Cumulative Oil Consumption by The Human Race

Peak Oil and the Future of Energy
Sponsored by
The City of North Vancouver
Greater Vancouver Regional District
Capilano College Global Stewardship Program
November 26-27, 2006
J. David Hughes
Geological Survey of Canada
dhughes@nrcan.gc.ca
GEOLOGICAL SURVEY COMMISSION GÉOLOGIQUE

OF CANADA DU CANADA
CALGARY CALGARY
Points to be covered:
- Patterns of Energy Consumption and Production:
- History - what actually happened “Hindsight”
- Forecasts - always arguable and debatable:
-“economists vs. geologists”
-“geologists vs. geologists”
-“optimists vs. pessimists”
- Magnitude and Distribution of Remaining Energy
Reserves and Resources:
- Implications for security of energy supply
- Where does Canada Stand in All This?
- Some thoughts on the way forward: Challenges and Changes

for a Sustainable Energy Future
1
World Primary Energy Consumption: 1965-2005
By Region By Fuel
Asia Pacific 173% increase in World
Africa
10000 Middle East 10000 Consumption 1965-2005;
Former Soviet Union 2005 increase = 2.7%
Europe
S. & Cent. America 218%
North America o
dr
8000 Hy lear
Million Tonnes Oil Equivalent
8000

c
Nu
600%
439% 93%
6000 787% 6000
Coal
62%
4000 4000 292%
Gas
87%
350%
2000 2000
Oil 151%
91%
0 0
1965 1970 1975 1980 1985 1990 1995 2000 2005 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year Year
Highest growth in 2005 = Asia Pacific 5.8%; Coal 5.0% (data from BP Statistical Review of World Energy, 2006)
World Energy Consumption 1990-2030 in Three Projections

(2005-2030)
Economic Cases (EIA, 2006)
900
High Economic Case +85%
800 Reference Economic Case
Low Economic Case +60%
700
+40%
Quadrillion Btu
600
500
400
300 History Forecasts

200
100
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Year
(History: BP Statistical Review of World Energy, 2006;
Forecast: Energy Information Administration International Energy Outlook, 2006)
2
Forecast Growth In World Energy Consumption, 2003-2030
(EIA, 2006, Reference Economic Case)
By Economic Development By Fuel
800 800
72% increase in World
Consumption (2.0%/year)
700 700
600 600 1 %
s +9
43% ble
n ewa 1%
Quadrillion Btu
Quadrillion Btu
/Re +3
500 500 dro lear
Hy Nuc
OECD Countries +32%
400 (18% of 2006 World 400 Coal +95%
Population)
300 56% 300
Gas +92%
200 200
Non-OECD Countries +121%
100 (82% of 2006 World Population) 100 Oil +48%
0 0
2003 2008 2013 2018 2023 2028 2003 2008 2013 2018 2023 2028
Year Year
(data from Energy Information Administration International Energy Outlook, June, 2006)
Summary
- Hydrocarbons provided 88% of the world’s primary
energy in 2005
- Forecasts suggest that 86.5% of a greatly expanded energy

demand will continue to be provided by hydrocarbons in
2030
- Most of the balance of energy supply will be provided by
large hydro and nuclear – sources with their own
environmental problems
- The Question is: IS THIS SUSTAINABLE?
…… Lets look in more detail at oil, gas and coal
3
OIL
- The largest source of energy in the world (36.4% of
primary energy consumption in 2005)
- The ultimate fuel for international trade – easily moved

by tanker and pipeline
- Highly subject to Geopolitics – the OPEC cartel has three
quarters of remaining reserves and the only remaining spare
production capacity – terrorism or natural disasters like
Hurricanes Katrina and Rita can cause extreme price
volatility
- Alternatives to oil have seen similar price spikes over the
past several years (natural gas, coal and uranium)
1085 Billion barrels

Cumulative Oil Consumption by the Human Race as a
Consumed
Percentage of Total Consumption through Yearend 2005
100
90% 2002
90
Cumulative Consumption as Percentage
50% of the OIL 80% 1998

80 Consumed by the
Human Race 70% 1993
70
of Total Consumed
90% of the OIL Used Since 1984 60% 1989

60 Consumed by the
50% 1984
50
Human Race
Used Since 1958 40% 1979
40
30% 1974
30
20% 1968
20
10% 1958
10
5% 1946
1% 1922
0
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Year
(Source of data: BP Statistical Review of World Energy, 2006)
4
World Oil Production and Consumption 1965-2005
Production Consumption
90 90 164% increase
up 1.3% 2005
Former Soviet Union Former Soviet Union
80 80 over 2004 5%
OPEC OPEC
Non-OPEC 14% Non-OPEC 11%
70 70
Million Barrels per Day

60 60
F.S.U. %
F.S.U. 88
144%
42% 14% C 4
50 50 E
OP
40 OPEC 40
135% 84%
30 30
Non-OPEC
164%
20 20
44%
Non-OPEC
10 182% 10
0 0
1965 1970 1975 1980 1985 1990 1995 2000 2005 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year Year
(data from BP Statistical Review of World Energy, 2006)
Forecast World Oil Consumption 2003-2030 Projections

in Three Economic Cases (EIA, 2006)
280 +71%
260 High Economic Case
240 Reference Economic Case +48%
220 Low Economic Case
+29%
200
Quadrillion Btu
180
160
140
120
100
80
60
40
20
0
03
05
07
09
11
13
15
17
19
21
23
25
27
29
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Year
5
World Conventional Oil and Oil Sands* Reserves 1980-2005
1200 100%
Percentage Share of Remaining World Oil Reserves

1100 90%
1000
Other OPEC 80%
900
mirates
Arab E 70%
United
OPEC
800 65%
Kuwait 60%
OPEC 75.2%
Billion Barrels
700
600 Saudi 50%

Arabia
500 40%
400 Iraq 30% 12%

300 Iran Former Soviet Union
Non-OPEC 20% 10.2%
200 Former Soviet Union
Other Non-OPEC 23%
100
10% Non-OPEC
14.6%
Other North America
0 U.S.A. 0%
1980 1985 1990 1995 2000 2005 1980 1985 1990 1995 2000 2005
Year Year
* Includes Oil Sands Reserves “Under Development” (data from BP Statistical Review of World Energy, 2006)
Oil Reserve Reporting in Selected OPEC Countries, 1980-2005,

Representing 88% of 2005 OPEC Reserves and 66% of World Reserves
800 Reserves inflated
by 285 Gbbls
or 69% over Implication
700 five-year period Venezuela Some of the
in 1984-1988 422 Gbbl or
without major 113% increase
600 Kuwait
new discoveries in reported
QUOTA WARS reserves over
Iraq the period may
Billion Barrels
500
be spurious
400 Iran
300 United Arab Emirates
200
Saudi Arabia
100
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Year
These Countries also Produced 181.6 Billion Barrels over the Period
6
World Oil Reserve to Production Ratio in Years Including
Oil Sands* and Possibly Spurious post-1984 OPEC Reserves
90
1990
1991
80 1992
Years of Production at Current Rates
1993
1994
70 1995
1996
1997
60 1998
1999
2000
50 2001
2002
2003
40 2004
2005
30
20
10
0
OPEC Non-OPEC F.S.U. Total World
The Growing Gap between Production and Discovery of

Regular Conventional Oil (1930-2050)
60
World Discoveries Peak in 1965
50
Past Discovery
Billion Barrels per Year
Future Discovery
40 Production
30
Production
20 has Exceeded
Discoveries
10 since 1984
0
1930 1950 1970 1990 2010 2030 2050
Year
Past discoveries have been backdated with revisions
from ExxonMobil (2002) to reflect “Reserve Growth”
(from Campbell, personal communication, September 2006)
7
World Oil Production Peak
WHEN?
- Debatable, because of the variables, BUT IT IS HIGHLY
LIKELY TO HAPPEN
DEPENDS ON:
- ULTIMATE RECOVERABLE RESERVES - a function of:

- Mother Nature’s Endowment (total discovered and
undiscovered resources)
- Technology and Price (determines economics)
- Reserve Appreciation (Growth) in known pools (through
more drilling, better technology and higher prices)
- RATE OF CONSUMPTION - a function of:
- Price (controls economic growth and
encourages/discourages conservation)
- Infrastructure for production
- Depletion rates of producing pools
Year of Peak Production and Percentage 2005 Production is below Peak

0
-10
Percentage Below Peak Production
-20
-30
-40
13 Countries Peak
-50
Since 2000
-60
20 Countries Peak Since 1995
= OPEC Countries
-70
Venezuela 1970
Canada 2004
Trinidad & Tobago 1978
Iran 1974
Iraq 1979
Uzbekistan 1999
Malaysia 2004
Other Africa 2004

Libya 1970
Argentina 1998
Australia 2000
USA 1970
Romania 1977
Indonesia 1977
Cameroon 1985
Other Europe & Eurasia 1986
Egypt 1993
Syria 1995
Rep. of Congo 1999
Oman 2001
Norway 2001
Yemen 2002
Other S. & C. America 2003
Turkmenistan 2003
Vietnam 2004
India 2004
Denmark 2004
Kuwait 1972
Tunisia 1980
Other Asia Pacific 1993
Gabon 1996
Mexico 2004
Other Middle East 1970
Peru 1982
Russian Federation 1987
United Kingdom 1999

Colombia 1999
Brunei 1979
63% of 2005
(data from B.P. Statistical Production was from
Review of World Energy, 2006)
Country
Countries Past Peak
8
Campell's 2006 Hydrocarbon Liquids Production and Forecast 1930-2050
35
Natural Gas Liquids Peak 2030 Combined Liquids
Polar Oil Peak 2030
Deep Water Oil Peak 2011 Peak 2010
30 Heavy Oil Peak 2030 (89 MMbbls/day)
Other Peak 2004
Russia Peak 1987
Middle East Gulf Peak 2005
Billion barrels per year
25 Europe Peak 2000

