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The Era of Xtreme Energy

Life after the age of oil.

| Tue Sep. 22, 2009 5:56 PM EDT

This story first appeared on the TomDispatch website.

The debate rages over whether we have already reached the point of peak world oil output or will not do so until at least the next decade. There can, however, be little doubt of one thing: we are moving from an era in which oil was the world's principal energy source to one in which petroleum alternatives — especially renewable supplies derived from the sun, wind, and waves — will provide an ever larger share of our total supply. But buckle your seatbelts, it's going to be a bumpy ride under Xtreme conditions.

It would, of course, be ideal if the shift from dwindling oil to its climate-friendly successors were to happen smoothly via a mammoth, well-coordinated, interlaced system of wind, solar, tidal, geothermal, and other renewable energy installations. Unfortunately, this is unlikely to occur. Instead, we will surely first pass through an era characterized by excessive reliance on oil's final, least attractive reserves along with coal, heavily polluting "unconventional" hydrocarbons like Canadian oil sands, and other unappealing fuel choices.

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There can be no question that Barack Obama and many members of Congress would like to accelerate a shift from oil dependency to non-polluting alternatives. As the president said in January, "We will commit ourselves to steady, focused, pragmatic pursuit of an America that is free from our [oil] dependence and empowered by a new energy economy that puts millions of our citizens to work." Indeed, the $787 billion economic stimulus package he signed in February provided $11 billion to modernize the nation's electrical grid, $14 billion in tax incentives to businesses to invest in renewable energy, $6 billion to states for energy efficiency initiatives, and billions more directed to research on renewable sources of energy. More of the same can be expected if a sweeping climate bill is passed by Congress. The version of the bill recently passed by the House of Representatives, for example, mandates that 20% of U.S. electrical production be supplied by renewable energy by 2020.

But here's the bad news: even if all these initiatives were to pass, and more like them many times over, it would still take decades for this country to substantially reduce its dependence on oil and other non-renewable, polluting fuels. So great is our demand for energy, and so well-entrenched the existing systems for delivering the fuels we consume, that (barring a staggering surprise) we will remain for years to come in a no-man's-land between the Petroleum Age and an age that will see the great flowering of renewable energy. Think of this interim period as — to give it a label — the Era of Xtreme Energy, and in just about every sense imaginable from pricing to climate change, it is bound to be an ugly time.

An Oil Field as Deep as Mt. Everest Is High

Don't be fooled by the fact that this grim new era will surely witness the arrival of many more wind turbines, solar arrays, and hybrid vehicles. Most new buildings will perhaps come equipped with solar panels, and more light-rail systems will be built. Despite all this, however, our civilization is likely to remain remarkably dependent on oil-fueled cars, trucks, ships, and planes for most transportation purposes, as well as on coal for electricity generation. Much of the existing infrastructure for producing and distributing our energy supply will also remain intact, even as many existing sources of oil, coal, and natural gas become exhausted, forcing us to rely on previously untouched, far more undesirable (and often far less accessible) sources of these fuels.

Some indication of the likely fuel mix in this new era can be seen in the most recent projections of the Department of Energy (DoE) on future U.S. energy consumption. According to the department's Annual Energy Outlook for 2009, the United States will consume an estimated 114 quadrillion British thermal units (BTUs) of energy in 2030, of which 37% will be supplied by oil and other petroleum liquids, 23% by coal, 22% by natural gas, 8% by nuclear power, 3% by hydropower, and only 7% by wind, solar, biomass, and other renewable sources.

Clearly, this does not yet suggest a dramatic shift away from oil and other fossil fuels. On the basis of current trends, the DoE also predicts that even two decades from now, in 2030, oil, natural gas, and coal will still make up 82% of America's primary energy supply, only two percentage points less than in 2009. (It is of course conceivable that a dramatic shift in national and international priorities will lead to a greater increase in renewable energy in the next two decades, but at this point that remains a dim hope rather than a sure thing.)

While fossil fuels will remain dominant in 2030, the nature of these fuels, and the ways in which we acquire them, will undergo profound change. Today, most of our oil and natural gas come from "conventional" sources of supply: large underground reservoirs found mainly in relatively accessible sites on land or in shallow coastal areas. These are the reserves that can be easily exploited using familiar technology, most notably modern versions of the towering oil rigs made famous most recently in the 2007 film There Will Be Blood.

Ever more of these fields will, however, be depleted as global consumption soars, forcing the energy industry to increasingly rely on deep offshore oil and gas, Canadian oil sands, oil and gas from a climate-altered but still hard to reach and exploit Arctic, and gas extracted from shale rock using costly, environmentally threatening techniques. In 2030, says the DoE, such unconventional liquids will provide 13% of world oil supply (up from a mere 4% in 2007). A similar pattern holds for natural gas, especially in the United States where the share of energy supplied by unconventional but nonrenewable sources is expected to rise from 47% to 56% in the same two decades.

Just how important these supplies have become is evident to anyone who follows the oil industry's trade journals or simply regularly checks out the business pages of the Wall Street Journal. Absent from them have been announcements of major discoveries of giant new oil and gas reserves in any parts of the world accessible to familiar drilling techniques and connected to key markets by existing pipelines or trade routes (or located outside active war zones such as Iraq and the Niger Delta region of Nigeria). The announcements are there, but virtually all of them have been of reserves in the Arctic, Siberia, or the very deep waters of the Atlantic and the Gulf of Mexico.

Recently the press has been abuzz with major discoveries in the Gulf of Mexico and far off Brazil's coast that might give the impression of adding time to the Age of Petroleum. On September 2nd, for example, BP (formerly British Petroleum) announced that it had found a giant oil field in the Gulf of Mexico about 250 miles southeast of Houston. Dubbed Tiber, it is expected to produce hundreds of thousands of barrels per day when production begins some years from now, giving a boost to BP's status as a major offshore producer. "This is big," commented Chris Ruppel, a senior energy analyst at Execution LLC, a London investment bank. "It says we're seeing that improved technology is unlocking resources that were before either undiscovered or too costly to exploit because of economics."

As it happens, though, anyone who jumped to the conclusion that this field could quickly or easily add to the nation's oil supply would be woefully mistaken. As a start, it's located at a depth of 35,000 feet — greater than the height of Mount Everest, as a reporter from the New York Times noted — and well below the Gulf's floor. To get to the oil, BP's engineers will have to drill through miles of rock, salt, and compressed sand using costly and sophisticated equipment. To make matters worse, Tiber is located smack in the middle of the area in the Gulf regularly hit by massive storms in hurricane season, so any drills operating there must be designed to withstand hurricane-strength waves and winds, as well as sit idle for weeks at a time when operating personnel are forced to evacuate.

A similar picture prevails in the case of Brazil's Tupi field, the other giant discovery of recent years. Located about 200 miles east of Rio de Janeiro in the deep waters of the Atlantic Ocean, Tupi has regularly been described as the biggest field to be found in 40 years. Thought to contain some five to eight billion barrels of recoverable oil, it will surely push Brazil into the front ranks of major oil producers once the Brazilians have overcome their own series of staggering hurdles: the Tupi field is located below one-and-a-half miles of ocean water and another two-and-a-half miles of rock, sand, and salt and so accessible only to cutting edge, super-sophisticated drilling technologies. It will cost an estimated $70-$120 billion to develop the field and require many years of dedicated effort.

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