Canada as an energy superpower

Ed note from PG: I am happy to announce that TOD:C is up and running again (and I believe overdue thanks are in order to Stoneleigh and Ilargi, now over at The Automatic Earth, for their efforts here). One of the new editors is benk (and I believe you already know Khebab!).

Ben is completing his Ph.D. in Chemical Engineering in Canada. His research focuses on the fine details of solid oxide fuel cells, dealing with ceramics and long equations. He attributes his initial interest in energy to the documentary "The End of Suburbia," which he first saw about 4 years ago. Since then he has felt a duty to get the good word out. Ben has been the host of theWatt Podcast talking about various energy issues, a capacity we are exploring bringing the TOD. Welcome Ben!

To get TOD Canada rolling again, I've written a refresher on Canada's energy situation. Canada can't be ignored when it comes to energy. We are a land of plenty. Lots of land, lots of weather, lots of consumption, lots of production. Plenty can easily become scarce though and it has to be managed, and managed well. Management of our resources will be Canada's challenge in the years ahead. Unmanaged, Canada's energy consumption is close to the highest in the world and stands at 350 GJ/person, slightly more than in the U.S. and Canada's energy intensity is the worst in the G7 at 10.6 MJ per unit GDP.

It's wrong to average Canada's energy situation though. Even neighboring provinces have vastly different stances: British Columbia has implemented North America's first consumer based carbon tax and is joining the Western Climate Initiative's cap-and-trade system while Alberta's Premier is still talking about bird kills by wind turbines. On the East Coast, New Brunswick has the largest Canadian refinery (288,400 bpd capacity) producing 45% of all U.S. reformulated gasoline imports, is building a new LNG terminal and has plans to become an energy hub for the Eastern U.S. by building a second 300,000 bpd refinery and a second nuclear reactor, both to be used exclusively for export to the US. Energy exports are a huge part of Canada's economy, accounting for 20% ($90 billion) of Canada's total exports in 2007.

From the federal perspective, Canada's government has publicly stated that they are positioning Canada as a "reliable energy superpower". This is the closest we have to a national energy policy. The wording here is important: By definition, energy superpower implies at least two things: 1) multiple customers 2) willingness to use energy supply as a negotiation tactic.

As far as energy superpowers are concerned, Canada still has a long way to go. Multiple customers are difficult to come by for a country with a single border. As far as "reliable energy superpowers" are concernerd, I recon Canada's just about there, we have no choice but to be reliable.

That being said, Canada is slowly gaining courage with respect to criteria #2 of an energy superpower: Our trade minister, David Emerson, recently suggested that he's willing to use the energy card after Hilary Clinton's and Barack Obama's talk of renegotiating NAFTA, Emerson let this out:

"Knowledgeable observers would have to take note of the fact that we are the largest supplier of energy to the U.S. and NAFTA has been the foundation for integrating the North American energy market," said Emerson.

So, what can Canada offer?

Canada's credentials:

Having energy resources isn't enough to be an energy superpower. Those resources have to be exported. The National Energy Board just released the Canadian Energy Overview 2007. From that document, I've put together a graph of Canada's average 2007 energy exports to the US:

Note: Here I assume all types of oil to have the same energy content

Even 30 TWh/year of electricity can be significant to small parts of North Eastern United States but obviously Canada's role as an energy supplier to the US is most important through natural gas and oil exports. The future of natural gas in Canada has been discussed on TOD before as well as Canada's tar sands. What makes Canada's energy situation so fascinating is the coupling between energy sources.

In the table below, I've ranked Canada's energy resources against the rest of the world and compared them with Russia's (a real energy superpower) using the latest stats from the BP Statistical review. It sheds some light on Canada's true situation:

Canada's Rank Russia's Rank
Oil Reserves 2 or 12* 7
Oil Production 7 2
Oil Consumption 8 4
Oil Exports 14 2
Natural Gas Reserves 21 1
Natural Gas Production 3 1
Natural Gas Consumption 4 2
Natural Gas Exports 2 1
Coal Reserves 13 2
Coal Production 15 5
Coal Consumption 14 5
Coal Exports 17 5
Uranium Reserves** 2 10
Uranium Production** 1 -

* BP Statistical Review only considers Canada's oil sands reserves to be those currently under development. Governments don't.
** Src: World Nuclear Association

Alone, Canada's energy resources, other than oil and uranium reserves, don't look to be particularly impressive. A large part of Canada's success as an energy superpower though is its ability to develop its resources. At any cost.

My first observation after compiling the above table was that Canada ranks 21st in the world in terms of natural gas reserves, but production, consumption and exports all rank in the top 4. Here lies the energy coupling challenge: In order to exploit our oil reserves, of which we have a lot, we are further depleting our natural gas reserves, of which we have few.

For each barrel of synthetic crude coming out of Canada from strip mining, 28 cubic meters of natural gas is used (this source claims 14-28 cubic meters). This means America is sacrificing roughly 1.14% of it's natural gas supply to import synthetic crude oil. For Canada though, converting NG into oil is economically a no brainer: at $125/bbl, we get $22/GJ for oil compared with the current going rate of $11/GJ for natural gas. Alternative methods like the nuclear option for upgrading bitumen do exist. In March, Bruce Power Alberta filed an application for a 4GW nuclear reactor for the tar sands, but if it goes through, would only come on-line by 2017.

To conclude, Canada is the most important energy supplier to the US. Canada has ambitions to become an energy superpower, which means that finding a second customer is likely a priority. But Canada's natural gas could quickly become a rate determining step in these ambitions and so resource management is the challenge that Canada will have to address if it is truly going to become a reliable energy superpower.

Good overview. Now, having energy to export today is one thing; what is the state of the Western Gas Fields over the course of the next 5 years?

Here's a pretty good overview by Libelle on that topic:

I'll see if there's any new info on this from the NEB.

About a quarter of the worlds undiscovered NG resources are thought to be in the Arctic, where Canada's announced policy emphasizes sovereignty and economic development. I agree a more explicit energy policy is needed.

This is my first post on the oil drum, although I have been reading it for quite some time. Much of Canada's supply growth is attributed to the eventual tie in of the Mackenzie and Arctic gas. From everything I have seen, this is very unlikely to happen any time soon unless mandated by the Federal government.