US 48 P k 1970
EIA Projections (Oct 2005):
2004 – 82.5 MMbbls/day
20 2005 – 83.6 MMbbls/day
2006 – 85.4 MMbbls/day
15
10
0
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Year
(C.J.Campbell, personal communication, September, 2006)
OPEC's Production plus Surplus Capacity December 2002

versus August 2006
34.08 MMbbls/day
35000 Other Liquids

28.4 MMbbls/day Iraq
30000 Venezuela
Thousand Barrels per Day
UAE
Saudi Arabia
25000
Qatar
Nigeria
20000 Libya
Kuwait
15000 Iran
Indonesia
6.3 MMbbls/day
10000 Algeria
~1.45 MMbbls/day
5000
0
OPEC OPEC Surplus OPEC OPEC Surplus
Production 4Q Capacity 4Q Production Capacity
2002 2002 August 2006 August 2006
(Data from U.S. Energy Information Administration, 2003 and September, 2006)
9
Published Estimates of Conventional World Oil Ultimate Recovery
USGS 5% 2000
USGS Mean 2000
USGS 95% 2000
Campbell 1995
Masters 1994
Campbell 1992
Bookout 1989
Masters 1987
Martin 1984
Nehring 1982
Halbouty 1981
Meyerhoff 1979
Nehring 1978
Nelson 1977
Folinsbee 1976
Adams & Kirby 1975
Linden 1973
Moody 1972
Moody 1970
Shell 1968 Consensus Estimate
Weeks 1959 ~2000 Gigabarrels
MacNaughton 1953
Weeks 1948
Pratt 1942
0 0.5 1 1.5 2 2.5 3 3.5 4

Source: USGS and Colin Campbell Trillions of Barrels
(from Wood, USGS, 2000)
Campbell’s (2005) Estimate of Future Discovery Rates

Which
givenUSGS
USGS P5,estimate
P50 and P95 to believe?
estimates
80
Past Discovery
Future Discovery
70
USGS F95
USGS Mean
60 USGS F5
Future discovery
50
Rates for the
EIA’s Reference
Gb
40
Case Forecast
30
20
10
0
1930 1950 1970 1990 2010 2030
(from Campbell et al, 2005)
10
Forecast of World Peak Oil Production Using EIA Methodology Assuming
USGS (2000) P50 Ultimate Recoverable of 3003 Billion Barrels and 1.4%
Yearly Growth in Consumption
140000
EIA forecast peak – 2040
(P50 - 82% consumed)
10 Year
120000 R/P Decline
Oil Production (thousand barrels per day)
EIA (2005) reference forecast to 2030

100000
2018 – 50% Consumed >20 Years
80000
Assumptions:
Ultimate Recoverable 3 Trillion barrels
60000
EIA (2006) Reference Case
Growth in Consumption
40000
20000
93% of all oil consumed on Earth
has been consumed since 1950 History Forecast Implication
0
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070
Year
(Source of data: BP Statistical Review of World Energy, 2006; Wood, USGS, 2000; EIA IEO, 2006)
EIA World Oil Production and Consumption Forecast 2003-2030

(Reference Economic Case)
Production 140
Consumption
140 48% increase Range of Peak Production
Unconventional
1.4%/year estimates of Duncan,
Non-OECD
Laherrere, Campbell, Bakhtiari,
OECD 120
120 OPEC
Ivanhoe, Deffeyes and others
539%
Million barrels per Day
nal +
Million barrels per Day
100
100
nv e ntio
o
Unc
80 80
Non-OECD +67% Non-OECD +84%
(82% of 2006 Population)
60 60
OECD -7%
40 40
51%
61%
20 OPEC +43% 20
OECD +23%
(18% of 2006 Population)
0 0
2003 2008 2013 2018 2023 2028 2003 2008 2013 2018 2023 2028
Year Year
11
Peaking Profiles of Giant and Super Giant Fields at 30-50%
of Total Production Suggests Peaking of World Production at
82% of Ultimate Recoverable Consumed is Wishful Thinking
Somotlar, Russia Romashkino, Russia Prudhoe Bay, Alaska
3.5 1.8 1.6
3 1.6 1.4
1.4 1.2
2.5
1.2 1
2 1
0.8
1.5 0.8 Peak Peak
Peak 0.6
0.6
1 42%
At 42% 0.4 At 47% 0.4 At
0.5 0.2
Produced 0.2 Produced Produced
0 0 0
1970 1975 1980 1985 1990 1995 2000 1949 1957 1965 1973 1981 1989 1997 1969 1974 1979 1984 1989 1994 1999
Forties, United Kingdom Oseberg, Norway Gullfaks, Norway

0.6 0.5 0.6
0.5 0.4 0.5
0.4 0.4
0.3
0.3 0.3
Peak 0.2 Peak Peak
0.2 0.2
At 30% At 45% At 50%
0.1 0.1 0.1
Produced Produced Produced
0 0 0
1975 1979 1983 1987 1991 1995 1999 1986 1989 1992 1995 1998 2001 1986 1989 1992 1995 1998 2001
Year
(data from Simmons, “The Saudi Arabia Oil Miracle”, February, 2004)
Post 1997 Estimates of the Time of Peak World Oil Production

Campbell 2006
Campbell 2005 Includes Non-
Deffeyes 2005 Conventional Oil
Campbell 2004
Bakhtiari 2004
Laherrere 2003
Laherrere 2002
Nemesis 2002
Smith 2002
Deffeyes 2001
Duncan 2001
Campbell 2001 Based on
Assuming
Laherrere 2000 USGS 2000
Symmetrical Peak
USGS P95 2000 Ultimate
USGS P50 2000 Recoverable
EIA USGS P50 2000* Peak at 82% of Ultimate Recoverable Consumed P50 and P95
Bartlett 2000 Estimates
Consensus
Campbell 1999
Peak 2010
USGS Magoon 1999
IEA WEO 1998
Edwards 1997
Ivanhoe 1997
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
(Source Bentley, 2002; Wood, USGS, 2000;
Year of Peak Production
*EIA IEO, 2006, reference case demand growth
of 1.4%/year and USGS P50 2000 estimate and peaking at World R/P of 10 years; Oil and Gas Journal, 2004; and others)
12
North American Oil Consumption and Movements: 1965-2005
U.S.A.
20
Consumption
(up 79%)

15 Net Imports
(67% of 2005
consumption)
10
Peak
Production 1970 Production
(up 231%) Production (up 938%)
5 (down 40%
Canada Net Exports Mexico
4 from Peak) 4
3 3
Net Exports
2 2
1 Consumption up 101% 1 Consumption up 555%
0 0 0
1965 1975 1985 1995 2005 1965 1975 1985 1995 2005 1965 1975 1985 1995 2005
Year Year Year
North America Reserve to Production Ratio in Years Including

Oil Sands* 1990-2005
50
1990
45 1991
1992
1993
40 1994
1995
1996
35 1997
1998
1999
30 2000
2001
25 2002
2003
2004
20 2005
15
10
0
U.S.A. Canada Mexico North America
13
Canadian Oil Production and Imports 1985-2005
(12 month centered moving average)
Liquids Production Crude Imports
3000 3000
Pentanes Plus
Condensate
Bitumen
2500 Synthetic 2500
Medium and Light
Thousand barrels per Day

Heavy
2000 2000
1500 1500
1000 1000
500 500
0
Production up 59% Imports up 226%
0
19 /07
19 /07
19 /07
19 /07
19 /07
19 /07
19 /07
20 /07
20 /07
7
19 /07
19 /07
19 /07
19 /07
19 /07
19 /07
19 /07
20 /07
20 /07
7
/0
/0
85
87
89
91
93
95
97
99
01
03
85
87
89
91
93
95
97
99
01
03
19
19
Month Month
(data from Statistics Canada, October, 2005)
Canadian Oil Imports and Exports 1985-2005
Crude Imports Total Exports

1800 1800
Exports up
1600 1600 245%
1400 1400
1200 1200
1000 1000 Net Exports

800 800
600 600
400 400
Exports offset
200 Imports up 226% 200
by Imports
0 0
1985 1988 1991 1994 1997 2000 2003 1985 1988 1991 1994 1997 2000 2003
Year Year
(data from Statistics Canada, October, 2005, and BP Statistical Review of World Energy, 2005)
14
Canada Scenarios of Oil Production Excluding Oil Sands (NEB, 2003)
Supply Push Scenario Techno-Vert Scenario
1.8 1.8
Peak 2006 Eastern Canada
Peak 2005
WCSB Condensate
1.6 1.6
WCSB Conventional Heavy
WCSB Conventional Light
1.4 1.4
1.2 1.2
1 1
0.8 0.8
0.6 0.6
0.4 0.4
0.2 0.2
0 0
2000 2003 2006 2009 2012 2015 2018 2021 2024 2000 2003 2006 2009 2012 2015 2018 2021 2024
Year Year
(data from National Energy Board, July, 2003)
Yes, But We’ve Got the

OIL SANDS – More Oil than Saudi Arabia!
- The Oil Sands cannot significantly offset declines in world production because of the lead
times and capital investment required. Massive expansions in the Oil Sands and Venezuelan Orinoco
extra-heavy oil belt could increase combined production from 1.74 million barrels per day at present to as
much as six million barrels per day by 2025, which is only 5% of EIA forecast World Demand in 2025.
- Oil from the oil sands is very energy intensive – Forecast four- to five-fold growth to 2025 will
require between 1.6 and 2.3 bcf/day of natural gas, which is approximately equivalent to the planned
maximum capacity of the MacKenzie Valley pipeline of 1.9 bcf/day, or about one-fifth of forecast Canadian
domestic consumption.
- Expansion of capacity is limited by natural gas supply and natural gas price, which could
destroy economics if there are shortfalls in supply, barring widespread application of non-thermal
processes, or switching to alternative fuels.
- Expansion of capacity is limited by water supply (1need average of 1-2 barrels of make-up water
for every barrel of oil, depending on recovery method and technology), let alone future expansion unless
technologies to reduce water consumption and/or further recycle water can be employed.
- Expansion of bitumen export capacity may also be limited by projected shortfalls of

condensate/light crude diluent for blending which are forecast to occur in the 2004-2006 timeframe
(National Energy Board, 2003), requiring other alternatives such as synthetic crude or conventional light oil.
(1CERI report 2003)
15
Current Developments are Already on a
Massive Scale Let Alone Quadrupiling Production
10 Km
Canada Scenarios of Oil Production Including Oil Sands (NEB, 2003)

4 4
3.1% of EIA forecast 2025 World demand Oil Sands In Situ
Oil Sands Mining
Eastern Canada
3.5 3.5 WCSB Condensate
WCSB Heavy
WCSB Light
3 In Situ +285% 3
In Situ +252%
2.5 2.5
Oil Sands Oil Sands
2000-2025 2000-2025
2 Mining +503% +400% 2 Mining +400% +330%
1.5 1.5
1 1
0.5 0.5
0 0
2000 2003 2006 2009 2012 2015 2018 2021 2024 2000 2003 2006 2009 2012 2015 2018 2021 2024
Year Year
16
EIA World Unconventional Oil Production Forecast 2003-2030
(Reference Economic Case, 2006) – includes Biodiesel, Ethanol,
Coal-to-liquids, Gas-to-liquids, Oil sands, Extra Heavy Oil and Oil shale
12
9.7% of forecast 2030 World Oil Consumption
10 Central and South America

