On Low Quality Hydrocarbons (Part I)

As most of us here know, the planet offers extremely large amounts of low quality hydrocarbons (LQHCs) that could, in principle, be converted to synthetic crude to displace conventional oil as it depletes. The major sources are tar sands (especially in Alberta), oil shale (especially in Colorado), and extra-heavy oil which will not flow readily (especially in the Orinoco region of Venezuela). Then there is also the possibility of converting coal to liquid hydrocarbons via the Fischer-Tropsch process.

Many peak-oil sceptics believe these resources will save our high-acceleration gasoline-powered lifestyle. In this two part series, I'll look at some models of how such a transition might occur.

Several of these LQHC processes have been commercially demonstrated. Canadian oil sands are in production today to the tune of about 1 million barrels per day. Venezualan heavy oil has been sold as an electricity feedstock (in the form of an emulsion with water called Orimulsion) and about 600,000 mbpd of upgraded crude is being produced (I've seen varying numbers here). Coal was converted to fuel by the Germans during WWII, and by the South Africans during the sanctions regime. Oil shale has not been commercially developed in the US, but there's been some production elsewhere in the past, and apparently, Shell is having some luck with a pilot in-situ process (which does not require water - the main scalability curse of prior schemes). More projects are being contemplated.

Although all of these resources differ in exactly how they are obtained, they are similar in that they are much more expensive to extract - requiring lots of capital, energy input, etc, to produce a useful output. One measure of this is the EROEI - the energy return on energy invested - how much energy you have to put in to to extract and make usable a resource versus how much you get out. In the early years of conventional oil, EROEI was often over 50. These days it's probably in the low teens (10-12). EROEI on LQHCs tends to be around 3.

However, the total amount of these resources is at least as big as the world's endowment of conventional oil, perhaps significantly bigger depending on eventual recovery rates. Canada has nearly 2 trillion barrels of tar in the tar sands, though only 300GB are currently viewed as recoverable, Venezuela has 1.4 trillion barrels of extra heavy oil, though recovery rates are unlikely to ever exceed 20%. Colorado has entire mountains of oil shale. The governor of Montana has argued that Montana has enough coal to provide the US with all the syncrude it needs for 40 years.

Folks who are sceptical that peak oil will be a significant problem are fond of pointing to these resources. For example, a Hubbert linearization analysis makes it fairly clear that CERA is relying on these resources to support its optimistic view that peak oil production will be a bumpy plateau several decades long. On the less thoughtful end, Marshall Brain used them to argue oil depletion would not be a problem.

Alternatively, folks who are very concerned about peak oil tend to discount these resources. Deffeyes in his book Beyond Oil says:

As the Middle East swings into its decline phase, a rapid and enormous investment in tar-sand facilities would be required. In my opinion, the preliminary steps to acquire government permits, investment capital, and construction capability are not going forward on a scale large enough to postpone the Hubbert Peak.
Hirsch argues that coal-to-liquids will be the dominant mode of adaptation for vehicular transport post peak, but that we need to start work on it twenty years in advance of conventional oil peak to avoid a significant liquid fuels crisis. We probably didn't start twenty years in advance.

I have argued elsewhere that the main variable controlling our ability to adapt to peak oil is the post-peak depletion rate. Gentle depletion (a few percent a year) give us time to develop and deploy conservation technologies, better electric cars, more nuclear and renewable electricity generation, etc. On the other hand, rapid depletion means we will be running out of liquid fuels faster than we can develop these alternatives and will be in a world of hurt. I deliberately defined the depletion rate there to be inclusive of LQHCs, since you can't tell the difference when you pump it into your tank at the gas station.

Now clearly, the depletion rate of conventional oil is moderated by the ramp-up in production of LQHCs. If LQHCs could be ramped up fast enough they could fully offset depletion, and maybe even allow continued growth in liquid fuel use (with some non-trivial climatic consequences). If not, then we indeed have a bad problem.

The arguments for saying we have a bad problem tend to be threefold. One comes from looking at the relatively modest expansion plans of the industry right now and arguing they aren't sufficient to offset depletion in conventional crude, either because peak is coming soon, or because we extrapolate that the industry in future won't be able to expand much faster than it is at present. The second argument comes from looking at the poor EROEI of these fuels and suggesting this fundamentally limits the ability to grow the usage of these fuels. And the third issue is the climate implications of burning all that gunk.

Let's dig into the problem in more detail with a little scenario analysis.

The situation today is that conventional oil production (including NGL but excluding LQHCs) is around 83mbpd (depending on whose production statistics you like), while production from LQHCs is around 1.6mbpd. (1mpbd from tar sands and about 600,000 mbpd from Venezuelan extra-heavy oil). We're going to take two scenarios for conventional oil production.

Our worst case scenario is that it's peak now (as Deffeyes has argued, and as the absence of any worldwide spare capacity might suggest), and that annual depletion will go 3% in 2007, 6% in 2008, 9% in 2009, and then consistently 12% after that. Ie the whole world is going to start behaving like the North Sea (which has started depleting at 10-15% annually).

My mild case assumes that CERA is right that a bunch of new deep water projects will allow production to grow at 2% annually until 2010, and then depletion will set in, rising quickly to a sustained rate of 5% annually.