In the WCSB, the production growth story is very challenging. Most of the gas in the WCSB is currently produced from Alberta, whos production has fallen by over a bcf/d since peaking in 2001. The Alberta government has predicted a 2.5% yearly decline, however this was based on continued high levels of drilling activity. Drilling for gas in Alberta has fallen off dramatically in the last several months due to royalty changes, high service costs, diminishing opportunities, the strong canadian dollar, and changes to income royalty trust laws. Because of this, it is likely that production will fall off at a rate greater than 2.5%/year.

Most of the rest of Canada's production comes from BC's portion of the WCSB. Production here has plateued over the last couple of years, however it may grow due to development the large "shale gas" plays that have recently been announced. Despite the potential, it will be very challenging to build all the infrastructure required to support significant growth in BC. I personally do not believe that it can offset the production declines that will be seen in Alberta.

The NEB (national energy board) forcast has Canadian gas production falling to 15bcf/d by 2009. At this time, it is estimated that canada will require about 9 bcf/d. Interestingly, the NAFTA proportionality clause dictates that Canada export 56% of its gas to the US. You will notice that the remaining 44% of 15bcf/d only amounts to 6.6 bcf remaining for domestic supply (about 2.4 bcf/d short). This problem will be worsened by continued growth of oil sands demand, and continued switching from coal to natural gas for power generation (especially in Ontario). If my understanding of the facts are correct, it seems that Canada might not be currently meeting its NAFTA requirement, and will certainly not have the ability to do so in the future (energy super power indeed!)

Canada badly needs its own strategic energy plan, however public and political awareness of this issue seems to be very small. The public is more focused on environmental issues and "excessive" corporate profits. If attitudes remain similar in the future, I see higher taxes on gas producers and continued eroding of supplies.

I definitely agree that Canada needs a comprehensive energy plan, but I do cling to the (probably naive) belief that Canada will ignore the proportionality clause if things really get tight. The way the US blatantly scoffs at their obligations under trade agreements I think we have earned a smidgen of leeway to keep from 'freezing in the dark' (of course a west-east pipeline network is a necessity). Also, the probability of another Albertan hissy-fit seems remote because energy prices will remain high this time and I think that it's well recognized that the 'Bloc Albertois' experiment didn't pan out particularly well.

For now though it seems the east is pinning it's fortunes to this LNG terminal in Quebec City that is rife with problems.

I quite liked Linda McQuaig's article from The Star from a year or so ago calling Canada an 'energy pussycat.'

Hey! That's "Block Albertexas"! ;) None of that Frenchy crap is allowed out west.

I was still quite young when the NAFTA agreement was signed (1994?) and thus obviously laregly uninterested in it at the time.

I wonder if anyone knows the behind-the-scenes thinking of that proportionality clause... I am assuming it was a US backed part of the agreement so that we could not cut back supplies once we started exporting them and once America had become reliant on them, is this correct?

Anyone have any extra info on this proportionality clause?

I too was quite young at the time but my father was a top aide to John Turner* who vociferously decried the proportionality clause as well as several other not-so-Canada-friendly tidbits in NAFTA. Turner is a family friend so I'm obviously biased, but I think Canada really missed out by hopping on the Thatcher-Reagan bandwagon with Mulroney. Turner really suffered from a surfeit of integrity and the general feeling of malaise towards the Liberals after 15+ years of Trudeau. As a fly on the wall I was always amused when they hit a stumbling block in the speech-writing process, Turner would say: "Oh well, we can always retreat to our last refuge -- in the truth."

*disclaimer: I vote Green, but my family is VERY Liberal, teeming with staffers, campaigners, etc.

Some reading:

The NAFTA agreement was initiated during Mulroneys term and ratified under Chretien. At the time, natural gas production was still rising. I think that most people felt that it would continue to do so for quite some time (maybe these were the same folks who now work at the IEA)

In addition, the large deposits in the Arctic and Mackenzie delta region had been found in the early 80's. I think most people felt that these would be put on stream sometime in the not too distant future. It seems like 10 years ago, people thought it would be 10 more years till they were on prodution. I think that in 10 more years we will still be saying we are 10 years away. In either case, these supplies will be hard pressed to make up for the short fall in Alberta.

It's much like the American situation where the North slope discoveries were touted as a find that would help to mitigate the 1973 peak, however the reality was that the north slope was only a slight blip on the overall decline.

The NAFTA Proportionality clause Article 605 is often misunderstood. It comes into effect only if the Federal Government of Canada (or of the US) undertakes to implement measures to limit exports. As long as the governments refrain from intervening in the North American energy market, there is no proportionality requirement. Decisions to export oil or gas from Canada to the US are entirely made by producers and suppliers, subject to regulatory approval by National Energy Board and the Alberta Energy Resources and Conservation Board, primarily for environmental and safety reasons.

The political effect of Article 605 is to severely limit the power of the Federal Government to intervene in the primarily Albertan energy industry, something Albertans wanted to prevent another National Energy Program. My guess is that the FTA negotiations were based on trading US access to Canadian energy for Ontario and Quebec access to US markets for manufactured goods. In effect, Eastern Canada gave up energy security for (supposedly) free access to US markets.

Interestingly, it appears that the Government of Alberta has recently taken steps to remove what may people believe is a requirement that the ERCB (successor to the EUB) hold in reserve 15 years supply of natural gas for Albertans before permitting exports. The 15 year rules appears to never have been written in law, but to be only an interpretation of the clause in the Gas Resources Preservation act (amended 2008) which requires that

Limitations on granting of permit
8 The Board shall not grant a permit unless in its opinion it is in
the public interest of Alberta to do so having regard to
(a) the present and future needs of persons in Alberta,
(b) the established reserves and the trends in growth and
discovery of reserves of gas or propane in Alberta, and
(c) any other matters considered relevant by the Board.
1984 cG-3.1 s5;1986 c17 s3

The EUB interpreted the clause to mean that "core consumers" needs should be met for 15 years before gas could be considered surplus and available for export from Alberta (to the rest of Canada or the US). The term "core consumer" was referenced in the Gas Resources Preservation Act and defined in Gas Utilities Core Market Regulation (AB 44/95):

Classes of consumers
3 Consumers are classified as follows for the purposes of this

(a) Class 1: Industrial Consumers, consisting of consumers who use
or consume gas at a location primarily

(i) as a raw material, or

(ii) as a fuel, whether for space heating, water heating
or otherwise,

in an industrial or manufacturing operation;

(b) Class 2: Alternate Fuel Capability Consumers, consisting of
consumers who have sustainable access to, and facilities that allow them to
use or consume, a source of energy, other than gas, in quantities
sufficient to satisfy the requirements for which gas would otherwise be
consumed by them;

(c) Class 3: Core Consumers, consisting of consumers other than
those within Classes 1 and 2.