Africa
Middle East
Asia 60%
8 OECD Europe ela ) +3
zu
Other North America
United States V ene
ainly
6 a(m
eric Overall Growth
Am
entral 2003-2030 +539%
C
4 nd
o uth a Asia +950%
S
2 Canada +350%
United States +650%

0
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
Year
(data from Energy Information Administration, International Energy Outlook, June, 2006)
Hirsh et al, 2005
SAIC / MISI
(from Hirsh et al, 2005)
17
Energy Profit Ratio for Liquid Hydrocarbons
High
Energy Return on Increasing Energy Input
Energy Invested
Energy Energy
Source Sink
(EROEI > 1) (EROEI < 1)
University Pimentel
of Minnesota and Patzek
Low
Li i l
na l
Ex Hea il
Bi on
l
ue ds
Sh ol
l
Bi Oil
Ta ids
Et el
Et l
i
H Oi
no
O
se
lO
O
n
s
n
i
ie
ie
ct
qu
ha
ha
as avy
l L r Sa
ve nal
vy
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od
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fa
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C ntio
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to
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(biodiesel, ethanol from University of Minnesota

on
oa
"N Co
Proceedings of National Academy of Sciences

C
"
"
July, 2006, and Pimentel and Patzek, 2005,

ld
Source
"O
Nat Resources Research (Vol. 14:1, 65-76))
Energy Profit Ratio versus In Place Oil Resources

(Energy Return on Energy Invested)
Energy Profit (EROEI > 1)
Energy Sink (EROEI < 1)
In Place Resources
The Issue is Not Resources – its Deliverability – How Fast

Can These Resources be Converted into Supply in the
Face of Growing Demand?, and at What Cost? We are
not running out of OIL – there will be oil in 100 million
years - it just won’t be recoverable at an Energy Profit
Oil Shale Oil Sands Heavy Oil, Light Oil,

Enhanced Primary
Recovery Recovery
18
GAS
- The third largest source of energy in the world after oil and coal (23.5% of
primary energy consumption in 2005)
- Largely landlocked when it comes to international trade, unlike oil and coal –
6.9% of World consumption (6.7 Tcf) was moved by Liquefied Natural Gas (LNG) in
2005
- Natural Gas is difficult to store by comparison to Oil and Coal (approximately
3.2 Tcf of “working” storage in the U.S. or 50 days of U.S. Supply) - North America
is a Continental gas market- about 2.9% of North American (ie. U.S.A.) consumption
was moved as LNG in 2005
- LNG entails an energy loss of between 15 and 30% for liquefaction,

transportation and regasification, as LNG must be cooled to –165 degrees Celsius
for movement by ship, with attendant greenhouse gas emissions
- LNG is subject to Geopolitics as three-quarters of remaining natural gas reserves

are located in the Former Soviet Union and the Middle East, as well as the NIMBY
syndrome in locating new receiving terminals in North America because of
perceived dangers by the general public
World Gas Production and Consumption: 1970-2005

Asia Pacific 168% increase in Consumption
Africa
250 250 up 2.3% 2005 over 2004
Middle East
Former Soviet Union
Europe
S. & Cent. America % 2527%
67
200 North America 51 200
0%
222 141
9%
Billion cubic feet per Day
1389%
150 150
311% 219%
100 100
191% 671% 363% 606%
50 50
12% 15%
0 0
1970 1975 1980 1985 1990 1995 2000 2005 1970 1975 1980 1985 1990 1995 2000 2005
Year Year
19
Forecast World Gas Consumption 2003-2030
in Three Economic Cases (EIA, 2006) Projections
240
High Economic Case
220 +120%
Reference Economic Case
200 Low Economic Case +92%
180
+67%
Quadrillion Btu
160
140
120
100
80
60
40
20
0
03
05
07
09
11
13
15
17
19
21
23
25
27
29
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Year
World Gas Reserves: 1980-2005

7000 100%
90%
6000 29% Middle East
80% 40%
Percentage of Remaining Reserves
5000 70%
Trillion Cubic Feet
60%
4000
Middle East
50% 38% Former
Soviet Union
3000 32%
40%
Former
Soviet Union 30%
2000
Asia Pacific
20%
Asia Pacific Africa
1000 Africa Europe
Europe 10% S. & C. Ameri
ca
S. & C. America 12%
North America North America 4%
0 0%
1980 1983 1986 1989 1992 1995 1998 2001 2004 1980 1983 1986 1989 1992 1995 1998 2001 2004
Year Year
20
World Natural Gas Reserve to Production Ratio in Years
1990-2005
120
1990
1991
100 1992
1993
1994
1995
80 1996
1997
1998
1999
2000
60 2001
2002
2003
2004
40 2005
20
0
North America Europe Rest of World Total World
Campell's 2006 Gas Production and Forecast 1930-2050

25
Peak/Plateau
Conventional Gas
20 2025
Unconventional Gas
Conventional Gas Peak of All Gas

2045
15
10
0
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Year
21
Campell's 2006 Total Hydrocarbon Production and
Forecast 1930-2050
60 Unconventional Gas
Gas Peak/Plateau 2025 Total Hydrocarbon
Natural Gas Liquids Peak 2030 Peak 2010
Polar Oil Peak 2030
50 Deep Water Oil Peak 2011
Heavy Oil Peak 2030
Other Peak 2004

Russia Peak 1987
40 Middle East Gulf Peak 2005
Europe Peak 2000
US-48 Peak 1970 Liquids Peak
30 2010
20
10
0
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Year
North American Gas Production and Movements: 1985-2005

United States
70
Total Consumption
60
Imports
50
Canada: 121% increase in Peak

Production
Production 1985-2005; 40 2001
Production down 1.3%
since 2002 Peak
30
Production
2002
Canada
20 20
Production
Billion cubic
feet per Day
15 51%
10
Exports 10
5 Consumption
0 0
1985 1990 1995 2000 2005 1985 1990 1995 2000 2005
Year Year
22
North America Natural Gas Reserve to Production Ratio in Years
1990-2005
80
1990
70 1991
1992
1993
60 1994
1995
1996
1997
50 1998
1999
2000
40 2001
2002
2003
2004
30 2005
20
10
0
U.S.A. Canada Mexico North America
Canada’s Remaining Discovered and Undiscovered Conventional

Marketable Natural Gas Resources According to NEB (2006)
Estimates including Lifetime assuming 2005 Production Rates
PROVEN 24% PROVEN 15%

RESERVES
RESERVES
CONSUMED (9.4 years)
63% (9.4 years)
77% HOPED FOR: RESOURCES
(4.9 years)
UNDISCOVERED
RESOURCES RESOURCES 8%
(4.9 years)
(46.9 years)
13%
Remaining Discovered
Discovered Resources
and Undiscovered Resources
(Resource estimates from National Energy Board, March, 2006, Report 2006-A, as at December 31, 2004;
2004 Proven Reserves from CAPP, 2006; 2005 Production from Statistics Canada, 2006)
23
Canada’s Exploration Treadmill – more and more drilling
to find less and less gas
Wells Drilled 17
Production Reserves
16000 66
16 65
15 64
14000
14 63
13 62
12000
Number of Gas Wells Drilled
12
61
Production (bcf/day)
11
10000 60
Reserves (Tcf)
10
59
9
8000 58
8
57
7
6000 56
6
5 55 2005 Estimated
4000 4 54
3 53
2000 2 52
1 51
0 0 50
1996 1998 2000 2002 2004 1996 1998 2000 2002 2004 1996 1998 2000 2002 2004
Year Year
Year
(Drilling Statistics: Canadian Association of Petroleum Producers;
Marketable Production: Statistics Canada; Remaining Reserves: Canadian Association of Petroleum Producers)
NEB, July, 2003, Deliverability Scenarios from Existing Gas Sources

20000 20000
Peak 2001 Peak 2001
18000 18000
16000 16000
14000 14000
12000 12000
MMcf/day
MMcf/day
10000 10000
8000 8000
6000 6000
4000 4000
2000 2000
0 0
2001 2005 2009 2013 2017 2021 2025 2001 2005 2009 2013 2017 2021 2025
Year Year
WCSB Solution WCSB Existing Gas WCSB Additions Sable
24
Annual Canadian Marketable Natural Gas Production
by Month January 1991 - July 2006
(12 month centered moving average)
6.5
Trillion cubic feet per Year
5.5
Peak/ Decline/
5 Growth Plateau Stagnation
4.5
3.5
Ja 1
Ja 2
Ja 3
Ja 4
Ja 5
Ja 6
Ja 7
Ja 8
Ja 9
Ja 0
Ja 1
Ja 2
Ja 3
Ja 4
Ja 5
06
9
9
9
9
9
9
9
9
0
0
0
0
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Month
(Source of data Statistics Canada, October, 2006)
NEB, July, 2003, Deliverability Scenarios from Existing

and Proposed Conventional Gas Sources
20000 20000
Peak 2001 Peak 2001
18000 18000
16000 16000
14000 14000
12000 12000
MMcf/day
MMcf/day
10000 10000
8000 8000
6000 6000
4000 4000
2000 2000
0 0
2001 2005 2009 2013 2017 2021 2025 2001 2005 2009 2013 2017 2021 2025
Year Year
WCSB Solution WCSB Non-Associated WCSB Additions
Sable Newfoundland Panuke
Mackenzie NS Offshore BC Offshore
LNG Imports NB LNG Imports Quebec
25
NEB, July, 2003, Deliverability Scenarios from Existing
and Proposed Conventional Gas Sources Including Coalbed Methane
20000 20000
Peak 2010 Peak 2015
18000 18000
CBM
16000 16000
14000 14000
CBM
12000 12000
MMcf/day
MMcf/day
10000 10000
8000 8000
6000 6000
4000 4000
2000 2000
0 0
2001 2005 2009 2013 2017 2021 2025 2001 2005 2009 2013 2017 2021 2025
Year Year
WCSB Solution WCSB Non-Associated WCSB Additions
Sable Newfoundland Panuke
Mackenzie NS Offshore BC Offshore
LNG Imports NB LNG Imports Quebec CBM
Actual Coalbed Methane Production in the U.S. 1997-2004 Compared

to NEB Coalbed Methane Production Scenarios 2003-2025
U.S. Coalbed Methane Production NEB Canadian CBM Production Scenarios
1.8 8.5% of U.S. Production 1.8
65% of U.S. CBM Production
16 Tcf recovered to date 23% of Canadian production

