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By Robert Rapier on Mar 8, 2012 with 11 responses

Gas Prices & Keystone Pipeline — R-Squared Energy TV Ep. 14


In this week’s episode of R-Squared Energy TV, I answer more questions about gas prices, and discuss the Keystone XL pipeline and future development of Canada’s oil sands. Some of the topics discussed are:

  • The EROEI for producing oil sands
  • The emissions profile of shipping the oil sands to China versus refining it in the U.S.
  • Why I support the Keystone XL pipeline AND development of renewable energy
  • How I think the pipeline would impact gasoline prices
  • President Obama’s impact on oil supplies and gasoline prices

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Link to Original Article: Gas Prices & Keystone Pipeline — R-Squared Energy TV Ep. 14

By Robert Rapier

  1. By Raindog on March 8, 2012 at 2:06 pm

    Question for next episode or whenever you get around to it:

    What do you think about the role that CNG vehicles might play in the next ten years? Can you compare the environmental footprint of a CNG vehicle that burns gas directly versus an electric vehicle that uses electricity produced from gas?



    • By Mark_BC on March 13, 2012 at 12:34 pm

      Overall I think they are about the same — 20% efficiency of the ICE direct burn versus 60% efficiency of NG to electricity conversion, minus transmission losses and 80% efficiency of charging and driving an EV. Actually maybe an EV is more efficient. But the advantage of the EV is that you can use electricity from any source, including renewable energy. The disadvantage is the range limitation and battery raw materials needed to build the EV.

  2. By f on March 9, 2012 at 8:07 am

    Great Episode — One question though: I’m interested to know where you got your EROEI numbers regarding the keystone pipeline (3:1 versus 8:1).

    • By Robert Rapier on March 9, 2012 at 11:45 am

      The number 3:1 (actually 2.9:1) floated around for a long time, and was repeated on a number of websites. A few years ago, if you looked up the EROEI of oil sands, that is the number that you found but it was never referenced. I was always a bit suspicious of it, because oil sands were being developed even when gas prices were higher, and I did not think a 3:1 EROEI would have been economical.

      I first calculated the 8:1 from an essay on steam assisted gravity drainage (SAGD) at The Oil Drum. The purpose of the essay was merely to educate readers on the process, but actual industry gas usage numbers were presented. The inputs and outputs came out to be 8:1, which makes more sense when you think about what they are doing. You have slid down the scale a bit more from conventional oil production, but you have not fallen off a cliff which is what 3:1 implies. Then, I saw the numbers again a couple of years ago in a presentation by one of the companies extracting oil from there. One of their slides consisted of a Hysys model, and they had their energy inputs and outputs there. Again, it came out to be about 8:1 (but was a different source than from the earlier SAGD presentation).


      • By Mark_BC on March 13, 2012 at 10:56 pm

        Hey Robert, great analysis. I too never really fully understood the opposition to the Keystone pipeline. The US has to get its oil from somewhere, it may as well be from Canada. Otherwise it’s going to China. Of course one could argue that the pipeline would just be another excuse to continue down the BAU trajectory and not deal with the immediate need to develop alternatives ASAP, which I guess is a reasonable argument.

        Regarding oil sand EROEI, I have also been trying to figure this out for a few years, and it’s really hard to find decent data. I have seen estimates ranging from 3 to 8. Based on my data I think it is about 5:1, especially since if anything the estimates of NG use will probably be on the conservative side, simply based on the nature of the sources of the information. But we also have to factor in the additional energy besides just extracting the oil sand (and upgrading it to SCO). It also needs to be transported, then further refined into final products. Also don’t forget that the upgraders that need to be built around each deposit (which you don’t need for conventional crude) require a lot of energy to be built. This should all be factored in because you don’t have that for conventional crude. This is also why it’s a slow process ramping up oil sands production because it takes 5-10 years to get a new mine going.

        I’d be interested in hearing your sources leading you to suggest the EROEI is 8:1. Here are mine leading to about 5:1:

        Page 16 of the NEB’s 2006 report

        Page 47 of the recent Royal Society of Canada report:

        Page 7 and onwards of this report:

        You may also find my analysis quite interesting as I go beyond energy and bring it together to explain economics. I put forth a 3:1 EROEI which I may revise upwards based on the information.

        Regarding people complaining about high gas prices, I can’t have any sympathy. Considering that the world is running out of oil, gasoline prices should be several times higher.

        • By Robert Rapier on March 14, 2012 at 12:14 am

          I’d be interested in hearing your sources leading you to suggest the EROEI is 8:1. Here are mine leading to about 5:1: Page 16 of the NEB’s 2006 report

          I would have to dig up my sources. One was from a story done at The Oil Drum by Dave Cohen a few years ago in which he used an industry report that cited the gas requirement per barrel.

          But if you look at NEB report, you will see that on Page 17 the expected input per barrel of oil in 2010 was 0.6 Mcf/barrel for mining and around 1 Mcf/bbl for in situ. That equates to an EROEI between 6 (for the 1 Mcf case) and 9.8. I thought the numbers I had seen were for SAGD, but maybe they were for mining (which I would have thought would have been higher than for SAGD).


  3. By DownToTheLastCookie on March 9, 2012 at 8:07 pm

    Hi Robert,

    I think you, the media and most everyone has missed the biggest impact the Obama Administration has make on oil. That being 54.5 mpg by 2025 for new vehicles. That’s about 20% better mileage than a current Prius. That’s a lot of CHANGE when you think about. If we are going to make it out of this mess, this is how it’s going to get done.

    I will also be totally surprised if Obama doesn’t approve the pipline after the election. I’m sure he will demand a few small change to the constuction, but they will mostly be meaningless. It’s all about politics. There is just to much security (economic and militarily) to not build it. Basicly, we as a society make the decision years ago by our behavior.  We don’t have any other choice now.

    • By Robert Rapier on March 9, 2012 at 8:10 pm

      I think you, the media and most everyone has missed the biggest impact the Obama Administration has make on oil. That being 54.5 mpg by 2025 for new vehicles.

      But that falls into that large category of energy policies that we will have to look back on at some future time. We don’t know yet whether that target is achievable, and so we don’t really know what the impact of these policies will be. But they are not impacting gas prices or oil supplies today — which is the point I am making. A sitting president can have all sorts of energy initiatives, but they won’t have an effect for several years.


  4. By Jim Takchess on March 10, 2012 at 6:36 am

    OT, a link about the Gulf Oil Spill and estimating the oil,

    Why open science failed after the gulf oil spill

    • By RBM on March 10, 2012 at 5:51 pm

      Excellent link, Jim.


  5. By armchair261 on March 11, 2012 at 10:50 pm

    Nice article. Apart from conflicting interests, another element to the Macondo story which detracted from the scientific investigation was the widespread assumption of malicious intent. Any journalist who even so much as dared to impartial was probably accused of being a shill or worse by most, and it spawned a whole host of breathless “look what else these bad people did!” articles on the industry. A memorable story by Anderson Cooper accused BP of building Endicott Island on Alaska’s North Slope to evade paying bonus bids, and a number of reporters claimed that BP had drilled below it’s permitted depth. The hostility was so him that no one in the mainstream bothered to question these wild claims.

    Unfortunately in the cases of Keystone and especially fracture stimulation, I think history is repeating itself. Junk science, that bane (rightfully) of global warming proponents, is winning the day among those same people when it comes to a sober assessment of the risks and impacts of fracturing.

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