According to EUB, core consumer consumption is less than about 18% of total Alberta Consumption (See Energy Utility Board report EUB ST98-2007, calculation of available for export).

Since the regulations that define core consumers have been repealed, it is no longer clear that there is any restriction on export of natural gas from Alberta, as of 2008.

Thanks a lot for finding this... I was looking for the text yesterday but couldn't get it.

Thanks for posting that. Most people I talk to in the industry have had little input on the subject. I suspect that the complexity of the agreements wording is part of the problem for most people. It certainly was for me, though it seems clear now. It certainly cheapens the credibility of some of the research bodies (ie. parkland institute), who have been publicly decrying the agreement for the (misleaded) reasons i mentioned in my previous post. Other prominent researchers have also apparently misunderstood the agreement (e.g. Richard Heinberg As is the case with alot of other work, it makes one aware that you must really question all of the data behind any opinion/analysis.

Did you have a link for where the 56% was specifically mentioned? I could not seem to find it in the site you posted a link for.

There won't be any specific mention of a percentage in the NAFTA agreement as it is determine by a rule.

If Canada were to impose an export restriction on natural gas (or any other defined petroleum product), it could do so only if maintains an export level greater than or equal to "the proportion prevailing in the most recent 36-month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties may agree".

The 56% figure given for natural gas would be based on the recent level of exports.

Further, the percentage is based on "total supply", which the agreement defines to be domestic production plus imports. This would be interesting if LNG terminals are established in Canada for gas that is solely destined for export to the US (as has been the case in several proposals).

I believe that the Parkland Institute is quite aware of specifics of the Proportionality article, but the media are not. No doubt Parkland's message has been somewhat distorted by the media's penchant for dramatic sound bites.

Parkland has been trying to raise the awareness of Canadians, especially in Eastern Canada, about Canada's lack of a domestic energy policy and in particular our loss of energy sovereignty. Most Canadians are complacently unaware of our true energy situation and the risks we are running. Their recent paper calling for the establishment of a Canadian SPR got considerable attention in Quebec, the province that is most dependent on foreign imports.

I don't know whether you have the time/resources, but if you could put together a 'keypost' it would be much appreciated... It is disturbingly rare to come across someone who has any worthwhile knowledge of Canada's energy situation.

Anyways, if nothing else, thanks for the input.

Encana happens to be doing both the Weyburn CO2 injection and oil recovery and is major player in the new BC natural gas. I analysed Encana's latest conference call.

The Encana portion of the Montney has 500 million cf to 1 billion cf a day long-term potential. [35.3 cubic feet in one cubic metre, so that amount would be 14.16 million to 28.3 million cubic metres/day, 3-6% of Canada's total natural gas production] They currently are getting 120 million cf/day.

New natural gas finds in Canada:
- Ootla, about 60 miles from Fort Nelson in northeastern British Columbia, may hold 9 trillion to 16 trillion cubic feet of gas. Horizontal wells test flowed at rates of 8.8 million cubic feet, 6.1 million cubic feet and 5.3 million cubic feet of gas a day.
- Montney find in BC (50-80 trillion cf)
- the Horn River basin (12+ trillion cf.)
- Quebec Utica Shale based on some of the Canadian-based research on the play to date the size of the resource is being estimated between 24 and 30 trillion cubic feet of natural gas.
- Smaller but significant find of 1.6 tcf in Southern Ontario

The total new reserves are 97 tcf to 140+ tcf. If they were developed with production rates proportional to Encana's efforts then they would provide 8 bcf/day to 22 bcf/day. The current projection if for Canada to produce 15 bcf/day in 2009 [5.5 tcf per year]. So these new finds appear likely to reverse the decline in Canada's natural gas producton.

Weyburn has 10 million tons of CO2 sequestered and Encana projects 30 million tons.

bear in mind that there are severe infrastructure constraints for all of these new resources. In addtion, the numbers quoted by the companies are more commonly the resource size rather than the reserve size. 20 to 50% of these numbers might be more appropriate as ultimate recoverable reserves. Encana has been quietly developing their Montney resource for several years, however this has not had a significant impact on BC's production rate. These plays are promising, but in some ways are similar to the enormous "reserves/resources" attributed to some of the oil shales. (i.e. they may be too energy intensive to develop to their full extent)

Canada has found significant amounts of natural gas in BC and Quebec recently. BC is the most active area for new natural gas finds.

The company said its stake in Ootla, about 60 miles from Fort Nelson in northeastern British Columbia, may hold 9 trillion to 16 trillion cubic feet of gas. Horizontal wells test flowed at rates of 8.8 million cubic feet, 6.1 million cubic feet and 5.3 million cubic feet of gas a day

This natural gas plus the Montney find in BC (50-80 trillion cf) and the Horn River basin (12+ trillion cf.)

Quebec also has a large natural gas find. The Utica Shale based on some of the Canadian-based research on the play to date the size of the resource is being estimated between 24 and 30 trillion cubic feet of natural gas.

Weyburn in Canada did have a fairly large scale CO2 sequestering injection project starting in 2000. 8 year $80 million project. they injected 7 million tons of CO2. 18000 bpd of incremental oil recovery because of CO2 injection. Expect to get 155 million barrels extra. 3.8 billion incremental barrels of oil in western canada from CO2 injection.

Smaller but significant find of 1.6 tcf in Southern Ontario last month

DOE also CO2 injection projects. Kansas and other places. Also looking at Texas.

The BC government took in 441 million from this month's auction of land rights in northeastern BC, a record for one month and indicative of the interest in finding new gas.

Great to see the Canadian perspective on Peak Oil back up for discussion.