I believe the truth will lie somewhere between these two scenarios, but I wouldn't like to try to pin it down too exactly just yet.

Now, if we would like post-peak total hydrocarbon fuel to be flat, instead of declining, the balance is going to have to be made up from the LQHCs. Just above are the LQHC production numbers needed to do that under the two scenarios. Note that these are net numbers (ie after whatever must be burned just in getting the stuff out of the ground and into a usable form). These numbers are whatever we can actually pump in the pipeline from Canada or Colorado or put into a a tanker in Venezuala. I also stress this is what is required to get flat global production. Not flat production per-capita, and certainly not business-as-usual 2% annual liquid fuels growth post conventional oil peak.

On the face of it, these graphs don't seem outrageous given the enormous size of the resource. But there's a problem, which I would like to christen the Hirsch gap in honor of the lead author on the Hirsch report.

The problem is clear in the graph above which looks at the approximate annual growth in LQHC net production required to balance the depleting conventional oil. You can see the growth rates needed are astronomical, even under the mild scenario. The problem is that when you have a really big production stream (conventional oil), and a little tiny production stream (LQHCs), it takes very large growth rates in the latter to compensate for even modest depletion rates in the former. Are these outlandish looking growth rates likely to be feasible?

This is why Hirsch thinks we needed to have started adapting twenty years prior to peak - to avoid having to grow LQHCs that fast (or experience the consequences of failing to do so). The problem ameliorates over time as the LQHCs become the dominant source of production and don't need to grow that fast to compensate for the depletion in the little remaining crude production.

In the second part of the series we'll look at physical restrictions on how fast poor-EROEI fuel production can grow, how the required rates compare to industry's current plans, and the CO2 implications of using LQHCs.

Totally excellent post.
The problem is that when you have a really big production stream (conventional oil), and a little tiny production stream (LQHCs), it takes very large growth rates in the latter to compensate for even modest depletion rates in the former. Are these outlandish looking growth rates likely to be feasible?
I think here that the situation is actually even worse because, of your four unconventional sources, only oil sands and heavy Orinoco crude have any chance of getting off the ground soon. Synfuels from coal are hard to pin down. People keep telling us it's coming but it never comes. Oil shale seems pretty hopeless in the time frame of your Required Annual Growth Rates in LQHC Production graph (and I would argue hopeless in the general case). And even for the Canadian oil sands, optimistic estimates are only in the range of about 4/mbd by 2020. So that leaves Venezuela, Hugo Chavez and Operation Balboa :)
"Synfuels from coal are hard to pin down. People keep telling us it's coming but it never comes."

It's already here, and it's been here for a long time.  It's not here outside of South Africa (which achieved petroleum independence through Sasol's CTL technology) because the breakeven price for Sasol CTL is around $40/bbl, and international energy companies still have a $30/bbl breakeven ceiling on investments in new projects.

Even Sasol, which has experienced a tremendous windfall from current crude prices, uses the $30/bbl ceiling:

"GIULIETTA TALEVI: Getting back to that oil price - we�ve seen it spike up recently to $70 a barrel - can you tell us what the average price you achieved over the period was, and where you see that price going for example in the next year?

PAT DAVIES: The average price we achieved is $44.40 a barrel for the year. We believe it�s very high at the moment, and things such as Hurricane Katrina and other impacts have made it even higher than it normally would have been - so we expect it will stay fairly high in the next couple of months. But then, say, in a twelve-month period out it would be between $45 and $50 is our best guess, but it�s very difficult to estimate.

GIULIETTA TALEVI: You�ve got a much more conservative estimate when it comes to planning for future investments - you�re talking about oil being at $30 a barrel - can you explain why there�s such a big difference as far as the investment outlook is concerned?

PAT DAVIES: Yes. This is really just to be conservative - obviously oil prices have fluctuated quite a lot over the last 50 years, and when they�re high everyone believes they�ll stay high, when they�re low everyone believes they�ll stay low - so while we�re all pretty bullish that oil prices are going to stay reasonably high, not at the current $60 level, they�ll come off that. But for investment purposes - where one is investing large amounts of money into projects that need to run for 20 or 25 years - then one needs to be more conservative, and ensure that they�re profitable even at lower prices. That�s why we take a conservative $30 a barrel view at this point in time."

Once the investment planning ceiling exceeds the breakeven cost for CTL, you'll see huge investments, and CTL will be everywhere.  Until then, publicly-traded corporations have a fiduciary responsibility not to build it.

As I posted earlier, Canadian tar sand production actually fell by 30%
in the first 6 months of this year and only part of this was due to the
fire at Suncor.
I don't believe non-conventional fuels will allow us to continue on the path we've been on.  I don't believe that the production volumes (capital costs) can be put in place in time.  But unlike Hirsch et. al., I'm not going to say that we have to have made the invesment prior to hitting the wall.

Economies can handle shocks.  We have to have a shock.  Or a couple.  Major ones.  That will help to get political minds and the populace in line, similar to the way people accepted 55 mph during the last shocks.

There is an enormous amount of demand destruction--with attended lowered standard of living and job losses--that is available with the appropriate shove across the tipping point.  Lovely Rita must might do the trick?  I think not.  We need a real shock that starts resolving all the global investment imbalances.