1.6 Colorado 1.6
New Mexico Supply-Push - 11.8 Tcf by 2025
Alabama Techno-Vert - 19.5 Tcf by 2025
Colorado 1.4
1.4
Trillion Cubic Feet per Year
Other States Peak – Plateau

2002 - 2004
1.2 1.2
1 1
0.8 0.8
New Mexico
0.6 0.6
Peak 1997
Alabama 0.4
0.4 Peak 1998
Other States Peak 2003
0.2 0.2
We are
Here 0
0
1997 1999 2001 2003 2003 2007 2011 2015 2019 2023
Year Year
(Source of data Energy Information Administration, 2006; National Energy Board, July, 2003)
26
NEB, 2003, Canadian Domestic Natural Gas Demand
Scenarios by Sector, 2002-2025
12000 53% growth in domestic 12000 53% growth in domestic
consumption 2002-2025 consumption 2002-2025
10000 10000
er
Oth er
ial Oth
8000 e rc 8000 cial
o mm mer
C m
MMcf/day
MMcf/day
C o
tial tial
iden iden
6000 Res +343%
6000 R e s +200%
16%
2002-
2002- 23%
y y
tricit tricit
2025
Elec
2025
Elec
4000 4000
2000 2000
Industrial Industrial
0 0
2002 2006 2010 2014 2018 2022 2002 2006 2010 2014 2018 2022
Year Year
U.S. Gas Consumption by Sector, 1997-2005

30 Electric Power
Overall Decline Residential
28 -3.4% 1997-2005 Commercial
26 Peak Consumption 2000 Gas Production/Delivery
Industrial
24
Trillion Cubic Feet/Year
22
+42.6%
20
Due to Major Capacity Expansion
18
16
14 -2.9%
12
10
-4.5%
8 -16.8%
6
-22.2%
4 Demand Destruction
2 Due to Price
0
1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
(data from Energy Information Administration, 2006)
27
U.S. Natural Gas Supply Forecast by Source 2005-2030
(Energy Information Administration)
30
15% Total Growth Supply Peaks at 26.5 Tcf
from 2005-2030
25 24.9 Tcf Liquefied Natural
Trillion cubic feet per year_
Gas +580%
20 Canada Imports Alaska
Lower 48 - Offshore
15
Lower 48 Lower 48
Production Production
10
Up 9.5% Declines 1.5%
Lower 48 - Onshore
2005-2014 2014-2024
5
0
2005 2010 2015 2020 2025 2030
Year
(data from Energy Information Administration Annual Energy Outlook, 2006)
The U.S. Gas Exploration Treadmill

U.S. Gas Wells Drilled U.S. Dry Gas Production
1993-2005 1993-2005
30000 20
2014 EIA Forecast
Number of Successful Gas Wells Drilled
25000
19
20000
15000 18
Production
Peak
10000 July 2001
17
5000
0 16
1993 1995 1997 1999 2001 2003 2005 1993 1995 1997 1999 2001 2003 2005
Year Year
(data from U.S. Energy Information Administration, April, 2006)
28
Canadian Shortfalls in Gas Supply Given Domestic Production Scenarios
and Forecast EIA (AEO 2006) Reference U.S. Import Requirements
Supply Push Scenario 9
Techno-Vert Scenario
9
Requirement:
Domestic Demand
8 8
Plus Forecast
EIA Exports
7 7
6 Shortfall 6
Total Forecast
Total Forecast
Domestic Production
Tcf/Year
Domestic Production
Tcf/Year
5 1.1 Tcf 5
Net Available for Exports Net Available for Exports
4 4
3 3
2 2
Domestic Consumption Domestic Consumption
1 1
0 0
2005 2008 2011 2014 2017 2020 2023 2005 2008 2011 2014 2017 2020 2023
Year Year
Note: Forecast Canadian LNG Imports are (data from National Energy Board, July, 2003,
Excluded from Domestic Production and EIA Annual Energy Outlook, 2006)
U.S. Supply with Canadian Imports and Shortfalls Given NEB, 2003, Supply
Scenarios and EIA (2006) Reference Case Supply Scenario

35 35
Liquefied Natural Gas Liquefied Natural Gas
Canada Shortfall Canada Imports
Canada Imports
4.1 Tcf (15.6%)
Alaska
5.2 Tcf (19.7%)
30 Alaska 30
Lower 48 Lower 48
25 Liquefied 25 Liquefied
Natural Gas Natural Gas
Shortfall
20 Alaska 20 Alaska
Tcf/Year
Tcf/Year
Canada Canada
15 15
Lower 48 Lower 48
10 10 Production
Production
5 5
0 0
2005 2009 2013 2017 2021 2025 2005 2009 2013 2017 2021 2025
Year Year
(data from Energy Information Administration
Annual Energy Outlook, 2006, and National Energy Board, July, 2003)
29
U.S. Annual Dry Gas Production Rate by Month January
1993 - June 2006 (centered 12 month moving average)
20
EIA 2014
Peak July 2001 Forecast
19.5
Trillion cubic feet/Year
19 Down
7.6%
18.5
18 Lowest
Decline Level
Growth 1.1%/Year Since
1.7%/Year
17.5 July
1993
93
94
95
96
97
98
99
00
01
02
03
04
05
06
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Month
(Data from Energy Information Administration, September, 2006; Forecast from EIA Annual Energy Outlook, 2006)
U.S. Supply with Canadian Imports and Shortfalls Given NEB, 2003, Supply
Scenarios and EIA Reference Case Supply Scenario with
1.5% Yearly Decline in Lower 48 Production
35 35
Liquefied Natural Gas Liquefied Natural Gas
Canada Shortfall U.S. Shortfall
U.S. Shortfall Canada Imports
30 Canada Imports 30 Alaska
Alaska Lower 48
11.1 Tcf (41.8%)
10 Tcf (37.6%)
Lower 48
25 Liquefied 25 Liquefied
Alaska
20 U.S. Shortfall 20 U.S. Shortfall
Tcf/Year
Tcf/Year
Canada Canada
15 Alaska 15 Alaska
10 10
1.5% YEARLY DECLINE 1.5% YEARLY DECLINE
in Lower 48 Production in Lower 48 Production
5 5
0 0
2005 2009 2013 2017 2021 2025 2005 2009 2013 2017 2021 2025
Year Year
(data from Energy Information Administration
Annual Energy Outlook, 2006, and National Energy Board, July, 2003)
30
FUTURE OUTLOOK:
- IMPLICATIONS – If supply and demand forecasts are to be
believed, there appear to be serious supply shortfalls in Continental
natural gas coming – Canada is unlikely to be able to fill the supply
gap
- SOLUTIONS - probably involve a portfolio of options:
- Conservation and Efficiency
- LNG – already factored into existing forecasts;
GEOPOLITICAL + NIMBY IMPLICATIONS
- Unconventional Gas - already factored into
existing forecasts in a big way
- Fuel Switching – to oil or coal – capacity quite
limited without new capital investment
- Destroy Demand – move gas intensive industries
offshore (fertilizer and petrochemical plants) -
this is already happening; GEOPOLITICAL
IMPLICATIONS
LNG Logistics
OPERATING COSTS (FREEPORT, TEXAS1):
- Production = $US .50-$1.00/mcf
- Liquefaction = $US .80-$1.00/mcf
- Shipping = $US .50-$1.45/mcf

- Receiving = $US .24-$.40/mcf
- TOTAL = $US 2.04-$3.85/mcf
(U.S. 2005 Imports priced at $US 5.72-$7.44/mcf)
(1Reimer, Freeport LNG, 2003; EIA November, 2005)
31
LNG Producers and Consumers in 2005
2.4 2.4
Producers Consumers
2 2

1.6 1.6
1.2 1.2
0.8 0.8
0.4 0.4
0 0
lic
lg y
Pu or taly
In n
Tu dia
U n
m
Sp ea
o
R l
N ago
Ta nce
ep e
Fr SA
K n
ic G UK
To i a
al a
U i
Q ia
to a
t
ad s a
O ia
Be ke
A tar
Br an
Eg E
SA
a
ai
ic
e
R ec
h a
yp
M nesi
ub
by
id Au eri
er tug
iu
or
un
& tral
iw
A
s
er
ut ap
e
ay
I
b
a
U
Li
an r
lg
ig
So J
d o
P
In
Total = 6.67 Tcf
in
Producers Consumers
om
in
Tr
D
LNG Logistics
COVERING PROJECTED U.S. SHORTFALLS OF 4-11 TCF/YEAR
WITH LNG WOULD REQUIRE NEARLY DOUBLING TO
TRIPLING THE WORLD’S PRESENT LNG CAPACITY (the U.S.
will also be in competition with many other countries for LNG
supplies). EXPANSION OF NORTH AMERICAN LNG CAPACITY
TO 11 TCF/YEAR WOULD REQUIRE ON THE ORDER OF:
- 200 New 3bcf capacity LNG Tankers
- 30 New 1bcf/day North America-based receiving terminals
- 56 New Foreign-based 200 bcf/year liquefaction trains
- Capital investment in the order of $US100-200 Billion
- Time to Build Total Capacity = 10-20+ Years
- OVERCOMING THE NIMBY SYNDROME IN LOCATING
NEW TERMINALS
- ACCEPTING THE GEOPOLITICAL IMPLICATIONS
OF DEPENDENCY ON OFFSHORE SUPPLY
SOURCES
32
(5.835 bcf/d)
Cancelled Terminals (26.97 bcf/d)

-Cheniere LNG, Brownsville, TX
-Cheniere LNG, Pinto Island, AL
-Fairwinds LNG, Harpswell, ME
-Hope Island LNG, ME
-Humbolt Bay LNG, Eureka, CA
-Mare Island LNG, Vallejo, CA
-Navy Homeport LNG, Mobile, AL (2.6 bcf/d)
-NJ Energy Bridge, Belmar, NJ
-Ormond Beach LNG, CA
-Radio Island LNG, NC (2.61 bcf/d)
-Tampa LNG, Tampa, FL
-Tijuana Energy Center, Tijuana, MX
-Offshore Shell Gulf Landing, LA (3.1 bcf/d)
-Pearl Crossing ExxonMobil, GOM
Southern Offshore Crystal Energy, CA
(14.55 bcf/d)
(8.3 bcf/d)
Total = 63.965 bcf/d
Category 4 and 5 Hurricanes in the Gulf of Mexico

are becoming an increasing Risk for Oil and Gas
Production and Delivery Systems
(Few platforms can withstand Category 4 Hurricanes)
33
Power Dissipation Index of Hurricanes versus
Sea Surface Temperature 1940-2010
(from Kerry Emanuel (Nature, Vol. 436/4, Aug. 2005)
LNG Supply Forecasts of U.S. National Petroleum