Those Natural Gas rankings are scary... we might need to do something about that soon.

This renegotiating of NAFTA could help us out a lot, with the weak economy and dollar in the US, we will have an extra advantage, being that they are desperate.

If they want to renogotiate a policy they have abused, and one that we probably should have read a little more closely before signing (i.e. continuous export levels), then I say we take it to them, after all, we're just "little Canada", how much of an impact could we have on the giant US economy anyways? (insert sarcasm here)

The thing is though, I don't think we have much negotiating power unless we can find a 2nd customer. Energy exports are such a huge part of our economy. I think that the US essentially considers Canada to be an extension of themselves with a lower concentration of NIMBY's, which would explain a lot about what's going on in NB right now. Also, one thing that I didn't talk about was fresh water. Water is definitely something that could also cause some major tensions.

A lot of people think we can sell it all: natural gas, oil and water but very soon it'll be either natural gas and water OR oil.

Good point about the Water exports.

A second customer would be invaluable in negotiating with the US, do you know if any efforts are being made to court China or India, both of whom are lacking resources and have become net importers? I know China likes to keep to themselves, but their coal shortage is going to be a huge problem for them. I know they have an amazing resource of it, but getting it out of the ground in time to fuel their reactors (are they still building one per day?) may be a problem. I recall reading they have maybe 1 or 2 days buffer supply at most reactors.

Any possiblity we can increase our coal production to take advantage of a coal-hungry China? Perhaps this will lead into a trade agreement for other FF's that can put pressure on the US to treat us as an "Energy Superpower" instead of playing hard ball with our lumber and power exports.

I'm not exactly sure what's going on wrt China. China has invested in some oil sands projects, so maybe that's the direction China would rather go: make money off of oil sands instead of actually secure oil supply. I'm not so sure how easy it would be to set up a consistent oil supply from Alberta to China.

As far as coal goes, as long as an environmental policy is uncertain, I can't see much being done on that front until people start to realize NG is a real issue. Alberta has filed applications for 4GW of nuclear power plants for the oil sands but that won't come online until 2017 at the earliest.

First off thanks a bundle for taking over the reins at TOD Canada, I look forward to a forum where I can talk Canada without having to provide ten background paragraphs explaining where Moose Factory, Ontario is (as an example).

According to Wikipedia, Sinopec has plans for a 100,000bpd tar sands project, but it has been delayed indefinitely. Also, who knows if that oil was actually going to flow back to China (as you pointed out they may have just wanted to get in on the bonanza). I think development of the Asia Pacific Gateway infrastructure is necessary before we can realistically begin meaningful exports to non-US countries.

While I'm at it, where does the majority of Atlantic offshore oil end up?

Relevant articles:

AND just for fun, a great analogy for poor misunderstood Canadians:

Just as long as it's not natural gas and water or oil OR beer.

The thing is though, I don't think we have much negotiating power unless we can find a 2nd customer.


The fundamental problem is that Canada's energy fate is completely entwined with that of the US. All of her extra capacity is directed there, and push might come to shove when the US starts to run low. Don't expect the lights to stay on for long in Montreal if they go off in New York City.

Microwaves might possibly be a better bet to extract oil from shales and sands:

The RF/CF combination is more economical and environmentally responsible than older oil shale extraction techniques as it uses less power, does not severely disrupt the landscape or leave behind residue that can enter groundwater supplies....For tar sands and heavy oil, the Raytheon process could yield 10 to 15 barrels of oil equivalent per barrel consumed, due to the lower heating temperatures required. When applied in tar sands, the combined RF/CF technology performs a mild upgrading in-situ, yielding an attractive light sweet crude oil. The process is “tunable”, facilitating production of various product slates.

The use of RF technology in shale processing would enable the fuel to be extracted from the earth in only one to two months. In-ground heating methods that do not employ radio waves, by contrast, require three to four years to replicate the natural conversion process.

This would enormously economise on the use of water too.

Nuclear batteries would be another possible solution:

This technology make it three times cheaper and faster (less infrastructure and piping) to tap 1.1 trillion barrels of oil that is in the form of oil shale in the USA. Increasing US oil reserves by 30-40 times and perhaps eliminating the need for oil imports in 10-15 years. Helping to more economically unlock global oilsands and oil shale. Plus it would at the same time allow up a 100 year transition to a lot more nuclear power and renewables. It would be possible for a shorter transition with less air pollution and fossil fuel use as well by eliminating coal. It would provide for 20-50 times more efficient use of Uranium and allow for the use of Thorium.

It seems a shame to use NG.

British Columbia has lots of coal(~20 billion tons?).

Convert it to synthetic natural gas, 1 million tons a year of coal could generate 12 bcf of natural gas a year, so at 30 cu ft per barrel of syncrude, that's good for 1.1 mbpd of syncrude.
The penalty for sequestration is ~25% in energy lost.

AFAIK no-one has actually done much sequestration at the moment, so the technology is pretty unclear as is the expense.
Of course, that is also a criticism of the two alternatives I mention, but they would also appear to be kinder to water resources than first extracting and processing the coal - incidentally, when I was a kid that is what people here in the UK used to cook on, and we called it 'town gas'- and then heating steam with it and using it to extract oil from sands.

Town gas was also one of the products which led to the old song 'Dirty old Town' although technologies have doubtless improved that.

Something about that seems wrong to me...
Coal is relatively hydrogen poor, so it would have to be upgraded (a lot) to produce methane, which requires hydrogen. You could use some of the coal-resource to make this via water-gas shift: you consume some of the coal (my guess would be >>60%) to upgrade the rest, but it produces a lot of CO2, and there's consumption of the water resource again. But then we've made the methane.

Then, you ship it to the tar sands, and both burn it for heat AND convert it back to hydrogen for upgrading the bitumen. My instincts say this would be a losing proposition.

The existing Dakota Great Plains Gasification Plant
creates 54 billion cubic feet of natural gas from 6 million tons of low rank lignite(6700 Btu/pound) and the excess CO2 is sequestered in the Weyburn oil field.

No need for anybody's 'guesses'!!

Thankfully, your 'instincts' as a real-live chemist need not be relied upon as we have actual FACTS.

This technology has been operation for over two decades.