There is a path to the other side.  A path through the bottle neck.  People don't model it cause they don't know how.  Too complicated.  But with all the great work at places like this, we're getting there.

You talk about demand destruction as if demand destruction was a solution. Aparently you don't KNOW what is demand destruction...

Get a history book, there is a good example of demand destruction, look at 1929, you know, when disemployement hit 50 %, the soup lines, the nazi coming to power at Germany...

THAT is demand destruction...and demand destruction isn't nice thing to happen.

João Carlos

Sorry my bad english, my native language is portuguese.

Joao Carlos. Excelent reply, and no need to appologize. I could not agree more. Everyone must realize what peak oil means in the reality of this current world. The United States will continue to get more beligerent, both abroad and domestically as the thin veneer that cheap oil provided us, is stripped away. Mark my words, what you saw in the aftermath of Katrina(meaning the slow federal response and the draconian attitude of many in law enforcement), is what's in store for all of us.

Peak oil is so much bigger than just a bunch of static charts and depletion rates. It will dig straight to the bone of our civilization. It will and already has, changed the face of my beloved country. In a mere 5 years we have gone from superpower of last resort,to the biggest bully on the planet. And it only gets worse from here on out. If even the best case scenario is what we have to look forward too, then God help us all!!

Robert NW Ohio

That's why we need smart economic growth focusing on creating a society that truly values our precious natural resources. Personally we need to increase efficiency in all areas of oil consumption - driving less in more efficient vehicles, create more public transportation, eating less meat, start rethinking suburban development, etc, etc

I guess I am too cynical to think that people will do this out of altruism.  It is far too ingrained in our nature for us to do whatever the hell we want.  The only thing that will force a more responsible attitude is higher prices.  For gas, for meat, , for oversized housing, etc.  With higher prices, people will figure out how to adapt on their own.

The transition will take time, of course, and aspects of this are outside of the control of the individual.  Things like availability of mass transit, for example.

I hope we have that time!
There is no other alternative guys.  I understand what demand destruction means.  But look at the facts.  The political will has not existed in the US to change course.  It will not change course until there are food lines and people losing their homes and rising crime and all the other problems associated economic dislocation.

I've read history.  I'm familiar with the pain of demand destruction.  Accept it.  The dream of five TVs and three cars, the dream of living in a suburb 60 miles from your place of work, and 20 miles from the nearest major thoroughfare, must end.

My point is clear.  I do not believe alternatives will make up the difference.  At some point, significant demand destruction will be necessary in order to shake up the tree, at least here in the US.

You can propose alternatives.  I try to be as realistic as possible when approaching this topic.

Please propose what you think WILL HAPPEN.  That is what I am discussing.  What will happen.  Based upon the best of my intution, looking at the numbers (CERA, ASPO, Reynolds, etc etc) and considering economic issues and human nature, the politics of the US, etc.

So please please tell me WHAT YOU THINK WILL HAPPEN.  The world is living beyond its means.  Money is sloshing around going into investements that are dead ends (condo towers, etc).  It won't stop until there is a collision.

Alternative are welcome.  We can put together all kinds of depletion graphs, economic/geolocic depletions graphs, but that does not tell us what will happen.  We can describe what we SHOULD do.  But in my opinion, starting with the Reagan years in the 1980s, the vision of a free party, of techno-tax-cut utopia, has been ingrained in the thinking of the American people.  They then pull out argument after argument:  WE WON THE COLD WAR, ENERGY WAS CHEAPER, AMERICA IS THE KING OF THE WORLD.  This has to be knocked out.  Energy must be more expensive enough so that people make a conscious choice when getting into that car to drive to the corner store.  They don't now.

So yes, we can pretend.  We can invision a perfect future.  Or we can be realists, accept what must come, and work with it.  What must come, in my mind, maybe in a year, maybe in five years, maybe in ten years, is demand destruction.

Alternatives are more than welcome.

Another great article, and I look forward to the second part since in my own research I wound up somewhat optimistic about the ability of LQHC supply to grow proportionally rapidly, particularly given that much of the capital and resources previously being put towards conventional oil production and discovery no longer will be.  

Given the context of your previous article suggesting rough 4% and 11% depletion rate cutoffs as far as impact on civilization, I think you're being a little pessimistic by trying to get LQHC to cover all depletion, rather than, say, lower 6% or 12% depletion to 3% depletion or the like.  In other words, the situation may be milder than the "mild case" and is probably not as bad as the worst case if we're just wondering what the odds are of civilization surviving.

This may just be outside the article's scope, but do you see no future for thermal depolymerization as a significant low-quality oil source?  Have to consider all the angles.

JT - I pretty much agree on the possibility of LQHCs essentially being a depletion reducer rather than a complete offsetter - there's just a lot of scenarios one might build, and only so much time and reader patience, and I decided to go with a "what would it take for CERA to be right?" approach in this particular post.  I'll look at what might be more realistically achievable next time.

I haven't studied thermal depolymerization much yet.