Council (September, 2003) versus Requirement Scenarios
Supply Gap with Different
Available Receiving Terminals Lower-48 Production Scenarios
20
Balanced Case
18 Reactive Case 50
Low Sensitivity Case Flat
16 1.5%/year decline
3%/year decline
Number of Terminals
Maximum 9 New 40
14 Terminals by 2025
12 -3%
30
10 -1.5%
8
20
6 Flat
Balanced
4
10 Reactive
2
Low Sensitivity
0 0
2000 2005 2010 2015 2020 2025 2005 2008 2011 2014 2017 2020 2023
Year Year
(data from National Petroleum Council 2003; supply gap based on Energy Information Administration,
Annual Energy Outlook 2006 forecasts and National Energy Board 2003 Supply Push scenario for Canada)
34
Energy Profit Ratio for Natural Gas and Alternatives
High
Increasing Energy Input
Energy Return on
Energy Invested
Energy Energy
Source Sink
(EROEI > 1) (EROEI < 1)
Low
n
as
yd )
as
n
ne
n
G
as
as
ge
tio
ge
fa
G
lG
LN
eG
l G th a
ro
ro
ca
o
Im nal
ht
on ona
(s
e
yd
l
ed
ifi
a
M
ig
io
Sh
es
H
as
rt
H
T
i
nt
nt
ed
at
po
id
ve
ve
dr
lb
se
qu
oa
"N Con
oa
es
y
H
Li
C
pr
C
C
as
om
"
"
G
ew
ld
C
"O
Source
Energy Profit Ratio versus In Place Gas Resources

(Energy Return on Energy Invested)
Energy Profit (EROEI > 1)
Energy Sink (EROEI < 1)
In Place Resources
As with Oil, the Issue is Not Resources – its Deliverability

– GAS resources with a low EROEI tend to produce at
much lower rates and have a vast
Proportion of their in place resources that will
never be recoverable (ie. Energy Sinks)
Shale Gas Coalbed Methane Tight Gas Conventional Gas
35
COAL
- Two-thirds of the world’s remaining hydrocarbon energy
- 27.8% of the world’s primary energy consumption in 2005 – second
only to OIL – Projected by EIA to be fastest growing fuel through 2030
- Used for electricity generation (more so than any other fuel),

primary heat and in the steel industry
- Lowest cost heat source: $0.84-$3.00US/gigajoule versus

$9.52US/gigajoule for gas and $9.69US/gigajoule for oil
- Double the carbon footprint of gas using conventional technology –

with advanced “clean coal” technologies the carbon footprint can be
reduced almost to that of gas (but costs $$$)
- Fastest growing hydrocarbon fuel source: consumption has grown
23% since yearend 2001 (5.0% in 2005)
World Coal Production and Consumption: 1981-2005

3000 3000
52% increase in Production 61% increase
World in Consumption
Consumption up
up 5.2% 2005 over 2004 up 5.0%
23% 2005 over 2004
(1.1%/year)
2500 2500
Million tonnes oil equivalent
Asia Pacific
2000 2000
Africa 222%
233% Middle East
F.S.U.
1500 Europe 1500
S. & C. America
82% North America 79%
-45%
1000 -36% 1000
-51% -26%
500 500
27% 42%
0 0
1981 1985 1989 1993 1997 2001 2005
1981 1985 19891993 1997 2001 2005
Year
Worldwide Coal Year
Consumption has Increased by 23% since 2001 (data from BP Statistical Review of World Energy, 2006)
36
Forecast World Coal Consumption 2003-2030 in Projections
Three Economic Cases (EIA, 2006)
240
High Economic Case +131%
220
Reference Economic Case
200 Low Economic Case +95%
180
+66%
Quadrillion Btu
160
140
120
100
80
60
40
20
0
03
05
07
09
11
13
15
17
19
21
23
25
27
29
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Year
World Hydrocarbon Consumption in 2005

Versus Remaining Hydrocarbon Energy Reserves
Consumption in 2005 Remaining Reserves

by Energy Content
Oil
22%
Coal
32% Oil
41% Coal
59% Gas
19%
Gas
27%
By Energy Content
37
World Remaining Recoverable Hydrocarbon Reserves by Energy
Content (2005)
8000
7000 Coal
Gas
6000 Oil
5000
Exajoules
4000
3000
2000
1000
0
North S. & C. Europe Former Middle Africa Asia
America America Soviet East Pacific
Union
Region
Price of Hydrocarbons per Gigajoule in 2005

10
Mine Mouth Subbituminous
Coal @ $14.00 US/tonne
9
U.S. Domestic Bituminous
Coal @ $50.00 US/tonne
8
Export Thermal Coal @
US Dollars per Gigajoule
$83.00 US/tonne
7
Natural Gas @ $10.00 US/mcf
6 Gas Oil
Oil @ $60.00 US/bbl
$9.52/Gj $9.69/Gj
5
Domestic
4 Bituminous
Coal $1.82/Gj
3 Mine Mouth
Subbituminous
Export
2 Coal $0.84/Gj
Thermal
1 Coal
$3/Gj
0
Hydrocarbon Fuel Type
38
Energy Content in Recoverable Remaining Ultimate
Potential of Hydrocarbons in Alberta (in exajoules)
Crude Oil
5 billion bbls
32.5 EJ
0.2% Coal
682 billion tons
13,633 EJ
Crude Bitumen 86%
311.5 billion bbls
2121.6 EJ
13%
Natural Gas
94 Tcf
92.4 EJ
0.6%
(data from Alberta Energy and Utilities Board, 2003)
ELECTRICITY
- Availability of reliable electricity defines our modern
civilization
- Electricity in essence cannot be stored in bulk – it must

be generated on demand
- We convert hydrocarbons to electricity at an energy

penalty of from 30 to 70%
- Electricity is transmitted to points of use with losses

depending on transmission distance – IT IS NOT A
WORLD TRADABLE COMMODITY
39
Generation of Electricity: 1990-2005
World North America
53% increase in Consumption 34% increase in Consumption
up 4.0% 2005 over 2004 up 2.3% 2005 over 2004
20000 5000
Asia Pacific Mexico
Africa
Canada
Middle East
Former Soviet Union USA 90%
Europe
S. &. C. America 4000 23%
15000 North America
Terawatt-hours
Terawatt-hours
143% 3000
68%149%
10000
-19%
2000
33%
30%
5000 87%
1000
34%
0 0
1990 1993 1996 1999 2002 2005 1990 1992 1994 1996 1998 2000 2002 2004
Year Year
Forecast World Electricity Consumption 2003-2025 Projections

in Three Economic Cases (EIA, 2006)
36000 +138%
High Economic Case
32000 Reference Economic Case
+104%
Low Economic Case
28000
+73%
Terawatt-hours
24000
20000
16000
12000
8000
4000
0
03
05
07
09
11
13
15
17
19
21
23
25
27
29
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Year
40
Forecast World Electricity Generation by Fuel Market
Share
2003-2030 (Reference Case EIA 2006)
300
81% Growth 2003-2030
19.4%
250
%
wa b l es +94 11.7%
/Rene
Quadrillion Btu
200
Hydro
r +31%
150 18.1%
Nuclea
41.5%
16.2%
100 Coal +84%
40.9%
50 22.2%
18.6% Natural Gas +116%
6.2% Oil +50% 6.2%
0
03
05
07
09
11
13
15
17
19
21
23
25
27
29
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Year
Forecast U.S. Electricity Generation by Fuel Type 2005-2030

(EIA Annual Energy Outlook, 2006, Reference Economic Case)
6000 Renewables 41% total
Nuclear
increase
Petroleum
2005-2030
9%
5000 Gas
Coal 16%
les +48%
Renewab
4000
12%
Nuclear + 15%
Terawatt Hours
3000
Gas +24%
2000
58%
Coal +59%
1000
0
2005 2010 2015 2020 2025 2030
Year
(data from Energy Information Administration Annual Energy Outlook, 2006)
41
Canadian Electricity Generation Scenarios by Fuel, 2000-2025
Renewables Renewables
1200 1200
Oil 52.4% total Oil 50.6% total
1000
Orimulsion increase 1000
Orimulsion increase
Coal 2002-2025 Coal 2002-2025
Nuclear Nuclear
Hydro Hydro
Terawatt Hours
Terawatt Hours
800 800
644%
421% 274%
600 600
42% 1%
400 61.3% 400 98.3%
200 19.3% 200 18.6%
0 0
2000 2003 2006 2009 2012 2015 2018 2021 2024 2000 2003 2006 2009 2012 2015 2018 2021 2024
Year Year
Implementation Times and Other Considerations

For New Electricity Infrastructure
FACTOR GAS COAL NUCLEAR HYDRO
HIGH -
LOW- VERY
Capital Cost MOD-HIGH VERY
MOD HIGH
HIGH
VERY VERY VERY
Fuel Cost LOW
HIGH LOW LOW
Environmental MOD(now) VERY VERY
LOW
Footprint LOW(future) LOW1 LOW2
Time to startup
1-2+ 5-7+ 5-12+ 6-10+
(years)
1 If the as yet unsolved problem of waste disposal is not considered
2 If the environmental costs of flooding river valleys, siltation
and ecosystem impacts are not considered
42
North American Generating Capacity Expansion
By Fuel (1998-2015)
1998-2005 – 236 Gwatts 2006-2015 – 95 Gwatts
WIND
Gas
Coal
Nuclear
GAS
Wind
GAS Other COAL
Total Expansion 331 Gwatts or ~30%

(data from National Electricity Reliability Council, October, 2006)
Implications for Sustainability - OIL

THERE IS A DISCONNECT BETWEEN WORLD OIL RESERVES
AND FORECAST OIL CONSUMPTION:
- World Oil Production could peak in the 2008-2012 timeframe (consensus) – even the
Optimist’s Reference Case says 2018 if peak symmetrical or 2040 if peak at 82% of Ultimate
Recoverable Conventional Oil consumed.
- OPEC has most of what’s left and could become the dominant oil supplier before the end of
the decade, but will need to rapidly expand its production capacity which could be problematic.
- Industrialized countries will be in competition with rapidly growing consumers in the

