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Transforming Canada’s Energy System: A Challenge & Opportunity for Alberta. David Layzell, PhD, FRSC . Professor and Executive Director Institute for Sustainable Energy, Environment & Economy, University of Calgary, Calgary, Alberta. Transform Alberta Summit,

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Transforming canada s energy system a challenge opportunity for alberta

Transforming Canada’s Energy System:A Challenge & Opportunity for Alberta

David Layzell, PhD, FRSC.

Professor and Executive Director

Institute for Sustainable Energy, Environment & Economy,

University of Calgary, Calgary, Alberta

Transform Alberta Summit,

Banff, Alberta. November 8, 2012


Transforming canada s energy system a challenge opportunity for alberta

What is an Energy System?

What People

Want:

What Energy System Developers Create:

What Nature Provides:

Service Technologies

Harvesting Technologies

Services

Sources

Currencies

  • Transportation

  • Communication

  • Illumination

  • Healthy food

  • Health care

  • Heating/cooling

  • Clean water

  • Information

  • Coal

  • Oil

  • Natural gas

  • Sunlight

  • Wind

  • Uranium

  • Biomass

  • Geothermal

  • Oil Refinery

  • SAGD facility

  • Hydraulic fracturing

  • Anaerobic digester

  • Pipeline

  • Nuclear power plant

  • Coal power plant

  • Gas turbine

  • Fuel Cell

  • Solar panel

  • Wind turbine

  • Automobile

  • Telephone

  • Light bulb

  • Refrigerator

  • X-ray machine

  • Computer

  • Furnace

  • Gasoline

  • Diesel

  • Electricity

  • Methane

  • Ethanol

  • Hydrogen

Adapted from “Smelling Land” by David Sanborn Scott


Transforming canada s energy system a challenge opportunity for alberta

Forces for Energy System Transformation

Economy

Declining conventional oil and gas

More reliance on unconventional oil & gas

Rapidly rising global energy demand

(esp. Asia)

High oil price

Low natural gas price (esp. in NA)

Energy Systems

Energy Security Concerns

(esp. in USA & E. Canada)

Jobs & tax income

Environment

Climate Change

Societal Impacts

Water and land use

Air pollution & health impacts

Risk/benefit assessment and relative ranking of each ‘Force’ differs widely among individuals and groups.


How to transform our energy system should be the focus of a canadian energy strategy

How to Transform our Energy System should be the Focus of a “Canadian Energy Strategy”?

My definition of a Canadian Energy Strategy:

Inter-provincial or multi-provincial cooperation around key components of Canada’s Energy Systems

to achieve:

Energy

Security

Healthy

Environment

Economic

Growth

As Canada’s energy province, Alberta needs to take a leadership role in the next energy system transformation.


Transforming canada s energy system a challenge opportunity for alberta

Canada’s Energy System (2006)

Domestic Energy use

Energy Service

Energy Source

Transportation

Oil

  • Note:

  • Large exports;

  • ~85% of primary energy from fossil fuels;

  • Large waste from conversion & transport

Residential & Commercial

Gas

Oil & Gas Industry

Other

Industry

Coal

Waste

Hydro

Electricity Exports

Waste

* Estimate of useful vs. wasted energy in energy services from NRCanSankey (2006).


Transforming canada s energy system a challenge opportunity for alberta

Outline for Talk

Domestic Energy use

Energy Service

Energy Source

Transportation

Summarize key features / peculiarities of the Canadian energy system;

Identify Questions to explore opportunities for Transforming the Cdn / Alberta Energy System;

Conclusions

Oil

1. Oil

Residential & Commercial

Gas

Oil & Gas Industry

2. Natural Gas

Other

Industry

Coal

3. Electricity

4. Energy Efficiency

Waste

Hydro

Electricity Exports

Waste

* Estimate of useful vs. wasted energy in energy services from NRCanSankey (2006).


1 oil

1. Oil


Trends in cdn oil production import

Trends in Cdn Oil Production & Import

Crude Oil Production

Exports to the USA

Domestic use [CDN production]

Totaldomestic usein refineries

Imports

Source: StatcanCansim126-0001


Alberta dominates the production of crude o il in canada 2011

Alberta Dominates the Production of Crude Oil in Canada (2011)

Oil Production


Most 76 or 2 2 mil boe d of the oil canada produces is exported to usa

Most (76% or 2.2 mil. boe/d) of the Oil Canada Produces is Exported to USA.