Or as Simmons always says - there is no silver bullet, but many, many small things that will have to come together for us to smooth out the depletion curve. Reducing wasteful consumption and increasing alternate production are the keys.
And as I posted above, there will be demand destruction--or pain--along the way.  The pain of a guy who just purchased a hummer and can no longer afford to drive it.  The pain of someone who purchased a home 60 miles out who can no longer afford to commute.  In some of these cases, there will be no satisfactory answer--or a partial answer for this person--but a reality for them will be a loss of income, a loss of future income because they chose to purchase that hummer, or to buy that overpriced house in the desert east of LA that requires non-stop air-conditioning during the hot times of the month.

Some bad decisions have been made.  Undoing them will be painful.

That's definitely true TRE. The question is how will those people channel their frustration? That's the mega political question of the 2006 / 2008 election cycle.

BTW - great post Stuart. I'm a big fan of your analyses.

That is simple: the Republicans will blame the democrats, Clinton and the liberals for the high gas prices. And they will say that the solution are more tax cuts.

They will win the elections again...

That's my nightmare. But really I hope someone points out that the republicans have controlled congress for over 10 years now and the White house for 5 years. They built up a huge deficit, lost a war in Iraq, missed 9/11, botched NOLA, pissed off most of the world and accomplished very little except accelerate sales of SUVs and suburban sprawl.
Bah....the Republicans can make worse. They can blame the democrats, Clinton, the liberals, the gays and teaching evolution at public schools as the reason there are high gas prices. And they will say that the solutions are cut taxes, social security reform, ammendment the Constitution for send gays to concentration camps and make sure no science (evolution, Hubert's Peak, Global Warming) be tauch at the public schools, you know, who need science?

And the american public will give the victory to these guys because, you know, they are macho and USA need fight "the terrorists"...

What saddens me most is that a Brazilian (or Portuguese) understands the US better than the majority of those who liver here.

There was a story on public radio about Hummers in Paris.  With gas at 7$/gallon, it costs about $250 to fill the tank.  If you used this as a daily driver, and filled once a week, you are looking at $13,000/Yr.  There will always be people rich enough to do this, of course.  They claimed that sales were still strong - I guess that says something about the demographic that is buying the things.  Ultimately the demand for those things will have to collapse though.
Recession would certainly 'help'.

But as in the above rather 'market forces' piece, Hubbert foresaw the implications -
"Our window of opportunity is slowly closing... at the same time, it probably requires a spiral of adversity. In   other words, things have to get worse before they can get better. The most important thing is to get a clear   picture of the situation we're in, and the outlook for the future - exhaustion of oil and gas, that kind of thing -  and an appraisal of where we are and what the time scale is. And the time scale is not centuries, it is decades."

Sadly, no-one listened, it is no longer decades.

The bottom line is that there is no alternative for cheap energy, and adapting to high cost eneergy will bring massive unemplyment and social dislocation. Highly unpalatable. Likely to be true. No escape.

Lewis Karrick found another process for "oil from coal", or liquefaction, called Low Temperature Carbonization (LTC). But the website that had the link is having problems (http://www.rexresearch.com/)
Great post as usual! in the mild case scenario, we are supposed to get 20 mbpd in 2015, Canadian tar sands are planned to reach 5 mbpd around that time which represents a growth rate of 100% in 10 years (7% annually)! the infrastructure investment required is simply huge without looking at the environmental cost. With no technological silver bullet, I don't see how LQHC could fill the gap.
sweet post and great replies

So we all know that transportation is the problem not electricity.

---Best Case-(economy good,environment good)---
So we all know that a renewable, no-carbon-emissions economy is the best case (with strong (and not-greedy) leadership from national governments)but here is what i think could happen

---Medium Case (good for rich people)-(economy good,environment bad)---
USA, EU and Asia ramp up LQHCs production soon and fast.  This is possible with strong (and greedy) leadership from national governments.  Whole sectors of economy disappear and all the people have to be retrained and relocated to help build LQHCs and fill in holes in manual labor force (office workers become farm workers).  Poor countries economies suffer the most and poor people suffer the most (big suprise).  In the short-term everything seems fine and then global warming kicks in and things get worse.  

---Medium Case (good for poor people)-(economy bad, environment good)---
USA, EU and Asia wait to long to begin transistion and the crash makes poor countries independent and everybody moves from cities to countries to farm. This is most possible with poor leadership from national goverments.  Everybody reorganize around renewable energies and no global warming.

---Bad Case-(economy bad, environment bad)---
USA, EU and Asia wait to long to begin transistion and the crash makes poor countries independent and everybody moves from cities to countries to farm. Rich country leadership goes crazy and uses LQHCs to reconquer the world and global warming kicks in. (long emergency)

The 3 main factors in this were national leadership, global warming and HQHC supply destruction.

