We're all fossil fuel junkies but "cold turkey" time is nigh.
That's the way William Rees sees how we've used irreplaceable supplies of oil, gas and coal during the last century.
We've already burned through about half of the conventional fossil fuels that it took Mother Nature four billion years to create, he says. "We've seen 100 years of squandering a rare and increasingly expensive resource."
Rees is the former director of the University of British Columbia's School of Community and Regional Planning. He's also the person who created the concept of "ecological footprint" - an analytical tool for measuring an individual or community's (whether it's a city, a country or the entire human population) energy and material consumption.
Each Calgarian, for example, has an eco-footprint of nearly 10 hectares, based on each resident's average consumption of energy and materials. In comparison, each person in a poor developing country has an eco-footprint of less than half a hectare.
The Alberta chapter of the Canada Green Building Council - "green" as in energy-efficient - hosted Rees' talk at Fort Calgary last week.
Rees argues that not only are we consuming oil, gas and coal at an unsustainable rate, our entire global society is now literally dependent on fossil fuels and their myriad spin-off products.
No influence has played a greater role in causing the four-fold global population increase since 1850 than humanity having access to abundant, cheap fossil fuels, he says.
We now get 90 per cent of our food directly or indirectly from fossil fuels - think monster combines, irrigation pumps, fertilizers, trucks delivering to grocery stores - rather than from the sun's energy, Rees says. "We are the product of growing oil production."
But there's a big problem. There always is when one is hooked on any substance.
Rees and others - including former chief petroleum geologists at Elf Aquitaine, ExxonMobil Corp. and other major oil companies - say there's good evidence that it's "high noon" for fossil fuels.
Their data show that worldwide extraction of conventional oil and gas will likely peak by 2010, and decline thereafter. And as fuel supplies continue to go down, prices will keep going up.
But won't higher prices drive more oil and gas exploration?
Rees contends that in most places in the world, the cost of exploring for oil and gas has become greater than the return from finding ever-smaller discoveries. Much of the exploration is being subsidized by tax regimes, royalty structures and other government incentives, he says.
There are now more rigs in Canada (730 in Western Canada's rig fleet alone), the U.S. and around the world drilling for oil and gas than ever before. But in a world of finite fossil fuel deposits, "it hasn't made any difference. We're still on the downslope."
Most industry experts and analysts strongly disagree with Rees and others who warn of the impending approach of the planet's "peak oil" time.
In their view, there's lots of undiscovered oil and gas still left in the ground. We've just got to develop better technologies for finding and producing it.
But what if Rees, the former chief petroleum geologists and others contributing to the Association for the Study of Peak Oil and Gas website (www.peakoil.net) are right?
What if we're just a few years or even a decade away from a world where oil and gas are so coveted, the $55-per-barrel oil and $6-per-million British thermal units gas prices squeezing our budgets now will seem like a bargain?
What will we use then to fuel our SUVs, heat our oversized homes and grow our far-away food?
As Rees puts it, perpetual growth in a finite system is "an impossible dream."
But wait a minute! There are some pretty impressive heavyweights on the other side of the peak-oil debate.
The U.S. Energy Information Administration, reports that world oil production in 2003 was actually about 2.5 per cent higher than in 2000.
And the World Energy Council concluded a couple of years ago that "fossil fuel resources are adequate to meet a wide range of possible scenarios through to 2050 ... and well beyond."
Even the UN's Intergovernmental Panel on Climate Change found that fossil fuels are so abundant that their continued use "will not limit carbon emissions during the 21st century."
Closer to home, the National Energy Board and the Alberta Energy and Utilities Board, in a report released last week on Alberta's ultimate potential for conventional natural gas, estimated that the province still has 101 trillion cubic feet (tcf) of natural gas remaining to be developed.
That includes 39 tcf of gas that have already been discovered and 62 tcf awaiting discovery. Put another way, out of Alberta's ultimate potential for marketable conventional natural gas of 223 tcf, nearly half of it's still in the ground.
Still, there are some worrisome signs in Alberta and the rest of the West that look a lot like the dark clouds that Rees and other so-called resource depletionists see on the horizon.
Penn West Petroleum Ltd., for example, had its worst year in 2004 for drilling results in a decade, according to a report. The company spent about $530 million on exploration and development, but added the equivalent of only 15.8 million barrels of oil to its proven oil and natural gas reserves. That's enough to support current production for just six months.
"Growth via the drill bit is no longer the norm for the mid-size and large companies," the Calgary-based Canadian Energy Research Institute (CERI) says in a recent issue of its CERI Energy Insight newsletter.
Exploration for ever-smaller pools of gas in Western Canada now amounts to only about 15 per cent of total drilling, and "industry is finding it difficult to replace production, and all but impossible to grow supply," CERI says.
Ramesh Ramachandran, president of Dow Chemical Canada, says soaring natural gas prices are causing permanent damage to Canada's petrochemical industry, including driving high-paying jobs out of the country.
The abundant gas supplies that gave Alberta's petrochemical industry a competitive advantage are gone, he is reported as telling CERI's natural gas conference in Calgary last week.
In his words, the oft-touted Alberta Advantage - as least when it comes to cheap and plentiful natural gas - has become "almost a historic relic."
UTS Energy Corp. now has Petro-Canada Inc. in its corner to help develop the Fort Hills oilsands project. But environmental groups are still hoping to knock the proposed development, located about 90 kilometres north of Fort McMurray, out of the ring.
Petrocan earlier this month agreed to pay UTS Energy $300 million for a 60-per-cent stake in the Fort Hills project. The total cost of the open-pit mine and upgrading facility is estimated to be about $5 billion.
The Alberta Wilderness Association (AWA) and other groups, which opposed TrueNorth Energy's original Fort Hills project (before UTS Energy bought control of it), vow to keep fighting this latest incarnation.
The development will destroy one of the world's most spectacular wetlands, called the McClelland Lake Wetland Complex, environmentalists contend.
"The proposed destruction of this internationally significant site is totally unacceptable," says Richard Thomas, AWA's representative in the area. "AWA will continue to fight hard for its complete protection."
But environmentalists shouldn't expect to get a sympathetic ear from Petrocan chief executive Ron Brenneman, especially since Alberta regulators have already approved the project for an initial production of 50,000 barrels per day.
Unless the AWA and other groups can find a way to challenge Fort Hills in court, consider this a TKO by UTS Energy and Petrocan.
Just call it a Five Billion-Dollar Baby.
(Mark Lowey can be reached at mark@businessedge.ca)
