in developed countries do not lose more than 1% of the carried gas. In less-developed countries, however, loses of 5% or more are quite common. With rising natural gas extraction and long-distance transport, these leakage problems should be resolved, not only to reduce the contribution of methane to global warming but also from an economic point of view, to make the best use of this valuable resource.

Gas is an abundant source of energy, with its proven reserves estimated at some 180 trillion cubic meters in 2004 [17] (Fig. 4.10), exceeding the energy content of the world's proven reserves of oil. Despite ever-increasing production, the reserves of natural gas tripled in the past 30 years, because important new fields were discovered in many parts of the world and technological developments allowed existing reserves to be upgraded. At the actual rate of consumption in 2004, these re-

Figure 4.10 World natural gas proven reserves. Based on data from BP Statistical Review of World Energy 2005.

serves would last close to 70 years compared to less than 40 years for oil. Our overall remaining gas resources are estimated at 450 to 530 trillion cubic meters. Since the beginning of fossil fuel exploration, only slightly more than 10% of the world's gas resources have been consumed, compared to 25% of the estimated world's oil resources (Fig. 4.11).

As in the case of oil, a few countries dominate the natural gas reserves. The largest known accumulations of gas are in Western Siberia and the Persian Gulf. In 2002, more than half of the global gas reserves were found in only three countries: Russia with 26%, and Iran and Qatar each accounting for about 15% of the reserves (Fig. 4.12). North America and Europe represent only about 4% each. Like oil, gas reserves are concentrated in a small number of giant fields. About 190 giant reservoirs contain 57% of the global gas reserves, with some 28 000 other reservoirs holding 28%. The remaining 15% represent marginal fields [4]. Although proven reserves are abundant, new resources tend to be discovered in more remote areas far from consuming centers, in difficult terrain, or as small fields. Even today, the geographical distribution of natural gas-producing regions is thus far from even. Most of the demand is concentrated in North America and Europe, but these regions have relatively limited sources of natural gas, in part because they have already exploited significant amounts of their initial reserves. In Europe, countries such as Norway, The Netherlands

About Blue Carbongcal
Figure 4.11 Oil and natural gas reserve to production (R/P) ratio. Based on data from BP Statistical Review of World Energy 2005.

and United Kingdom still have significant Northern Sea reserves, but a growing part of Europe's natural gas consumption has to be imported from the rich but remote Western Siberian fields in Russia as well as from Algeria. North America is still largely self-sufficient in natural gas, the larger part of gas imports in the United States being supplied by pipelines from Canada. However, due to stagnating or declining rates of production as well as to a steadily increasing consumption, North America will have to rely more on imports mainly in the form of liquefied natural gas (LNG) from countries such as Algeria, Trinidad and Tobago, Nigeria, and the Middle-East. LNG, however, as discussed subsequently has its own limitations and hazards.

In order to be shipped overseas as LNG, natural gas must first be liquefied at a port-side liquefaction plant in the producing country. Liquefaction removes almost all impurities (CO2, sulfur compounds, water, etc.) and the gas becomes almost pure methane. Once liquefied, LNG is piped onto giant ships, the size of three football fields, with a carrying capacity of 150 000 to 200 000 m3, where it is stored in highly insulated, double-walled tanks (Fig. 4.13). After a trip of 10 to 15 days, the LNG is transferred from the ship to a regasification terminal where the liquid is heated to gas ready for distribution. The construction of a LNG infrastructure is very capital intensive, with each liquefaction and regasification plant costing between $1 and $2 billion [11], or even more if located offshore. Nevertheless, ExxonMobil and Qatar Petroleum recently signed two $12 billion deals to build LNG infrastructure to deliver 100 000 m3 natural gas per

Eurasia 5,1%

Europe

Eurasia 5,1%

Europe

'South and Central America 4,0%

Africa 7,8%

North America 4,1%

Rest of Middle East

'South and Central America 4,0%

Africa 7,8%

North America 4,1%

Iran

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