I personally think that the (good for rich people) Medium Case will happen and global warming be the problem of the future. (not really problem but 'guiding force')

(science fiction on global warming:
Forty Signs of Rain by Kim Stanley Robinson)

(fiction movie about human rights:

You are forgetting one possible major factor: government shortsightness and inertia that can lead us to fierce competition and resource wars.
I do think that in spite of the Iraqi fiasco there are still lots of people in Washington that consider seriously attacking Iran thus killing two birds with one shot - securing a strategical resource and suffocating China. I even fear that the second goal has greater importance than the first one. I even imagine them think "If we have control of the Middle East while oil production from the rest of the world is declining - then the world is effectively ours". This strategy could explain why US administration is doing actually NOTHING for lessening oil dependance. Even zero cost measures like (serious) CAFE standards or lower highway speed limits are not even under consideration.
Excellent post and comments. Two quick remarks:

  1. Governments and bureaucracies might be better adapted to dealing with emergencies and disasters (read: demand destructions), than with slow adjustments. It is sad, but it might be true. Emergencies call for tools that are readily available to them: rationing, emergency legislation, expansion of the regulatory apparatus, etc. Slow adjustments, on the other hand, might unsettle the political balances that keep them in place. To put it otherwise, governments have very limited foresight, and short memory spans (maximum plus/minus four years). This might explain our inability to deal with PO until it is too late...
  2. I was reading something today about "network effects", and I realized how relevant they are for the post-PO period...Network effects might lower the cost of alternative fuels (e.g., Fischer-Tropsch liquids currently cost up to 10 percent more than conventional diesel). On the other hand, it might be unwise to encourage too many alternative fuels, because we might end up with networks which are too small...
Shale oil, as we have often heard, is problematic as well - see the Rand report linked here:
Excerpt: "Under high growth assumptions, an oil shale production level of 1 million barrels per day is probably more than 20 years in the future, and 3 million barrels per day is probably more than 30 years into the future."
Right, I was writing my comment when you posted yours. Thanks for the link. In any case, shale oil doesn't help in Stuart's scenarios as we track the ability of unconventional sources to compensate for conventional oil declines going forward.
Re: "Shell is having some luck with a pilot in-situ process..."

Here's a report on Gauging the Prospects of a U. S. Oil Shale Industry from the Rand Corporation which does not have that breathless "oh wow" quality of the Rocky Mountain News article cited.
As for in-situ retorting -- heating oil shale in place and extracting it from the ground -- Shell Oil Company has successfully conducted a small-scale field test based on slow underground heating using electric power. While larger-scale tests are needed, Shell anticipates that this in-situ method will be competitive at crude oil prices in the mid-$20s per barrel.

A design base for a full-scale commercial surface retorting plant or an in-situ operation is at least six years away. Assuming the private sector decides to invest in oil shale development and production, we expect that an oil shale industry capable of producing more than a million barrels per day is at least 20 years off.
Also, the in-situ method does require some water in order to work. From the News article: "And we've hardly gotten to the really ingenious part yet. While the rock is cooking, at about 650 or 750 degrees Fahrenheit, how do you keep the hydrocarbons from contaminating ground water? Why, you build an ice wall around the whole thing." It's hard to know how much water a commercial operation would require bbut I'll bet Shell's got numbers on that. There is little water available on the Western Slope here in Colorado, a situation which will be getting worse in the future.
Look, you have to trust me on this, but you are reading PR.  These guys are not 30 years away from commercializing oil shale.  They are, at minimum, 100 years away from commercializing oil shale.  

What Shell is doing in Colorado was done much bigger and better by the Swedes in WW-II.  Shell's successes are small and unimpressive.  They have not broken any new ground here in anything they have done.  And don't believe them when they say the process does not use water.  In fact don't believe them at all.

Oil shale and tar sands do not belong in the same category.  Tar sands have gone through the pyrolysis reaction and have been converted from kerogen to hydrocarbon.  Oil shale has never gone through this reaction.  Parts of the tar sand resource are producible as "cold hydrocarbons" (parts of Peace River for example).  No oil shale will "give up" any of its hydrocarbons without heating the rock up to 350 to 400 deg C.

If you want to know more about this, I wrote about it at the attached link.


Thanks, Bubba. I was looking around for your link but I couldn't find it or remember it. I'll bookmark it this time since the issue comes up over and over again.

Which is why I said, starting this thread off
Oil shale seems pretty hopeless in the time frame of your Required Annual Growth Rates in LQHC Production graph (and I would argue hopeless in the general case).
Even the Rand data seemed hopeless to me. If oil shale prospects are even worse than that, it doesn't surprise me. Quoted EROEI estimates in the 3 to 3.5 range seem unrealistically optimistic to me. Also, there are obviously big technical "challenges" that have not been solved. I hope Stuart takes this into account when he does Part II of his excellent post.
I have a copy of an article but it is unfortunately at home. I can get back an quote some figures if you are intrested.

During WW2 in sweden we had a surplus of electricity, a fair ammount of wood for heating and lacked coal and most of all oil.

The process to get oil out of a layer of oil shale a few m thick some tens of m to the surface were to drill an array of closly spaced holes and proceed in a line across an area. First the ground water pumps advanced and I guess there also were permanent pumps around the perimeter. The idea were to get rid of any water that could transport away the heat from the process. Then there were lines of resistive heaters lowered into the holes and following them lines of condensors connected to the holes where the outgassing from the heated layers where cooled with ambient air and the condensate and gas collected.. All these systems were constantly batchwise moved forward on railtracks. Heat leaking forward was productive het, the ammount leaking sidewas were small due to the lenght of the line and heat leaking backwards were used for the last stages of extraction but most heat energy were left of the layer to cool off during decades of noxious seepage to the surface. An idea never pursued was to use that heat by building a greenhouse on top of the area to use the "free heat" left from the process. I guess oil was to cheap for that idea to make sence and the grocerys might have gotten a slightly tarry taste. :-)

No water needed but lots and lots of electricity and a disregard for the local environment.

