More oil sands in the pipeline than the future will want: IEA

Alberta has already approved far more oil sands production than the world will want according to the International Energy Agency (IEA).

If the IEA is right, it means an end to new oil sands project approvals and probably an abandonment of some that have already been approved. It also means Canadians might want to re-evaluate the need for bitterly controversial new tar sands pipelines—like Keystone XL, Northern Gateway and the Trans Mountain twin.

Let's take a look at some of the details.

The IEA has arguably the world's most detailed and comprehensive database on global energy. Their flagship annual report—World Energy Outlook—is an essential resource relied upon by many of the world's major economies, as well as global energy industries. The IEA's 2010 World Energy Outlook report specifically analyzed future oil sands demand under several possible energy scenarios. In every scenario, global demand for oil sands in 2035 was well below what has now been approved.

What makes this analysis so remarkable is that the IEA is a friendly proponent of the oil sands. They open their report saying "production from Canadian oil sands is set to continue to grow over the projection period, making an important contribution to the world’s energy security." No greenie tree-huggers there.

But the IEA are also hard-nosed economists who include in their analysis the reality that high production costs coupled with high carbon emissions will hurt the competitiveness of the oil sands in the future. They conclude that there are already more oil sands projects in the pipeline than will be needed to supply future demand.

My chart below details this oil supply and demand mismatch:

The red column shows that already approved projects will be able to deliver 5.2 million barrels of oil a day (mmbpd). Additional projects to deliver another 3.8 mmbpd are working towards approval. Both the industry and the Alberta government say they are planning for 5.0 mmbpd to be flowing out the taps by 2030, with more supply coming soon after.

For comparison, my chart shows the high-end and low-end of the IEA demand scenarios for the year 2035.

Lowest demand scenario

In the most hopeful IEA scenario, humanity limits climate change to two degrees Celsius—which is more than double warming so far. Two degrees is the threshold above which most climate scientists say an overheating climate becomes dire and dangerous for us.

As US President Obama warned in his acceptance speech last week, the "destructive power of a warming planet" is a growing threat that must be addressed.

In this scenario, the IEA says global demand for oil sands will be 3.3 mmbpd. Over a third of the 5.2 mmbpd the industry already has approval for, and is planning to produce, won't be economically viable.

In fact future demand can be met almost entirely with currently producing projects plus those in construction. About 90 per cent of projects already approved but not being built yet won't be needed.

Highest demand scenario

The IEA's most pessimistic scenario has humanity choosing a dirty energy path leading to a climate "catastrophe" of six degrees Celsius of global warming. As the IEA said when releasing their report: "Everybody, even the schoolchildren, knows this is a catastrophe for all of us." (See: Climate “catastrophe” of 6C dead ahead: IEA.)

But, even in this dystopian future of climate misery, the IEA says that only 4.6 mmbpd of tar sands oil will be economically viable. This is still well below the industry game plan of 5.0 mmbpd by 2030, rising to 6.0 mmbpd by 2035.

However you slice it, it is looking increasingly likely that demand for Alberta's oil sands will fall well short of even today's commitments. The endless growth scenario is looking more like a long walk on a short pier. Albertan's would be wise to protect themselves from this risk while they still can.

MIT agrees

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worry worry worry

The end is nigh--well not quite;I've just began to believe that a 747 jet liner will not land in my bedroom tonight(but what about tomorrow night??)--

NOW what to do about the Northern Gateway pipeline?