Developing World over a finite supply, with attendant impacts on economic growth due to oil
price (which will shape the world oil production profile at peak).
- Even with a four- or five-fold expansion of production from the Oil Sands, Canada will be a
small player in World Oil Supply (about 3% of forecast 2025 World Demand with net export
capacity of about 1% of forecast 2025 World Demand).
- Supply from Unconventional Oil is unlikely to compensate for the decline in Conventional
Oil Production. Unconventional liquids production including biodiesel, ethanol, coal-to-liquids,
gas-to-liquids, oil sands and oil shale is forecast to meet less than 10% of 2030 World demand.
43
Implications for Sustainability - GAS
THERE IS A DISCONNECT BETWEEN NORTH AMERICAN GAS
DELIVERABILITY AND FORECAST CONSUMPTION:
- Several existing producing areas in North America are in or near decline.
- Higher cost frontier and offshore conventional production and non-conventional

production from coalbed methane, tight gas and shale gas likely cannot forestall the
declines in conventional production for long and cannot provide for forecast aggressive
domestic demand and export growth, unless as-yet-unproven windfalls result from
hydrates, coalbed methane, shale gas etc.
- The United States will require between 16 and 42% of projected demand to be met by
offshore sources by 2025, depending on the success of the development of non-
conventional gas in the U.S. and Canada, the pace of new conventional development in
Canada, the realization (or lack thereof) of optimistic supply additions in the U.S., and the
development of LNG import capacity in the U.S. and Canada.
- Solutions include conservation/efficiency, LNG imports, (which would mean large

investments in new infrastructure), demand destruction, (move intensive
fertilizer/petrochemical industries offshore), additional non-conventional gas and fuel
switching.
Implications for Sustainability - ELECTRICITY

- The North America Electric Reliability Council (NERC, October, 2006) indicates 224
gigawatts of new gas-fired generation was completed in 1998-2005 and forecasts new gas-
fired supply growth of 43 gigawatts through 2012 (25% NA gas-fired grid expansion
1998-2012)
- Electricity generation accounted for 24.3% of U.S. gas consumption in 2005 (EIA, 2006)
and is expected to account for 28% in 2020 (EIA, 2006)
- Forecast shortfalls in supply of natural gas could jeopardize future availability of a
secure electricity supply unless new supplies can be secured
- Renewable energy - biomass, wind and photovoltaics must be emphasized but will
realistically only provide a relatively small incremental supply (eg. Wind represents about
0.5% of Canada’s generating capacity at present).
- Nuclear is limited by capital cost, public perceptions and environmental impact (Waste
storage at Yucca Mtn. will cost $US50billion+ to build and will be completely filled with
U.S. wastes since the beginning of the Atomic Age). The EIA (2006) forecasts only modest
growth in world electricity generation from nuclear through 2030 (31%) with declines
thereafter – this translates into a reduction in market share. The EIA AEO 2006 reference
economic case indicates only 12% growth in U.S. nuclear capacity through 2030.
- Large Hydro is limited by lack of available sites and environmental costs
44
Implications for Sustainability - COAL
- Two-thirds of World’s remaining hydrocarbon energy (90% of North America’s)
- Lowest cost hydrocarbon energy - cost is 9% to 32% that of gas and oil at $US10/mcf and
$US60/bbl, but double the carbon footprint of gas with old technologies
- New more efficient utilization technologies, with reduced GHG emissions, are the key to
expanded coal use:
- Higher Efficiency Generation new existing technologies can raise thermal
efficiency from 32% to 45% with a corresponding reduction in GHG emissions of
30%, but they are expensive (SCPC, IGCC) – expected future improvements in
efficiency to 50% (2010) and 60% (2020) (Vision 21 USDOE).
ITS HAPPENING – eg. NIEDERAUSSEM 3900 MWATT GERMAN PLANT
@ 43.2% EFFICIENCY; VATTENFALL OXYFUEL PILOT IN GERMANY
- Petrochemicals from Coal (POLYGENERATION) – gasification, liquefaction,
in situ gasification for deep coal utilization
- Hydrogen from coal (competes with H2 from natural gas @ $4.00US/mcf –
China produces 5 Mt of H2/year from coal for fertilizers) or in conjunction with
electricity generation (IGCC, ZECA - higher cost)
- “Zero Emission” utilization through CO2 sequestration in coal seams, depleted

oil and gas reservoirs and saline aquifers
HYDROGEN
The Silver Bullet?
- Hydrogen is an ENERGY CARRIER not an ENERGY SOURCE
- Hydrogen is largely created from hydrocarbons or electrolysis, each of

which can be used directly without the energy conversion losses to
hydrogen
- Because of energy losses in production of hydrogen from hydrocarbons

or electrolysis, a “Hydrogen Economy” could actually exacerbate the
greenhouse gas emission and Global Warming Problem, if hydrogen
cannot be generated exclusively from renewable sources (conversion from
gas loses 30% and from electolysis 28% (not including the losses from
hydrocarbons to electricity – a further 30-70%))
- The stock brokers have already figured it out - witness “Hydrogen’s non-
future” published in the Financial Post of April 3, 2004, based on BMO
Nesbitt Burns analysis of the Hydrogen Economy
45
Energy Density of Hydrogen in Comparison
With Other Energy Carriers
Energy Density by Weight (KWh/kg) 14
12 Propane
Gasoline
10 Diesel
Natural Gas
6
@ 25Mpa* Methanol
4 Batteries
Lead, Lithium*
Liquid H2 @ -253C*
2
H2 Gas @ 25Mpa*
Metal Hydride
0
0 1 2 3 4 5 6 7 8 9 10
Energy Density by Volume (KWh/litre)
*Includes Weight of Containment Vessel (data from Dr. Werner Zittel et al, 1996)
World Primary Energy Shares - 1850 to 2100

Given Oil and Gas Supply Limitations
Source - World Coal Institute
46
The Last Piece of the Energy
Sustainability Puzzle:
POPULATION GROWTH
and
ASPIRATIONS OF GROWTH IN
ENERGY CONSUMPTION
IN THE DEVELOPING WORLD
There is a Great Inequity in Energy Consumption Worldwide

Primary Per Capita Energy Consumption of Selected Countries in 2001
9
8
Tonnes Oil Equivalent per Capita
14.4% of 48.4% of
7 World Population World Population
6
0
il
lia
in
Pa ia
e
do a
A u A.
ng a n
sia
n
da
Av .
sh
ea
.U
ag
az
n
pa
d
ita
So stra
S.
de
st
i
or
na
ne
In
or F.S
Ch
Br
er
Ja
U.
ki
Br
la
K
Ca
In
ut
ld
Ba
Region
W
(data from BP Statistical Review of World Energy, 2002, and United Nations World Database, 2002)
47
Primary Energy Consumption by Economic Development: 1965-2001
Industrialized World
5.23 Tonnes Oil Equivalent/Person
(excluding F.S.U.) 0.96 Billion People
6000
Hydro
Nuclear
5000 Coal 0.65 Tonnes Oil Equivalent/Person
Gas 4.88 Billion People
Oil
59%
4000
More Developing World
3500
Hydro
3000 3000
Nuclear
Coal
2500
Gas
2000 Oil
2000
1500
1000 1000
Increase of 87.2%
or 64.9 mtoe/year 500 Increase of 467.6%
0 0
or 72.3 mtoe/year
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001
Year Year
(data from BP Statistical Review of World Energy, 2002, and United Nations World Database, 2002)
China Population and Energy Consumption

History and Forecasts (1965-2030)
Population Per Capita Consumption Total Energy Consumption
1600 2.5 3500
1400
3000
2
1200
Million Tons Oil Equivalent
2500
Tons Oil Equivalent
Millions of People
1000
1.5
2000
800
1500
1
600
1000
400 History Forecast Forecast Forecast
+83% +12% 0.5 +92% +115%
500
200
History History
+367% +752%
0 0 0
1965 1975 1985 1995 2005 2015 2025 1965 1975 1985 1995 2005 2015 2025 1965 1975 1985 1995 2005 2015 2025
Year Year Year
(Consumption History: BP Statistical Review of World Energy, 2006; Population History and Forecast: United States
Census Bureau, 2006; Consumption Forecast: Energy Information Administration World Energy Outlook, June, 2006)
48
CHINA: The World’s Number 2 Consumer of Energy
Primary Energy Production and Consumption by Fuel: 1981-2004
1400 1400 Average 9.6%/year growth in Consumption
Average 8.1%/year growth in Production
over the period - up 12.1% 2004 over 2003 over the period - up 15.1% 2004 over 2003
1200 1200
Hydro Hydro
Nuclear
Asia
Nuclear
Coal Coal Flu

1000 Gas 1000 Gas

Oil Oil
800 800
415%
415%
600 600
Coal 219%
Coal 208%
400 400
200 200 Deficit 3.2

MMbbls/day
Oil 72% Oil 264%
0 0
1981 1984 1987 1990 1993 1996 1999 2002 1981 1984 1987 1990 1993 1996 1999 2002
Year Year
CHINA’s Oil Production Surplus and Deficit 1980-2005
1.5
1 Surplus
0.5 Deficit
0
-0.5
-1 2005 Consumption up 3.2%
2005 Production up 4.2%
-1.5 1996-2005 average consumption up 7.6%/year 48% of
1996-2005 average production up 1.97%/year Demand
-2
-2.5
2005 Deficit 3.36 MMbbls/day
-3 (2005 DEFICIT = 4.1% OF WORLD CONSUMPTION)
-3.5 S u rp lu s
1980 1983 1986 1989 1992 1995 1998 2001 2004

Year
49
India Population and Energy Consumption
History and Forecasts (1965-2030)
1600 0.6 800
1400 700
0.5
1200 600

0.4
Tons Oil Equivalent

Millions of People
1000 500
800 0.3 400
600 300
0.2
400 History Forecast Forecast 200 Forecast

+121% +40% +44% +102%
0.1
200 History 100
+231% History
+632%
0 0 0
1965 1975 1985 1995 2005 2015 2025 1965 1975 1985 1995 2005 2015 2025 1965 1975 1985 1995 2005 2015 2025
Year Year Year
INDIA’s Oil Production and Imports 1980-2005
2005 Consumption down -3.4%

2005 Production down -3.9%
2.5 1996-2005 average production down -0.23%/year
1996-2005 average consumption up 4.7%/year
2 2006 Imports = 1.7 MMbbls/day

(2.0% OF WORLD
69% of
CONSUMPTION)
Demand
1.5
Imports
1
0.5
Production
0
1980 1985 1990 1995 2000 2005
Year
50
Non-OECD-Asia Outside of China and India Population and
Energy Consumption History and Forecasts (1965-2030)
1400 1 1400
0.9
1200 1200
0.8

1000 1000
0.7
Tons Oil Equivalent

Millions of People
0.6
800 800
0.5
600 600
0.4
0.3 400
400
History Forecast Forecast Forecast
+128% +37% 0.2 +58% +116%
200 History 200
0.1 +349% History
+922%
0 0 0
1965 1975 1985 1995 2005 2015 2025 1965 1975 1985 1995 2005 2015 2025 1965 1975 1985 1995 2005 2015 2025
Year Year Year
Population Growth – History and Forecast (1965-2030)