I kicked up the amount of gas based on the higher energy
British Columbian (mainly) bituminous coals which have double the heating value of North Dakota lignite.

As usual for TOD we have a negative reaction to a completely practical solution offered, based on somebody's 'instinct'.

The fact is we can produce natural gas to fuel the tars sands operations for probably 100 years with gasification technology and existing coal deposits in British Columbia, but it is a lot easier to dismiss the idea as 'wrong' without understanding it.


I'm sorry if you were offended... I never said you were wrong, and tried not to say so because I didn't have time for the calculations. I shouldn't have used such strong language. The numbers you've provided indicate a Btu recovery of ~65%... this is significant and I stand corrected.

This is why the Canada section of TOD is much more pleasant to post on, cause people speak like this instead of bashing each other, nicely played chemist.

Seems very clear to me that being #2 in both oil and uranium, but only #21 in Natural Gas means that the tar sands are eventually going to have to go nuke, BIG TIME.

I don't know much (if anything) about the Peace River tar sands developments, but I wonder whether the Peace could handle the double draw of water from nuclear plants as well as tar sands extraction. I understand that there is a certain amount of recycling, but of course nuclear plants need cold water for cooling which Bruce Power has in abundance on Lake *Huron*, but can the same be said for the Peace River?

As a disclaimer, I have zero technical training and my concerns are principally environmental, but I'm hoping someone more knowledgeable might share their thoughts.

*edited for geography confusion

Energy super power? When?

Laherrère has a chart showing Canadian Gas goes into "negative" EROEI by 2014.

A nation freezing its butt off in the winter doesn't strike me as an energy superpower.

Also, IIRC, all the oil lines flow from Alberta to the states - there isn't one single major oil line that goes from Alberta to ON / QC / NS etc., per map below:

Frankly, I think Canada is extremely vulnerable - much more so than the States. While Canada makes lots of oil and Uranium and Thorium and gas, it doesn't have the refining capacity or even the direct access to its own resources, as they are all directed immediately to the states. The fact that Canada is actually a net oil importer and has no SPR only serves to demonstrate my point further.

For "Canada" to find other customers for its oil assumes that Canada has control over its oil, and AFAIK, that isn't the case - private firms control its extraction, production and distribution. If I am wrong, I would like to be shown how. I don't see Canada as an energy Superpower - I see it as the Energy Chump for the USA.

I think the term energy "Superpower" is a convenient leverage tool of the present government - gives them a political strategy to disarm critics who point out the country's vulnerability: no strategic petroleum reserve, imports oil into the eastcoast, the proportionality clause of NAFTA, etc. Resurrecting anything like a "National Energy Policy" would be parliamentary suicide for a populist Conservative Party reliant on maintaining the bulwark of Alberta's 28 Commons seats.

Stuart, you are bang on. If we are relying on the Oil (Tar) Sands to keep the charade going, pity help us when NG supplies lack the capacity to cook the sludge. Not saying anything about the catastrophic effect the development is having on the Athabaskan landscape. As much as things may be cooking now (figuratively and literally) the party may be over quicker than most Canadians realize.

Rather than tossing around macho superlatives like "Superpower" what this country needs is an engaging debate on energy policy. 'Cause when the party's over, we may be in for one hellish hang-over. And the shivers may not be all detox symptoms: it's pretty cold outside in most of Canada during the winter months.

For "Canada" to find other customers for its oil assumes that Canada has control over its oil, and AFAIK, that isn't the case - private firms control its extraction, production and distribution. If I am wrong, I would like to be shown how.

unless the oil is given away for free the Canadians must be benefiting some how. I see in some areas you can work at McD's and make more than you'll ever make in many McD's. they are having trouble finding workers because the energy sector is paying so well and taking all the available workers. the energy parts of Canada seem to be booming while the manufacturing areas aren't doing as well. even if private firms do control extraction, production and distribution is that bad? that benefits the communities in the area.

there are no barriers to canadians owning canadian oil companies.

With all that said, Canadians do not any longer own a lot of extraction companies, I guess perhaps since the enormous required capital just isn't there? The boomtown benefits in Alberta are also obviously merely temporary. It's great if that massive inflow of money is being used to develop alternative economic foundations for the province, but it's not secret that very little is being done on that front. Alberta does siphon some royalties off into a "heritage fund", but it's a tiny, tiny amount compared to any other similar sovereign fund (Norway is a good example).

It's difficult not to conclude that private and most foreign private interests are basically walking away with most of the wealth being pulled out of the ground, and in the meantime, the fresh water supply is beginning to dwindle, the boreal forest is being damaged, with best indications showing that the damage is irreversible, and tailing "ponds" full of toxic sludge on the order of 5-10km in diameter have been produced.

There are obviously tradeoffs in every regional energy boom, but the tradeoffs seem particularly poor in the long-term for Alberta.

t's difficult not to conclude that private and most foreign private interests are basically walking away with most of the wealth being pulled out of the ground

what is so bad with private companies and foreign private interests? any canadian can purchase a canadian energy company. some of the royalty trusts produce very high dividends. nothing is also preventing canadians from purchasing stock in foreign companies.

out of work people from the hard hit towns of the east coast are given a lifeline by working at the oil sands.

Daniel Teasdale came from Nova Scotia in February. He runs an excavator and, at 21 years old, he expects to make more than $115,000 U.S. a year.

"I like the place, but I like the money the best out of anything," he says. "It's just triple what I was making at home. Even more, it's unbelievable. Money is nothing out here. People are throwing money all the time. It's just money, money, money."

In June, Fort McMurray's Ford dealership sold more vehicles than any other in Canada. Colin Matthews, a 25-year-old oil-sands worker, is at the dealership looking for a new truck -- his second in two years.

"It's something to show off when we go back to Newfoundland next year," he says, looking at an F-150. "It's going to be a good sense of pride, knowing that you worked so hard and you've got something good to show for it."

...Seven months ago, Teasdale was digging out basements for less than $10 an hour in Nova Scotia. Now, he's making six figures and saving for a house.

Teasdale says he plans to stay in Fort McMurray for years.