There is ongoing speculation about the real potential of the Bakken and shale oil  resource discoveries ,worldwide. The U.S. are fairly certain that in a few years they will be net exporters of oil  and gas.See the following two references and be bewildered.How might these resources affect us—maybe the Tar Sands will eventually be challenged by this new huge production potential(some say with less expensive and more desirable product )Note; Alberta also claim huge reserves of these shale oil deposits??—Where will it ALL TAKE US--remains to be seen.Of course Enbridge and Trans Canada will be building MANY pipelines to carry these new oil and gas products—to everywhere.!! Reference 1. a world outlook http://www.worldenergyoutlook.org/and 2. a Canadian outlook http://www.theglobeandmail.com/commentary/peak-oil-more-like-peak-canada/article5370334/-look at  these and then ask yourself “what we in BC should do about the Northern Gateway pipeline project”?— Some suggestions for Enbridge; Yes the Enbridge Gang have an image problem; largely due to the mess created in the Michigan-Kalamazoo fiasco.—Most pipelines ,eventually, will have a leak incident....and with GOOD OPERATING PRACTICES the incident will be handled with little impact.The history making Kalamazoo incident was unfortunate for all parties—and this incident is  causing Enbridge much hard work to gain public confidence. Yes ,BC residents are not yet ready to have Enbridge build a pipeline through very difficult mountainous route , then to ‘handoff’ the responsibility for marine transport in very large oil tankers as they wiggle their way through a 50 kilometer inlet waterway. Enbridge have ‘stuck’ steadfastly to this ‘bad plan’. Couple this with Enbridge’s inability to create an  ‘operations safety’ image and they make it very difficult for ‘peasants’ like me to accept their ‘bad plan’! Yes ,there is a strong Provincial and Federal government desire for the pipeline operations REVENUE—and couple this a bit of BULLYING by Enbridge-- we might yet see the pipeline built. However the problems are mounting;1. the public negative  stance remains—Enbridge likely don’t care much---BUT the politicians are getting nervous and ‘nervouser’!2.time is every ones enemy—the longer we wait—the sooner all this Bakken and shale oil bonanza factors into the outcome—how? As I see it ,after reading some of the articles referred to above---Enbridge ,though reluctantly, may say—enough already-‘we’re out of here’!---Enbridge are likely to benefit ‘hugely’ from these new oil and gas finds—they’ll be building pipelines to meet the continental demand... and the Northern Gateway loss may become but a blip on their balance sheets!3. Is there hope?—yes—but time may be an issue—so what to do – First, Enbridge needs to get busy and earn the public trust—I see a sign of hope –Al Monaco,new President and CEO,is making some good noises—he’s been quoted recently discussing the ‘possibility’ of moving ship loading out of Douglas Channel and to Prince Rupert—repeat—a ‘possibility’.And now MORE hopeful signs for Enbridge –see http://m.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/pq-makes-oily-mess-with-its-pipeline-rhetoric/article5398351/?service=mobile where the columnist tells us that ...”Al Monaco ,may be changing the ways of his company...tying executive bonuses to safety and security...” this is the signal that many have been waiting for—this guy has been listening and more importantly –he’s acting ! ! However the columnist also suggests that the Northern Gateway pipeline project ...looks doomed!—Many folks are saying the same thing—Yet hope remains, IF Mr. Monaco can quickly SHOW B.C. public the NEW ENBRIDGE--4.Convince the willing members of the Board to ‘have an OPERATIONS SAFETY EPIPHANY’(what to do with the unwilling??)—First ,get rid of those fluffy full page color ads and spend the money elsewhere--get the senior technical and management (including Board members) on the road (local gatherings,major and local media,etc..)to show us that your ‘operators’ know their stuff—we, the public,will  judge the QUALITY of your team—Romney and Obama went in front of a world audience to show themselves—now you SHOW US THE BEEF!!5.show us your NEW ORGANIZATION– I suggest that you include CORPORATE TECHNICAL OFFICER,(CTO ) who  will be responsible to keep you and the Board apprised of system conditions –and show how will the Board be held ACCOUNTABLE for directing and funding system needs and sound practices, in a timely manner...don’t just follow operating and technical standards—SET THE STANDARDS!6. In spite of all the naysayers—there are millions of miles of pipelines and millions more will be built—let BC enjoy the benefits(yes there are risks)—let Enbridge show us how they intend to MINIMIZE the risks!—Let’s get on with the project ‘SMARTLY’--and together,eventually, we should  enjoy the benefits of this controversial project..Simple as that.