I would be very interested in a reference.
You didn't mention that it takes on average 1000 cu feet of Natural Gas to produce 1 barrel of oil.  I worked out the EROI as 5:1 however that neglects the fact that Tar Sands are totally constrained by the amount of natural gas available.

With all the demands for gas in the future how will we make this amount of gas available for making oil??

I agree that's the way it's done now, but it doesn't seem to me they are restricted to do it that way.  In future, they can use part of the syncrude output to power catalytic cracking of the tar.  That will lower EROEI (which is why I quoted three as a better long term number).
In my view the worse case scenario for the human race and the planet would be best case scenario for the development of the LQHC's. Imagine if they could be developed rapidly enough to offest the depletion of conventional oil even to the point of allowing a growth in annual consumption of all oil sources. The vast majority of people and certainly the business and political leaders, technotwits, flat earth economists etc would all chorus to the effect that "there again, the threat of die-off has been averted by yet another resource substitution via human ingenuity...Julian Simon we love you...AND old habits will continue (assuming the exacerbated global warming doesn't stuff us all in the meantime) and the unsustainable level of economic activity will be that much higher and almost certainly guarantee a die-off scenario!
Exactly my thinking.  Thank you for saying it.  We need some major shocks to get people to understand that the eternal game of exponential growth will come to an end.  We need a 70/80s style shock followed by another one so people realize: "this isn't stopping."

The political implications are a little frightening, particularly in the US.  We've got a faith-based post-modernist reality-be-damned collection of leaders at this time whose primary response to problems is ideological and public relations to gain political advantage.

Stuart - Excellent post! I look forward to meeting you at the Peak Oil and Sustainability Conference in Ohio this weekend - it will be surreal with all of us discussing energy while a Cat 4-5 makes landfall in the oil region simultaneously.

Regarding your 4th graph - the "Hirsch Gap" as you call it - this is where Katrina/Rita and other events like them can be blessings in disguise (well, sort of )If oil has a superspike now, it will cause enterpreneurs to invest in LQHC technology faster and perhaps that curve is lower.  Ultimately, the answer lies in reduced consumption though - we HAVE to get there at some point - but will be mroe possible if there is not an infrastructure meltdown first due to large Hirsch Gap.

This is good research and an interesting post, but it assumes that to avoid substantial demand destruction, we will have to maintain a steady supply of the liquid fuels that we now obtain from conventional petroleum.

This assumption neglects the possibility that there could be a shift away from liquid fuels to solid fuels (coal, oil shale burned directly rather than refined) and nuclear power. These energy sources, and renewables, could (at least hypothetically) be ramped up as energy sources and used in part to power fuel cells for transportation.

Of course an expanded use of solid fuels and nuclear power would have terrible consequences for the environment and the climate.

And of course there will be economic dislocation and pain, no matter what, if only because of the gaping financial imbalances.  However, I think the fact remains that there is an awful lot of capital now deployed speculatively in search of returns because conventional industries now mostly have excess capacity and offer diminishing returns.  Energy development offers an avenue for productive capital investment that offers a good prospect of solid returns.  For this reason, I think that energy development will see investment on a massive scale.

Thanks, Stuart. Here's  Boone Pickens' take on LQHC's from 23 June 2005:

"Like Simmons, Pickens doesn't believe that the oil sands are an effective substitute. Pickens said Tuesday that huge development costs and a tight labour supply will prevent the Alberta oil sands and other unconventional means of production from covering the shortfall in supply. That said, Pickens holds a big stake in both the Canadian Oil Sands Trust [TSX:COS.UN] and Suncor Energy [TSX:SU].

According to Boone, "You add about a million a day [of oil sands production] for about $40 billion per million, that's about $360 billion dollars to add 9 million barrels a day...Could it be done? The money could be available for that. I'm not so sure if the human resources could do it."

In terms of other unconventional production sources, Pickens believes that with high oil prices and government assistance, the possibility for a bona fide shale play to develop in the Rocky Mountains is distinctly possible."

Article at: http://www.resourceinvestor.com/pebble.asp?relid=10766

I'd like to see the analysis extended to a Peak Oil 2015 scenario. To me this is the kind of time frame the evidence is pointing to, from oil market behavior, to al-Husseini's comments, to some of the CERA analysis, to the Exxon report (which predicted a non-OPEC peak by 2010). Your so-called "mild" scenario of a worldwide peak by 2010 is actually quite extreme by mainstream standards.
Mmmm.  But generally the forecasts are assuming significant support from LQHCs to get those later peaks.  Eg. CERA is for sure - they say explicitly that things would start to get sticky after 2010 if it wasn't for the  unconventional oil.  After all, when all the projects coming on line are in 2 miles of water or have heavy sour oil, or are in some completely unstable part of the world, or all of the above, we're obviously getting to the end of sensible places to look for conventional oil.  I'm trying to break out the conventional stuff from the LQHC and ask whether what reasonably optimistic forecasts are assuming for LQHCs looks plausible or not.  It is certainly true that if you believe OPEC's reserve numbers, my mild scenario looks radical.  But I don't see how anyone can look with any care at the history of OPEC's claimed reserves and find them credible at all.  I cannot come up with any plausible way a rational reserve estimation process would have come up with those particular time series, so I think they're almost certainly all liars, and I am assuming that those reserves mostly don't exist.
Re: "CERA is for sure - they say explicitly that things would start to get sticky after 2010 if it wasn't for the unconventional oil"

Right, of course. What new conventional oil are you talking about, Halfin? Are you talking about deep-drilling stuff? All that has been covered in HO's continuing series on new CERA projects, off Brazil, Gulf of Guinea (West Africa), etc.