115,000 US$ for operating an excavator....

i'm in the wrong business I think, hahaha

Trouble is, if the Alberta government, the federal government and those "lucky" folk earning $25 an hour working at Tims/McD's don't plan for the time when the means of extracting the tar sands oil runs out/is bought by LNG customers who can outbid Canada, what's left of their fortunes isn't going to be worth very much.
Even if the profits were coming into Canadian pockets, there'd need to be a wholesale strategic plan - and action to carry through on it - that would outline a post-carbon future's energy source and supply system. Currently there isn't one. Until there is, I reckon it's time to start making our own plans. If buddy Tim from NS is smart with his new-found wealth, he'll be building an off-grid, renewably-powered and super-insulated home as far from Fort Mc as possible...
The ownership issue, the history of the NEB and the currently low duties placed on fossil fuel production companies simply make the formation of such a national plan even harder, as you can't plan how to use/sell/conserve what you don't have the right to control...

Greetings all. This is my first post here. Just wanted to point out re: environment, if we end up in an energy depression or recession, won't most of Canada end up uninhabitable? Or, won't you be cutting down that aboreal forest for firewood to keep from freezing to death? In the scheme of things, why are we so damned worried about making a bit of a mess when the world has been here for billions of years and has undergone countless natural catastrophes and always it renews itself. I think we underestimate the power of nature and overestimate our own actions.

As Emerson said, "Drive nature out with a fork and she always comes running back." In the history of the world, our puny lifetimes are as nothing to planetary time. I'd be more worried about the collapse of civilization, after which we burn up the forests as in days of old. An energy depression means reversion to around 70-100 years ago. Think about that kind of life with albeit with 300 million people all struggling to eat and not freeze. THEN you'd have a real environmental problem. Don't you think?

Sweden builds some pretty damn good houses a long way north in the cold without using loads of heat.
Hundred's of years ago in Norway and Sweden they did the same thing, without modern technology - things like putting sod on their roofs to insulate.
Just get smart.

Sod, huh? Don't think any modern house could support that. Bugs and termites, ugh. Hey, Blanche, why's that mud leaking out of the ceiling?

Goats are the worst:

Americans! Whatever next!

The thing about your chart is that most of the decline in Canada's EROI is the gain in market share of tar sands production, which has a far lower EROI than conventional oil production, but it's still positive. I wouldn't expect that chart to continue to be linear.

Nuclear or microwave technology instead of using NG would raise it a lot anyway.
Things are bad, but not all bad.

Interesting because 5 years ago when I looked into the Colorado oil shale situation and read about the extraction problems and the amazing extremes Shell is going to, as a non expert I wondered about microwaves or building a nuclear power plant. Surely Shell thought of that too.

OTOH, If I were God, I would take away all cars from environmentalists and deny them electricity. Then see how much longer they would complain. I suspect our biggest problem is a universal lack of perspective. Then, again, the acceptance of the endless growth theory is as crazy as NIMBY Californians. We are the pampered generations that think food comes from a grocery store and electricity from a wall outlet. Looks like we've got some rude awakenings in store.

If you were god, I don't think you'd make stereotypical and immature comments. You're attacking a straw-man environmentalist that, while she may exist, isn't actually a representative sample. I can speak as an environmentalist that doesn't own any patchouli, acknowledges the need for cars and electricity, and does know food comes from hard work and killing animals. Real environmentalism is about long term planning, not pampered rich people who like to complain.

I think I see your point, but alienating people isn't constructive problem solving. I'm sorry I bit.

Then you ought to be able to separate yourself from those about whom I am referring and not take umbrage at a generalized comment and call it immature.

You missed his last point completely; you used a broad brushstroke, not a fine felt-tip marker. Good thing you're not God or you would end up accidently wiping out your chosen petro-worshippers by mistake.

Then you ought to be able to separate yourself from those about whom I am referring and not take umbrage at a generalized comment and call it immature. If I alienate people who want their cake and eat it too, then so be it.

I wouldn't expect that chart to continue to be linear.

ha! we are in the land of linearists. this is like the sacred place of the linearists.

I seem to recall that Canada was initially blamed for the Northeast power blackout, which really underscores its contribution to the power grid.

Yea! TOD CANADA is back!!

Hi Ben, thanks for you contribution. Canada seems to be sitting pretty WRT resources, but temptation to maximise short term production could cause Canada to do a UK as opposed to a Norway

Canada has huge potential for wind power to be integrated with the large hydro base. I support the idea of turning natural gas into liquid fuels, though as this technology is expanded (same with CTL) it will push the prices of these energy sources up to the same level as oil (as is happening with veg oil)

Lots of land in the Northern hemisphere is going to be very valuable.

Canada and Russian alliance to take over the world?

The give and take between US and Canada has always worked out well. We love to bicker, but in the end we get along ok. I suspect that will continue. And no, we don't want Canada as an annex or 51st state. We like you just the way you are: crazy Cannuks! After all, if we didn't have neighbors to bitch about, what would we do?

I would say that Canada is an energy colony of the States, much like Mexico, and will remain so due to facts of geography. In this regard, I think it most appropriate for Canadians to deeply consider the future of Canada "when the money's gone, and all the spending ends," as in many ways the dilemmas faced are similar to those the Saudi's face.

I would rather be in Canada than most places in the world.

Sure its cold, but insulation does wonders. In the last few years, I have personally cut my own heating bills in half. I want to cut them in half again.

Some of our power companies are very progressive. Providing up to 100% rebates on insulation costs, low rate loans for better windows, appliances and even geothermal heating:

Some parts of the country are very well suited to geothermal heating and have rather high adoption rates, which should grow as fuel prices rise.

Public transportation can be very good. So good, that I use it every day and only spend $400 per year to fuel my vehicle. I will use less, once my renovations and insulation work is complete.

There is also this matter of vast renewable resources, yet to be developed. In my own province we export electricity. There is the potential for new hydro dams adding 2000 MW. However, with higher prices I suspect 6000 MW of new dams might be viable.

We have to be careful, reduce or end personal car useage and spend the money on insulating buildings and constructing dams. It won't be easy, but we just might be ok in some parts of our northern world.

It appears that Canada showed a slight decline in net oil exports in 2007:

With Venezuela almost certainly showing a larger net oil export decline in 2007, what I find interesting is that the two largest sources of unconventional oil in the Western Hemisphere showed declining net oil exports in 2007. To the extent that Canada can show a future increase in net oil exports, it will probably be offset by declines from Venezuela, and then we have Mexico crashing, probably approaching zero net oil exports within six years.

