Date Added: 2008-12-29
Date Modified: 2010-07-17
Silver Donald Cameron
Viewing the world from Nova Scotia
Silver Donald Cameron
30 May 2010
The Lonely Mission of David Hughes
What's the true value of a barrel of oil?
Around $70, say the markets. The market value of anything is the price that a willing buyer will pay and that a willing seller will accept.
David Hughes shakes his head. It is a big head, with a high forehead topped by a thatch of curly hair. Hughes is a hydrocarbon geologist, a veteran of 32 years with the Geological Survey of Canada. He is now an independent consultant living in Cortes Island, BC. His special interest -- his obsessive interest -- is the rate at which human beings have been consuming the earth's fossil-fuel supplies. He has spoken about this subject all over the world, including here in Nova Scotia.
For Dave Hughes, the value of a barrel of oil is the amount of work the oil can do. It represents about six gigajoules of energy. A joule is roughly the amount of energy it takes to lift an apple from the floor to the kitchen counter. Six gigajoules is six billion joules, enough energy to lift that apple 6,000,000,000 times.
Put a guy on a treadmill wired to a generator, and in an hour he can generate about 360,000 joules. Keep the guy on the treadmill continuously except for breaks, weekends and holidays. How long will it take him to produce the energy contained in a barrel of oil? About 8.6 years -- and if you were paying him the Alberta minimum wage, you'd owe him $138,363.
That's the real value of a barrel of oil. Oil is a miracle substance. It has given us a lifestyle hitherto obtainable only by people who owned slaves, and we literally treat it like garbage. That plastic bag you buy, the bag that was created for the sole purpose of being thrown away, is made out of invaluable, irreplaceable, vanishing oil.
And the era in which that was possible, the era of cheap fossil fuels, that era is ending. Spreading that message is what Dave Hughes is all about.
Discussions of energy supply have been dominated by economists, not geologists. Economists will tell you that shortages make prices rise, and rising prices create additional supplies or alternative technologies or both. So the problem is self-correcting.
Geologists reply that the economists' model only works if there is no limit to the potential supply But that's a fictional world. In this world, Dave Hughes notes, what count are things like EROEI, or Energy Return On Energy Invested, a very different measurement.
In traditional oil fields, EROEI is about 100 to 1. You consume one barrel of oil to drill a hole in the desert, and 100 barrels come gushing up. Today, EROEI in traditional oil fields has fallen to 25:1. Oil scraped off the surface of Alberta's tar sands has an EROEI of only 6:1. Oil retrieved from deep in the tars sands has an EROEI of 3:1. The ratio for corn-generated ethanol is barely over 1:1.
Oil supplies with an EROEI lower than 1:1 will never be produced, no matter how high the price of oil, because they absorb more energy than they yield. And that's why it's meaningless to note that there may be billions of barrels locked up in formations like oil shales, which have never been mined at a net energy profit. It's possible, of course, that technology will find an efficient way to extract oil from such sources -- but not soon, and not on a sufficiently massive scale to allow us to continue using oil at our present breakneck clip.
Fundamentally, to understand EROEI is to recognize the truth of Dave Hughes' analysis. Obviously, if we had access to plentiful oil reserves with an EROEI of 25:1 or so, we would not be bothering with low-yield sources like corn ethanol and the tar sands. We would not be spending $100 million to lower a drill bit through a mile of ocean water in order to drill down through four more miles of Brazilian sea-floor.
But we are.
We are not "running out of oil," Hughes agrees. But we are certainly running out of cheap, easily-recovered oil. We are about to discover the real value of oil, and it may not be a pleasant experience.
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I'm Silver Donald Cameron, a professional columnist and author. My most recent books are Sailing Away from Winter, and The Living Beach. For more about me, go to www.silverdonaldcameron.ca
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