About OPEC's reserve numbers, again, it is necessary to say that in the late 80's all the Middle East nations doubled their numbers to allow additional production under new rules at that time. We don't know those numbers now but their reserves (???) haven't fallen since then.
One of the best documents I've ever seen on oil sands and peak oil is The Oil Sands of Canada (big pdf warning) from Raymond James.

This document, beginning on page 40 (out of 138), begins a section entitled Hubbert's Curve And Its Implication on Oil Sands Investment. Just before that, they have sections on Many OPEC Countries Have Passed Peak Production and Several Non-OPEC Countries Have Passed Peak Production. This is really precious because these are financial people trying to get you, the investor, to put your money down on oil sands production as a lucrative future investment.

I can not praise this document enough as a guide to our general future and in particular our future concerning liquids from oil sands in Alberta, Canada. Invest, go for it!
Stuart - thanks for replying.  The oil shale EROI is worse at

"The energy balance is favorable; under a conservative life-cycle analysis, it should yield 3.5 units of energy for every 1 unit used in production."

This is from http://www.rockymountainnews.com/drmn/news_columnists/article/0,1299,DRMN_86_4051709,00.html

At this EROI WITH natural gas then the EROI using the products to heat the ground will be much lower probably not even breaking even.

The EROI problem is significant for the LQHC. Stuarts curves omit an important fact: tar sands and extra-heavy oil has EROEI about 3 - 3.5. Because there will not be any extra energy anywhere to produce oil from these the needed enenergy must be produced from those same LQHCs.

If we take EROEI as 3 we need 33 units of energy to get 100 units of net energy. That is also net energy from LQHC so we need 11 units of net energy to produce that and so on. The result is that to get 100 units of net energy we need to produce about 48 units of energy from the LQHC source. So the gross production should be 50% higher than the net gain. This makes the required totla production growth rates far higher.

Tar sands production is essentially mining. It is not possible to increase that in the required pace. Extra-heavy oil is different but the required growth rates here are also simply impossible.

Oil shales are not oil and their EROEI is so bad that for above reasons they are not a viable alternative. Only small volumes might be possible. Oil shales are now used for power generation just like coal and this is the best EROEI use for them.

Syncrude fron coal is a non-starter because coal is needed for other purposes and the coal deposits are already depleted. It is not possible to increase coal production that much. Because of the bad EROEI for syncrude from coal it makes more sense to use coal for the present purposes. Lignite has a very bad EROEI for syncrude and is used mostly for power generating. Its role will be there.

Tar sands and extra-heavy oil will have a bigger future role as substitutes for conventional oil but their energy role will more like that of coal: they will provide long-term relatively stable basic energy supply. They will help to stabilize the fossile fuel supply in the far end, 50 - 100 years forward and be mostly substitutes for depleting coal. This is significant for the likely peak oil scenarios. It might well be that extra-heavy oil will be used mostly for power generating where the EROEI is better.

I think that it is quite clear that LQHCs will not save from the effects of conventional oil depletion but they can mitigate the overall energy shock somewhat.

PS: We must remember that world natural gas will start depleting also in 10 - 20 years. World coal will have its peak probably in the same time frame. Therefore syncrude making with bad EROEI is not a good idea. In the after Peak Energy situation EROEI will become very important efficiency factor. The climate problems will aggaravate this. This means that the share of oil in the future energy mix will be considerably smaller both relatively and absolutely.  
How bad can some people's math get. Suppose 100 tons of crude is extracted each day. Of this 33 tons is set aside for tomorrow's production and 67 tons goes to market.
Better check your own math.
You are both essentially saying the same thing. What he is sayng is that for 100 net tons of crude we need to burn 48 tons of crude.
You are saying that for 67 tons of crude released for the market you need to set aside 33 tons for tomorrow. Now divide 100 / 48 = 2. Deviding 67 by 33 equals also 2. You are both effectivly sayng that from each 3 tons out of the ground one ton is lost for the extraction process.
But as for the growth rate this is not a relevant variable. It affects only the capital cost and the depletion rate per net (usable) unit of energy. In case of EROEI = 3 we have to invest 50% more money per net energy (you have to invest for 3 tons but you get only 2 tons) and you deplete your resources also 50% faster. If EROEI is 2 the capital costs and depletion rats are doubled.
It is of curse true that growth rate for net and gross LQHC would be the same if the LQHC syncrude poduction would be done only on energy from LQHC. But this is not the case today. Tar sand oil is extracted using natural gas. I don't know about Venezuelan extra-heavy oil, but may be they also use other fuels as energy source in extraction.