Other than that, everything looks peachy for the closest oil exporters to the US.

WT: Peachy, indeed. When I read your "assessment" I thought Wow, that's been bubbling in the back of my mind for some time but I couldn't quite connect the proverbial dots. But you saw what should have been obvious. Its probably because the consequences could be so terrible that we just didn't want to see it. So simple: exporter consumption meets exporter decline for a net decline in exports. Add to that political hijinks and its a witch's brew.

My frequent co-author, Khebab, and I have spent a fair amount of time on this subject. Our most recent paper:

Thank you. I'll introduce myself here. I write about liquid fuels for my industry (recreational), basically just distilling and passing on what a wide range of experts write. Did a nice piece on your work today. Until three years ago I was in the "plenty of oil" camp until I became convinced that "reserve" numbers had all the same characteristics of government statistics. Almost overnight I went over to the "Peak" side. As I looked at the disparities in actual production numbers, the holes grew wider. It became obvious that the agencies and IOCs were all about avoiding panic.

Since my industry exists at the margins of discretional spending, it was imperative that my understanding be correct. I suppose it should have come as no surprise that my writing was met with the old "shoot the messenger" response. But never mind, my industry can now be officially proclaimed deader 'n a doornail. My boat building associates have a wee bit of a problem with their 600 gallon fuel tanks. Looks like I need to transition to sail boats, you think?

Do I get shot for being waay off topic here?

The critical difference between Peak Oil and Peak Exports is that our Peak Oil expectation has been a slow, steady post-peak exponential production decline rate, while our model and recent case histories suggest that a net export decline will show an accelerating net export decline rate. I've compared it to the difference between a commercial airliner doing a gradual descent for landing and a terrifying near vertical dive into the ground.

I'm afraid that one of many ramifications is that the discretionary side of the economy is going to just get crushed. I assume you saw the item in the New York Times a few days ago about the guy who is repossessing boats. Perhaps a "growth industry" might be arranging to rent out boats as housing units, since a lot of them are going to remain tied up in marinas.

And to tie it back to Canada, I believe the people who drew up the FTA (precursor to NAFTA) had a very good idea about your Peak exports model and that was why they insisted on the energy clause. Peak exports will fall all the more quickly if countries start hoarding it like they have started hoarding rice. Once it is recognized there is a shortage almost overnight we could be in a situation where there is no longer an international open market for oil.

Yeah, I thought of that. Problem is that boats deteriorate so rapidly, sorta like oil reserves, but I'm sure that many will become floating homes. I agree with you on the economy and my view is that we'll probably see another 1929, only worse. Check out the state of the banks. They are all broke, surviving on borrowed "reserves." Add to that the nation is $53 trillion in debt, plus a trillion dollars will go out for petro imports this year alone and we have all the makings of an economic disaster. Don't know about you but my home is worth half of what it was two years ago. Value is going below construction costs. Think of all the SUVs and big pick ups that are also now nearly worthless and we're getting close to a whole year's GDP ($14T) down the drain. I don't see a ray of sunshine anywhere in this.

Do I get shot for being waay off topic here?

I think not as fishing and boating have been Canadian passions/pastimes for centuries, and both are threatened by Peak Oil. I checked out your blog and noted your authorship. I fish a lot here in Oregon and note that despite $4 gas lots of folk are still filling their tanks and launching their boats. I'm hoping to take advantage of circumstances and buy a fuel efficient boat to use for the next ten years. My question for you is What do you think about Arima, specifically the 17' Sea Chaser?

I just upgraded my 2 HP Honda outboard to a Tohatsu 6 HP for my sailboat. I was down at the marina today fiddling around with the engine and putting some new blocks on the main sheet, and I thought to myself it was an sort of an ironical thing to do when oil hit $135.00!

I felt better when I looked at all the other power boats with their 25HP Mercs and such and, according to the manual, this Tohatsu guy it will go for an hour at 5000 RPM and only use up 2 litres of gas.

I got it because I was having some issues getting out to sail while going against the tides ... anyway I digress.

Great to see TOD Canada back!

Then there's the other end of the boating spectrum, where the price of fuel really doesn't matter. Had coffee this week with a power boater who doesn't know his fuel consumption and doesn't care. I've tried gentle discussions about peak oil with him but he isn't interested. One of his friends recently took his wife to Vancouver and back from Victoria; for a round-trip distance of maybe 120 miles the fuel bill was about $1000 for the two of them. These guys will be doing this for as long as the fuel barge has enough in the tank.

Wow a $1000.00 that's wild. These guys must be really wealthy, I just can't imagine. Last year I think I burned maybe 12 litres.

Speaking of fuel barges ... one major is considering getting rid of their fuel barge where my boat is located. Apparently, they need to make a certain amount of sales each year to justify the barge and they don't. In any event, if it does go away those power boaters and diesel sailboat guys with built in tanks will have to travel about 10 additional nautical miles to fill up at the next closest barge.

I just periodically fill the portable when I get gas for the car. Probably they will too I guess although they'll have to make a lot of trips ...

As an aside, having a fuel efficient outboard can have its drawbacks too. Last weekend I went out and had the last dregs of winter gas in the Honda. So I think that's why it decided to die in the middle of the bay! I did get it going but I kept the sails up all the way to my slip.

Now I have two engines and sails so no excuses for not getting home!


First, your blog is very interesting, I put it in my favorites box to come back to and see how response is going (I assume it is still pretty new by the lack of responses and comments to your posts)

I love boats, not that I have one, the cost of the boat has always been more of a deciding factor than the cost of fuel)and have always felt that the trawler class boats you mention in one of your posts is a great way to go, a slower and calmer way to go. It also fits in perfectly with my boating area, the Ohio River north of central Kentucky US.