Oil Production

Oil Transport


O nly 57 0 9 mil boe d of cdn crude o il p roduction is refined in canada

Only 57% (0.9 mil. boe/d) of Cdn Crude Oil Production is Refined in Canada…

Refine Petroleum Products (RPP)

…but Canada also refines 0.7 mil. boe/d of Imported Oil (42% of Total Oil Refined)

Oil Production

Oil Transport

In balance, Canada is a Net Exporter of

Refined Petroleum Products (RPP).


Canada is on track to greatly increase oil p roduction in the next 20 years

Canada is on Track to Greatly Increase Oil Production in the Next 20 years

Oil Sands

Sources: StatcanCansim 126-0001 (historical data) and adaptation from CAPP forecast (Crude Oil: Forecast, Markets and Pipelines, June 2012)


And shale oil production in the usa is threatening existing m arkets for cdn oil

…and Shale Oil Production in the USA is Threatening Existing Markets for Cdn Oil

USA Annual crude oil production (1985-2011)

Kboe/d

This new production will compete with CDN oil for US markets.

Source: U.S. Energy Information AdministrationNote: Production data includes crude oil and lease condensate


Transforming canada s energy system a challenge opportunity for alberta

Questions…

Can we move AB oil to E. Canada at competitive prices with Brent crude?

Should we refine more AB oil in Canada?

Can we get access to the Pacific to open up markets in Asia?

How can we address the environmental cost?

Available for new markets

Production in excess of Cdn needs

CDN oil (Kboe/d)

Estimated US import

Source: Rising US Energy Independence, what does it mean for Canada?, Special Report, TD Economics, May 2012


2 natural gas

2. Natural Gas


After y ears of rising ng p roduction export both are declining as us i mports r ise

After Years of Rising NG Production & Export, Both are Declining as US Imports Rise

Canadian production

Exports

Natural Gas in Canada (EJ/yr)

Total

Domestic use

Domestic use [of CDN production]

Imports

Source: CANSIM tables 128-0009 and 128-0002


Over 50 of cdn gas production was exported to usa in 2009

Over 50% of Cdn Gas Production was Exported to USA in 2009

Natural Gas Production

While E. Canada imported gas equiv. to ~11% of Cdn production.

Natural Gas Transport

Natural Gas Import


Us production of gas has been increasing sharply

US production of gas has been increasing sharply…

US Natural Gas Production in EJ/yr

US Shale Gas is taking market share from Cdn Natural Gas production.

NG Price is low

compared to oil:

$ / GJ

  • Nat Gas: $3-4

  • Oil (@$80/barrel) $13

What are the NG reserves in Canada?

Source: EIA Annual Energy Outlook 2012 (early release)


Canada has v ast natural g as r esources

Canadahas Vast Natural Gas Resources…

  • 865 EJ

  • equivalent to 290 years of current natural gas use in Canada**

* Total amount of gas hydrates in Canada could be 18 times higher

** Current Natural Gas demand in Canada is ~ 3 EJ/yr.

Sources: IEA, Golden Rules for a Golden Age of Gas: World Energy Outlook Special Report on Unconventional Gas, 2012

Energy content conversion factors used: 38,430 k}J/m3 (IEA values for Canadian natural gas)

* Council of Canadian Academies, Energy from Gas Hydrates: Assessing the Opportunities and Challenges for Canada, 2008


Transforming canada s energy system a challenge opportunity for alberta

Questions…

  • Does it make sense to transform the energy system towards natural gas?

    • LNG exports to Asia?

    • Replace coal power with cleaner gas?

    • CNG/LNG vehicles?

    • Expand fertilizer & plastics industries?

  • How can we address the environmental costs?

    • Recovery & Processing?

    • Use?