The gross energy viewpoint sheds light to the problem of volumes. It is not same thing mining 100 million tons of something or 150 million tons. While the relative growth rates are the same, absolute are not. In coal mining a 10% yearly growth is extremely high.  

What exactly is EROEI? Is it the total amount extracted divided by how much it took to extract it? Is it the amount sent to market divided by what it took to extract it? What is included in the energy investment? Pimental would include the energy used to build the factory that made the tools used to make the factory to make the plow that the farmer uses to plant his crop. Where is the line drawn?
I would say that it is amount sent to market minus the amount used to extract (the net energy) versus the amount invested.
There is another moment - the energy used to extract oil usually does not come from the oil itself. But from a societal perspective (and also from cost perspective assuming close prices per calorie of different energy sources) this is irrelevant - we are still receiving less energy returned no matter of the form.
The statement in the initial post is precise: if we start large scaling and using only LQHC the efective EROEI will not be 3:1 but 2:1 - this is because the "1" part in 3:1 also has to be obtained from LQHC at some point. For me personally this means deminishing the possibility of LQHC to solve our problems unless they are coupled with some HQ energy sources. BTW is it a coincidence that a nuclear power plant is proposed to fuel the tar sands extraction process? Something tells me that in the end it will be built especially having those natural gas prices now.
I should probably know this, but is there a way to use energy from the tar sands themselves to fuel the extraction and refining process? If you're using natural gas for fuel, and have a terrible EROEI, then you've caused a lot of pointless waste.

But, if you have a surplus or unusable energy source (as the tar sands basically are), using a lot of that low-quality source to get a little high-quality energy might be an acceptable tradeoff. Example: if you're in Iceland, with a tiny population sitting on enormous geothermal resources, using a lot of geothermal to make a little hydrogen can be a reasonable tradeoff-even if the EROEI is dreadful.

The process as it exists now uses natural gas for two purposes, as fuel to heat the water and the oil, and as a source of hydrogen.  You can use anything for the heat, but the hydrogen now has to come from natural gas.
This is pretty far outside my field...but what about sticking a nuclear plant in the middle of Alberta and using it instead of natural gas? See Sept. 22 Wall Street Journal, page B6, Total May Use Atomic Power At Oil-Sand Project. (I subscribe, so I don't know if a link would work for non-subscribers.)

Reference is made to a nuclear plant (four small reactors) running a gold mine, of all things, in the Soviet Arctic, starting in the '70s. So there is a precedent, of sorts.

Anybody have a guess on how much natural gas a 500 megawatt reactor could replace? Heck, go for broke -- make it a 1500 monster, like we've got here in Lithuania. Could this work?

I found this site this morning and have found it very informative. I am already aware of the peak oil problem, and have also researched unique aspects. Though it is not directly relevant, I wish to bring up a few issues.
Transportation currently depends upon oil. The simple reason usually sited is the energy density per gram (along with ease of transport/storage). Conventional vehicles can be converted to run on other energy sources such as hydrogen (I've witnessed an ICE running on hydrogen, it was even a V-8). HOWEVER, hydrogen is only an energy storage method.... it must be produced. The average consumer is unaware of this. Also, to approximate the milage recieved from burning 15 gallons of gasoline (using btu's)a car would need to burn the equilivant of 32 gas bottle cylinders of Hydrogen. In addition, an enormous amount of energy is required to generate this Hydrogen. Assuming a good portable storage solution is found, the impact of converting an entire nation's transportation to electricity could more than double (conservative) demand. Granted solutions exist, but the U.S. has not build any new nuclear plants in a very long time. In other words, transition from petropowered transportation to any other form is not realistic with 5 years, even with a huge monetary incentive. Those who cite hybrids and other 'progress' need a reality check. GM has been talking for more than 5 years about its' hybrids and hydrogen vehicles yet nothing has been brought to market to date. Sorry about the rant, but I feel there is one very large implication no one is realizing. Without oil, large scale transportation is not possible.
(P.S. I drive an 11 year old chevy... it has held up great and I believe the only thing that will do it in is a lack of fuel to run it)
About 15 years ago Scania developed a large truck engine that ran on wood-gas, CO rich gas from partly combusted wood burned to completion in the engine. So it would essentially be possible to run a truck fleet on finely chopped firewood. I do not know why they developed it, perhaps their development team did it for fun, perhaps they got some funds from the defence ministry before we entered the era of eternal peace and we still had money set aside for civil defence in Sweden. Back then we had diesel and petrol stocked for at least ONE YEAR but that went away with the cold war, now we have dozens of empty rock cavers. Anybody needing some oil storage space? Its even  bombproof. :-/
For a visualization of the current peak oil & depletion scenario models we have their comparison data on one graph to illustrate peak production, depletion and exhaustion.   Currently we include Colin Campbell from ASPO, Jean Laherrere, Rembrandt Koppelaar, BP, ExxonMobil, EIA, IEA & OPEC. We update them as new versions are made public so visit often! http://TrendLines.ca/economic.htm

This is the second year of our project and each month we have visitors from over 30 nations.