On boating and oil, this has been an interest of mine for many years. Boating is one of the first industries to suffer during a fuel price spike, partially because so many boats are sold on speed and luxury, not of freedom of movement and enjoying the great scenery and lifestyle. In the 1970's the boating industry all but collapsed for almost a decade. Many very creative alternatives were tried, including propane and compressed natural gas as fuels. Sailboats and motor yachts were another option. The Diesel vs. gasoline price has caught many people off guard, but is explainable by the factors you mentioned plus the cost of Ultra Low Sulfur Diesel, it's requirement for the use of natural gas as a "de-sulfuring" agent. I spoke of this over a year ago in a post on TOD that was all but ignored. The odds are that Diesel fuel will not be as cheap as gasoline in the foreseeable future. Diesel fuel in recreational boating will soon begin to fade away for good.

It is to be remembered that boats were the first form of long range transportation for humans, preceding the age of oil by thousands of years.

When the day comes and oil is no longer available, and cars are no longer on the road, there will still be boats. They may not be the twin engine 60 mile per hour "blasters" we see on the water today, but there will still be boats.


All the big V-block diesels are gone, replaced by 4s & 6s inlines. Mfgrs like Cummins and Cat will be able to detune their 3000 rpm engines to turn 12-1600 rpm and turn big props. IF there is a future for boats, they will be single engine diesel trawler style boats, deep draft, big keels as of old. These will be engines that burn 2-4 gph.
There will be no more V8 gas engines. This is not 1974 oil crisis which was temporary; this time is permanent. I seriously doubt any boat or engine builders will survive this. Already closing shop in droves. Then all the subsidiary parts mfgrs go out of business too, so I foresee the entire marine industry support structure collapsing. Next, the marinas and boat yards close down. But it won't be just my industry.

What people fail to realize is just how fragile our modern economy is. Does anyone think that Boeing and Airbus will survive this? The consequences here are just awful to contemplate. To get the complete picture one has to contemplate the entire interdependency of all aspects of economic activity. Start with the fact that the Ponzi finanical system has collapsed and take it from there.

David aka research24,

I realize that I may be stepping into the jaws of a steel trap in saying this, and I should just let sleeping dogs lie, but you seem like a nice guy and as I said, I very much like the idea of a blog that follows and discusses the boat market, and issues surrounding boating such as oil prices, economics and the state of boating infrastructure today, so I am going to say what I am about to say in brief here, and just in case you are no longer following this thread, I will comment on some of your posts on your blog if you do not object...but here goes with what I have to say...

I have been a registered member of TOD for over two years. It has been a GREAT source of analysis, and some of the minds that post here are among the best statistical and technical thinkers you will find anywhere, including Stuart Staniford, Robert Rapier, Alan Drake and Jeffrey Brown. Make no mistake, I have on occasion had reason to differ with any one of these gentlemen, but I try to avoid it because I know I am usually outmatched by their knowledge and statistical abilities. In my own defense, I can swing a pretty mean rhetorical sword though, and work the logic side pretty well...:-) But...

The TOD board can have a tendency to take the darkest possible view of all things, and once a very dark scenario is proposed, it can have a tendency to become self feeding. This leads to scenarios that are so grim as to surpass normal comprehension. Often, the grim scenarios proposed, while having the possibility of coming to pass, are seen by most people (including many people in the energy business and some pretty good statisticians) as being statistically highly unlikely to occur. This does not mean they are not possible, but that in many cases they are highly unlikely. Just as the "cornucopian" can reassure us that IF everything goes well, we're fine, so the "doomer" can make a case that if everything goes horribly wrong, we and our culture are all dead (and sooner than the normal course of nature would kill us off anyway)

What I am trying to say is that it is advisable to take many of the darkest scenarios seen on TOD with a huge grain of salt. It is clear by your description of the future of the boating industry that you are depicting a scenario far grimer than almost anyone in that industry would imagine. Since the scenario you are proposing for that industry would mean the absolute death of that industry, it goes without saying that few in the boating industry can accept or make use of such a scenario other than to simply abandon the industry and...?

This is the problem with all doomsday scenarios, in that leave no future course of action open as viable. The logic works like this:

"We are all doomed"
What can we do?
"Nothing will really change things"
So what should we do?
"We must change in a major way"
Will that save us?
"No, most of us will perish or be reduced to absolute poverty, anarchy and slavery"
Then why should we try to change?

As one can see, it becomes a tautological argument, and most people will recognize it as such, and as such, completely useless.

So don't expect anyone in the boating industry to support such logic if the only answer comes out to be the death of the industry. Why should they? Now on the other hand, if we take a more balanced view and discuss real alternatives, and use real examples (one thinks of the European boating industry which has long survived in the face of fuel prices far higher than we in the U.S. have ever paid, or the Japanese boating industry, operating in a nation of high prices and no home resources)or the possibility of alternatives (there are such things as electric boats, solar can be used on boats, steam and Stirling engines are thoughts, fuel cells are possible, etc.

Of course, many will make the case here on TOD that these alternatives have a low probability of working. Perhaps so, but if the only alternative is certain death, why not try something? Even if
we can't afford to take the boat out of the slip, these ideas would make some great debating material to kick around on rainy days down at the waterfront pub! :-)

So don't give up the ship just yet (o.k., nautical pun intended! :-) we still have some interesting times ahead of us, on land and water!


If I lived in as cold a climate as Canada I would be conserving as much energy as I could for future generations. Besides that, why sell now when it will be much more valuable in the future?

I think our Canadian friends have a much brighter future that we in the States. Their nation isn't hopelessly in debt and borrowing more every day, doesn't have a nearly worthless dollar, has high energy-to-population ratio plus resources. Americans may be warmer, but Canadians are at least solvent. American's net worth is fast approaching zero.

This is a wonderful analysis. Canada seems to have some potential.

Unfortunately my generation know that Canada will always be drawers of water and hewers of wood for the US. Somehow Canada has never come close to its destiny.

It is a G7 by coincidence not by good planning and management. It should have been a G2 at least.

I cannot get enthusiastic because my Canadian pension (for a G7 country) is a sick joke.

Here's an update on the Hyperion nuclear battery:

Hyperion offers a 70% reduction in operating costs (based on costs for field-generation of steam in oil-shale recovery operations), from $11 per million BTU for natural gas to $3 per million BTU for Hyperion. The possibility of mass production, operation and standardization of design, allows for significant savings.

This is not going to solve all the water use issues, but appears to me a much superior solution to using natural gas.
I tend to like mass-producible, factory built solutions.