Industrialized Developing
United States Canada OECD-Europe China India Other-Asia
1600 1600 1600 1600 1600 1600
History
1400 1400 1400 1400 1400 1400
Forecast
Millions of People
1200 1200 1200 1200 1200 1200
1000 1000 1000 1000 1000 1000
800 800 800 800 800 800
600 600 600 600 600 600
400 400 400 400 400 400
200 200 200 200 200 200
0 0 0 0 0 0
1965198520052025 1965198520052025 1965198520052025 1965198520052025 1965198520052025 1965198520052025
(United States Bureau of Census, November, 2006)
51
Per Capita Consumption – History and Forecast (1965-2030)
12 12 12 12 12 12
11 11 11 11 11
Tons Oil Equivalent per person
11
10 10 10 10 10
History
10
9 9 9 9 9 9
Forecast
8 8 8 8 8 8
7 7 7 7 7 7
6 6 6 6 6 6
5 5 5 5 5 5
4 4 4 4 4 4
3 3 3 3 3 3
2 2 2 2 2 2
1 1 1 1 1 1
0 0 0 0 0 0
1965 1985 2005 2025 1965 1985 2005 2025 1965 1985 2005 2025 1965 1985 2005 2025 1965 1985 2005 2025 1965 1985 2005 2025
(United States Bureau of Census, November, 2006;

BP Statistical Review of World Energy, 2006; EIA International Energy Outlook, June, 2006)
Total Consumption – History and Forecast (1965-2030)

3500 3500 3500 3500 3500 3500
History
3000 3000 3000 3000 3000 3000
Forecast
2500 2500 2500 2500 2500 2500
2000 2000 2000 2000 2000 2000
1500 1500 1500 1500 1500 1500
1000 1000 1000 1000 1000 1000
500 500 500 500 500 500
0 0 0 0 0 0
1965198520052025 1965198520052025 1965198520052025 1965198520052025 1965198520052025 1965198520052025
(BP Statistical Review of World Energy, 2006; EIA International Energy Outlook, June, 2006)
52
World Population Increase 1950-2050
Total Population Percentage Increase Net Increase/Year

10 2.5 90
Motor Vehicles
9 80
>5%/year
Millions of People Increase per Year

8 2 70
7
% Increase per Year

60
Billions of People
6 1.5
50
5
40 Motor Vehicles
4 1 (70 million new
30 Vehicles built
3 in 2005)
(U.S.A. 20
2 240 million; 0.5
China 2006
1 Motor Vehicles 34 million
10
800 million +20% in 2005)
0 0 0
1950 1970 1990 2010 2030 2050 1950 1970 1990 2010 2030 1950 1970 1990 2010 2030
Year Year Year
(U.S. Bureau of Census, 2005; Hirsch, 2005;

Globe and Mail February 17, 2006; Vancouver Sun, July 22, 2006; National Post September 16, 2006)
Trends in Energy Investment for Food Production

(The Hydrocarbons We Eat)
20
Energy Input per Unit of Food Energy Output
Industialized
10
5
Loss
1
Profit
.5
Developing
.2
.1
.05
.02
(Adapted from Science, April 19, 1974)
53
The Way Forward
• Business as usual is not a sustainable option – the
ultimate resource potential of oil and gas is arguable but we are
definitely dealing with a finite resource - the implication of this is that
we are running out of the CHEAP OIL that fueled the rapid growth in
per capita consumption and lifestyle of the last century. Production
from crude bitumen resources is not scalable to offset declines in
conventional production.
• GAS availability in North America is highly

correlated with electricity reliability and cost -
replacement of declining low-cost conventional gas and meeting future
demand growth with higher cost conventional and non-conventional
supplies represents an EXTREME CHALLENGE and, even if it is
doable, likely means much higher-cost electricity and higher costs for all
other gas uses. LNG imports face infrastructure limitations, siting and
Geopolitical obstacles which will likely limit LNG’s ability to fill the
supply gap. Banking on windfalls from as-yet-unproven hydrates,
CBM, shale gas etc. could prove dangerous if the required production
levels are not realized.
The Way Forward

• The first step is to recognize the problem, and begin
making the changes and creating the infrastructure that will be
required for transit to a more sustainable energy future
• The most cost-effective approach is energy conservation

- reduce consumption on all levels
• A longer term vision is required than the lifespan of a

typical government – THERE IS NO SILVER BULLET – all
options must be objectively assessed and deployed as incremental
contributions to a solution
• A sustainable energy future is not out of reach – but we

have to be thinking in the 10-20+ year timeframe to
develop the infrastructure for alternatives as well as
technologies and incentives to reduce consumption
54
Public Awareness Is Crucial as it Empowers Governments to
Take the Long-Term View Required to Implement Solutions
August, 2005
June, 2004
National Post
June,
U.S. 2005
Army
National Post
October 2, 2004
October 2, 2004
September, 2005
(released March, 2006)
Media coverage of some of these issues is becoming an almost

daily occurrence, but there is still much denial
Awareness is Rising
U.S. Army Corps of Engineers (March 14, 2006)
“The Army operates in a domestic and world energy situation that is
highly uncertain”
“Future availability of customary energy sources is problematic-
world petroleum production is nearing its peak”
“The earth’s endowment of natural resources are depleting at an
alarming rate-exponentially faster than the biosphere’s ability to
replenish them”
“Current energy policies and consumption practices are not
sustainable. They clearly limit and potentially eliminate options for
future generations”
“As the Earth’s population swells-competition for finite resources
will increase…conservation is ‘...the best path to follow’”
“…disproportionate [U.S.] consumption of energy relative to global
consumption causes loss of the world’s good will and provides a
context for potential military conflicts…”
55
Awareness is Rising
Jim Buckee, CEO of Talisman Energy (May 4, 2005):
Conservation and energy efficiency are the "most
important" ways to reduce oil demand
Questioned whether the world will ever be able to produce

90 million barrels a day
IEA World Energy Outlook 2006 (November 7, 2006):

“… the energy future we are facing today, based on
projections of current trends, is dirty, insecure and
expensive”
“Strong policy action is needed to move the world onto a
more sustainable energy path”
Awareness is Rising
Peter Tertzakian, Chief Economist ARC Financial Corp
Author “A THOUSAND BARRELS A SECOND”
(February 13, 2006):
“…the World is on the verge of a break point that could
come before the end of the decade…”
“…there is no quick technology fix to save us from
the inevitable, at least in the next five to ten years…”
“…only Government has the power and the tools to push
us to a new energy path…Free market forces are not
strong enough to catalyze rapid change in energy
because it takes so much capital”
“What the World needs is rapid change. There has to
be a push from Nations”
56
But Denial Runs Deep
Ian Robinson, Editorial Writer, Calgary Sun, Nov. 5, 2006
“Personally, its always been my dream to have a
humongous ecological footprint”
“Bigger house, bigger car, wood-burning fireplace.”
“When the World Wildlife Foundation gives you crap

about your ecological footprint …
… Its saying ‘stop living’”
“Al Gore is the new darling of the movement. Don’t know
if they’re liars, or just dumb, or suffer a pathological
sense of self-importance”
“Dunno. Don’t care. But I can’t take them seriously –
Neither should you.”
Some of the Smartest Comments

on Energy Sustainability I’ve Heard Lately
• Senior Executive, Dow Chemical, New Orleans, March
17, 2005:
Letter to George Bush signed by many concerned industrial
representatives included two top priorities on energy security:
- Conservation and Efficiency (in ALL Sectors)
- Fuel Diversity: Renewables, Clean Coal, Coal Gasification,
Nuclear
• Senior Energy Executive on using Gas to Produce and
Refine the Oil Sands:
Using gas to produce and refine the oil sands is akin “… to
turning gold into lead…”
• Dow Canada CEO on gas use for electricity/oil sands:

Utilizing Gas for low value uses like electricity generation and oil
sands as opposed to high value uses such as petrochemicals is like
“…lighting candles with one hundred dollar bills…”
57
Some of the Other Comments
on Energy Sustainability I’ve Heard Lately
- U.S. President George Bush at Rio Summit and later reiterated:
“The American way of life in not negotiable”
- U.S. Vice President Dick Cheney on Conservation:
“Conservation may be a sign of personal virtue, but it is not a
sufficient basis for a sound, comprehensive energy policy”
- U.S. Energy Bill:
- Tax break of $3,150 for buying a hybrid vehicle.
- Tax break of $25,000 for buying a Hummer or SUV greater than
3 tons, as long as it is used for business, with write off of all
remaining costs over 6 years.
- Oregon State Government “We’re losing revenue on gas taxes
because of people buying hybrid vehicles”
“We’ll put a GPS system on all vehicles and tax people on how
many miles they drive, not how much gas they consume”
Is This the Shape of Things to Come?
Gas Station Lineup, South China, August 17, 2005
58
Can Energy Supply Meet Forecast
World Demand?
- MOST PROBABLY NOT – Present Global Energy Demand
Forecasts are likely to prove to be Unsustainable unless they
are revised sharply downward
- The Energy Sustainability Issue will certainly affect us and
will profoundly impact our Children and Grand Children,
unless Global proactive actions are taken (SOON)
- The Energy Sustainability Issue may Trump the Global
Warming /Environmental Degradation Issue with respect to
short term Socio-Economic impact, although both are on the
radar in the near term
- Solutions to both Issues have common components (eg.
Conservation, Efficiency, Technology, Alternatives), hence
mitigating one issue can help mitigate the other
Despite the Proponents of Infinite Growth

and the Ability of the Markets and Technology
to Overcome all Obstacles there is One
Supreme Overriding Principle:
ENERGY CONSUMPTION CANNOT
EXCEED ENERGY SUPPLY
Therefore the reality of FINITE nonrenewable
energy resources will force a transition to a
sustainable energy future.
The Only Question Is:
HOW WILL THIS TRANSITION OCCUR?
59
THE PROBLEM
Aggressive demand growth in the past and forecast in the future
Built mainly on non-renewable energy sources
CONSUMING THE EARTH’S CAPITAL AND ITS INTEREST
THE SOLUTION
Radically Reduced Demand – how to do it?
Supplied mainly by renewable energy sources
But also by alternative higher value uses of non-renewables
LIVING ON THE EARTH’S INTEREST AND PUTTING