Predicted NG Supply & Demand for Canada & USA

Available for new markets

Exports

EJ/yr

Source: Adapted from Rising US Energy Independence, what does it mean for Canada?, Special Report, TD Economics, May 2012


3 canada s electrical system

3. Canada’s Electrical System


Provinces vary in sources for power p roduction

Provinces Vary in Sources for Power Production

Hydro

Nuclear

Power Generation

Coal

Note: Average values between 2005 and 2009


Most is used within each province but 78 of canada s e lectricity t rade is n s not e w

Most is used within each province, but ~78% of Canada’s electricity tradeis N-S, not E-W

Labrador trade with Quebec is the primary exception

Power Generation

Power Transport

Notes:- Trades lower than 0.5 TWh removed- Average flows values do not consider years without trade- Share calculation based on all flows values


Provincial greenhouse g as ghg e missions affected by source of power

Provincial greenhouse gas (GHG) emissions affected by source of power.

GHG Emissions

Power Generation

Note: Average values between 2005 and 2009


Canada s ghg emissions from power generation

Canada’s GHG Emissions from Power Generation

GHG emissions** associated with power production in Canada

119 Mt CO2/yr

Gas

18

  • Equivalent to:

    • ~3X the GHGs from oil sands recovery and processing (well to pipe)*

Oil

8

Coal

93

*** In 2009, oil sands recovery accounted for 6.5% of GHG Canadian total emissions (source: NRCan)


Questions

Questions…

  • Should provinces switch from Coal to Natural Gas?

    • Reduce GHGs by 40 Mt CO2/yr

  • Should provinces switch from fossil fuels to large hydro / renewables for power generation

    • Reduce GHG emissions by ~119 Mt CO2/yr

    • Create an W. Cdn Power Grid?

Coal

Kg CO2 / TJ power

Natural gas*

Large Hydro

Oil

* Assuming combined cycle units

An opportunity for inter-provincial cooperation…


Canada has the hydro potential to displace fossil fuel power generation

Canada has the hydro potential to displace fossil fuel power generation

…and hydro is a great base load / storage for wind and solar

Undeveloped hydro potential

Developed hydro

Notes:- Trades lower than 0.5 TWh removed- Average flows values do not consider years without trade- Trade newer than 2007 not considered


Dollars of revenue per t co 2 e emissions co 2 e for canada s primary industries

Dollars of Revenue per t CO2e Emissions ($/CO2e) for Canada’s Primary Industries

Per tCO2, coal power generates less economic activity than other primary industries. Plus we have other alternatives. Should not this be the first place to look for GHG reductions?


4 energy efficiency

4. Energy Efficiency


Energy use gj capita

Per Capita Energy use in Alberta, Canada and Northern Europe

Energy use (GJ/capita)

49% higher

than the

CdnAvg!

Agricultural & Fishing

Why is Alberta be so much worse than other provinces?

Commercial & Institutional

Residential

Transport

Industry

Canada: CanSimTable 128-0002, Table 128-009, Table 128-0016. Supply and demand of primary and secondary energy in terajoules, annual (terajoules); Canada. Table 051-0005 - Estimates of population, Canada, provinces and territories, annual (persons);

European Countries: Eurostat. Supply, transformation, consumption - all products - annual data [nrg_100a]; Eurostat. Population on 1 January by age and sex [demo_pjan]


Transforming canada s energy system a challenge opportunity for alberta

Question

Why?

  • Should not Alberta strive to be the Canadian Leader in:

    • Energy efficiency?

    • Renewable energy?

    • Low carbon communities?

  • ISEEE is working on this…

  • We have some of the answers, but there is still a lot we don’t know.

  • Clearly, there is much that can be done to improve.

Gas

18

Oil

8

Coal

93

“My government will put energy efficiency at the top of the agenda. It is the fastest and most cost effective measure to improve on sustainability; it is the "low-hanging fruit.”

Alison Redford, Leadership Campaign Materials (2011)


Conclusion

Conclusion

  • Energy Efficiency is the ‘low hanging fruit’. Alberta has the potential to move from last place to first place in the transformation to a low carbon community:

    • Population growth (new communities);

    • Financial resources;

    • Impressive technology and innovation workforce;

    • Willing public.

  • Success is critical to ‘rebranding’ Alberta, and creating an industrial base that can carry the province through its boom/bust cycles.

  • Build Partnerships with other Provinces to realize the energy system transformations that will better achieve energy, environment and economy objectives:

    • Oil (pipelines east?, new refineries? Pacific access? Better recovery technologies?)

    • Gas (LNG terminals? Replace coal? Replace diesel? Fertilizer/plastic? Better recovery technologies?)

    • Electricity (W. Canadian grid? Renewable integration? Electrification of oil sands?)


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