SOMETHING IN THE BANK FOR PAST TRANSGRESSIONS
SOLUTIONS
- RENEWABLE ENERGY SOURCES such as wind,
photovoltaics, run of stream hydro, tidal power, solar thermal and
biomass are EXTREMELY UNLIKELY to fill the hydrocarbon
gap if we insist on maintaining our current levels of consumption (let
alone increasing them).
- The ABSOLUTE FIRST PRIORITY is to reduce energy
consumption as much as possible. This requires a crash program
through:
- MORE EFFICIENT AND SUSTAINABLE COMMUNITIES:
- Radically enhanced building codes – R2000+++
- Mass Transit as a viable option
- Incentives for efficient appliances and heating
- Increased densities
- Design for local access to consumer requirements
- Enabling pedestrian, biking and car pool transport
60
SOLUTIONS
- IMPLEMENT LOW COST OR REVENUE NEUTRAL
READJUSTMENTS THAT ENCOURAGE A REDUCTION
IN ENERGY CONSUMPTION:
- STOP building and widening roads to accommodate ever
more traffic – instead reinvest these funds to improve public
transit
- Implement user fees for car travel in downtown areas that
are served by public transit (this has worked well in many
places in Europe, where per capita energy consumption is
half of that in the U.S. and Canada)
- Reintroduce lower speed limits – this worked in the 1970’s
- Mandate much higher average mileage requirements for the

vehicle fleet
SOLUTIONS
- LIVING LOCALLY:
-The INTERNET represents an absolutely
unprecedented opportunity to reduce commuting as
well as to access World Markets. BROADBAND
INTERNET expanded to all rural and suburban
communities can ensure the viability of dispersed,
more sustainable communities.
- Encourage and nurture the development of
LOCALLY GROWN FOOD and LOCAL
MANUFACTURE of required commodities in order
to minimize long distance transport.
61
SOLUTIONS
-MORE EFFICIENT VEHICLES:
- BOTTOM LINE: Replacing half of the U.S. ground

vehicle fleet with hybrid and more efficient vehicles
would cost $3.8 Trillion and consume 5.6 billion
barrels of oil equivalent energy to build. Even with a
crash program implementation it would take 8-10
Years. Yearly savings of 25% of current fuel use
would be 3.3 billion barrels.
(vehicle numbers, proportion of fuel consumption and average lifespan from Hirsch, 2005)
How far must a Hybrid Car be Driven before it Saves

More Energy than it took to Build It?
Comparison of Hybrid at 50 mpg with existing
Vehicle at 20 mpg
1100
Gallons of Oil Equivalent Energy
Energy Savings
600 Energy Deficit
100
-400
Energy Answer
-900 Required Approximately
To Build 65000 miles
-1400
-1900 E n e rg y S a v in g s
0 15000 30000 45000 60000 75000 90000

Miles Driven
(energy for vehicle construction from Savinar/Ruppert, September, 2005)
62
SOLUTIONS
-MORE EFFICIENT VEHICLES (continued):
MESSAGE:
- Reducing transportation requirements is likely to have a much
more immediate impact than replacing the vehicle fleet with hybrids
and maintaining existing transportation habits.
- The existing vehicle fleet represents a tremendous amount of

embodied energy in its construction that would require a similar
expenditure of energy to replace.
- IDEALLY we need to do both: replace vehicles at the end of their

practical lifespan with the most efficient vehicles available AND
reduce transportation requirements as much as possible.
SOLUTIONS
- BULK COMMODITY TRANSPORT:
-TRAINS instead of TRUCKS
– trains are 3.4 times as efficient in moving
goods than trucks
- SHIPS instead of TRUCKS

– ships are 8.7 times as efficient in moving
goods than trucks
- SHIPS, TRAINS and TRUCKS instead of PLANES
– ships, trains and trucks are much more efficient in
moving goods than planes
(data from U.S. Dept. of Transportation and Canadian Shipowners Association, 2006)
63
SOLUTIONS
-Implement RENEWABLES such as WIND, BIOMASS and
PHOTOVOLTAICS to the maximum extent possible:
- WIND, unfortunately, cannot exceed about 20% of the
grid as it is intermittent and must therefore be backed
up by a (usually) nonrenewable energy supply (wind is
0.5% of Canada’s capacity at present). Also requires
proximity of high quality sites to load centres.
- BIOMASS can be used in a highly efficient manner
given present technology but realistically represents
only a small incremental contribution to current
consumption levels (The Energy Profit Ratio of Biomass
MUST also be considered – what is the net energy
returned after all energy inputs are accounted for?).
SOLUTIONS
-Implement RENEWABLES (continued):
- PHOTOVOLTAICS are also limited by the intermittent
nature of the sun and the storage problems if batteries are
used. They are optimally suited to residential applications
because of their low power intensity but they are
expensive. TRUE NET METERING with TIME OF USE
PRICING in grid intertie applications CAN RADICALLY
IMPROVE THE ECONOMICS OF PV and has been
implemented in several States. Generators of PV electricity
can “run the meter backwards” obtaining the retail price
at the time of the sale (typically during peak load when the
price is highest). This not only improves the economics of
PV, it reduces peak load and therefore the need to build
new large scale fossil fueled generation by utilities.
64
SOLUTIONS
- NONRENEWABLES ALTERNATIVE USE: Remaining fuels
should be used for their highest value contribution to society:
- CONSERVE NATURAL GAS used for electricity
generation and as a low grade heat source through
substitution by renewables, distributed generation with CHP,
clean coal technologies, coal gasification, coal-to-liquids,
and, if economical, nuclear – for example, ethane extracted
from raw natural gas and turned into polyethylene increases
its value by a factor of 12, into packaging products by 20, and
by upgrading to building materials by a factor of 58 (Dr.
Ramachandran, President DOW Canada, June, 2005) .
- Implement expansion of alternative oil and gas substitutes
including COAL-TO-LIQUIDS (commercially viable at $30-
$35/bbl), COAL GASIFICATION, GAS-TO-LIQUIDS and
LNG technology (but, as with oil sands, takes many years and
$$$ for infrastructure and has a low EROEI).
SOLUTIONS
- Continued expansion of the OIL SANDS is inevitable but
must employ technologies that utilize alternatives to natural
gas for energy input and minimize environmental impacts
including water consumption (but, as noted, takes many
years and $$$ for infrastructure and therefore will be a small
part of the solution and also has a low EROEI).
- Expansion of the VENEZUELA ORINOCO EXTRA HEAVY
OIL BELT is also inevitable but must be done with maximum
efforts to minimize energy inputs and environmental impacts.
- FORGET HYDROGEN as a major contributor to
transportation and distributed generation unless there are
major improvements in fuel cell technology (10-20x in cost;
5x in lifetime; 2x in efficiency) as well as in storage
technology, and the ability to generate hydrogen from
renewable sources.
65
IMPLEMENTING MANY OF
THESE SOLUTIONS (ESPECIALLY
CONSERVATION AND EFFICIENCY)
GOING FORWARD IS NOT OPTIONAL
ENERGY CONSUMPTION CANNOT
EXCEED ENERGY SUPPLY
MOTHER NATURE WILL TAKE CARE
OF THE PROBLEM
BUT UNLESS WE ARE PROACTIVE
WE MAY NOT LIKE THE SOLUTION
“…a Lower-Impact Society is the Most

Impossible Scenario for Our Future…
…Except for all other
Conceivable Scenarios”
Jared Diamond (2005) from his best-seller “Collapse”
66
Re
so
urc
es
Bi rt
h
Limits to Growth:
rat e
Did the Club of Rome have a Point?

Dea
Or…
t h ra
te
Will Technology and Forward Thinking
P
Come to the Rescue?
opu
lati
on
it a
er cap
Food p
ut
ut p
i al o a n
tr it t io
us ap llu
Ind per c Po
1900
900 2000
2000 2100
21
This could be the Price of an Unsustainable Energy Future
(adapted from Hamblin, 1970)
Thank you
Contact Coordinates:
Dave Hughes
dhughes @ nrcan.gc.ca
403 292-7117
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Cumulative Oil Consumption by The Human Race

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Cumulative Oil Consumption by The Human Race

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Peak Oil and the Future of Energy

GEOLOGICAL SURVEY COMMISSION GÉOLOGIQUE

- Where does Canada Stand in All This?

- Some thoughts on the way forward: Challenges and Changes

Million Tonnes Oil Equivalent

World Energy Consumption 1990-2030 in Three Projections

300 History Forecasts

- Forecasts suggest that 86.5% of a greatly expanded energy

- The Question is: IS THIS SUSTAINABLE?

…… Lets look in more detail at oil, gas and coal

- The ultimate fuel for international trade – easily moved

1085 Billion barrels

50% of the OIL 80% 1998

90% of the OIL Used Since 1984 60% 1989

Million Barrels per Day

Forecast World Oil Consumption 2003-2030 Projections

Percentage Share of Remaining World Oil Reserves

600 Saudi 50%

400 Iraq 30% 12%

Oil Reserve Reporting in Selected OPEC Countries, 1980-2005,

300 United Arab Emirates

The Growing Gap between Production and Discovery of

- ULTIMATE RECOVERABLE RESERVES - a function of:

Year of Peak Production and Percentage 2005 Production is below Peak

Other Africa 2004

Rep. of Congo 1999

Other Asia Pacific 1993

Russian Federation 1987

United Kingdom 1999

25 Europe Peak 2000

OPEC's Production plus Surplus Capacity December 2002

35000 Other Liquids

0 0.5 1 1.5 2 2.5 3 3.5 4

Campbell’s (2005) Estimate of Future Discovery Rates

(from Campbell et al, 2005)

EIA (2005) reference forecast to 2030

EIA World Oil Production and Consumption Forecast 2003-2030

Forties, United Kingdom Oseberg, Norway Gullfaks, Norway

Post 1997 Estimates of the Time of Peak World Oil Production

Million Barrels per Day

(data from BP Statistical Review of World Energy, 2006)

North America Reserve to Production Ratio in Years Including

Thousand barrels per Day

Canadian Oil Imports and Exports 1985-2005

Crude Imports Total Exports

Thousand barrels per Day

1000 1000 Net Exports

(data from National Energy Board, July, 2003)

Yes, But We’ve Got the

- Expansion of bitumen export capacity may also be limited by projected shortfalls of

Canada Scenarios of Oil Production Including Oil Sands (NEB, 2003)

(data from National Energy Board, July, 2003)

10 Central and South America

United States +650%

Hirsh et al, 2005

(biodiesel, ethanol from University of Minnesota

Proceedings of National Academy of Sciences

July, 2006, and Pimentel and Patzek, 2005,

Nat Resources Research (Vol. 14:1, 65-76))

Energy Profit Ratio versus In Place Oil Resources

The Issue is Not Resources – its Deliverability – How Fast

Oil Shale Oil Sands Heavy Oil, Light Oil,