New computer modelling system allows exploration of Canada's potential energy future; graphic from here. This article appears in the August 2009 issue of Oilsands ReviewBy Peter McKenzie-Brown
“This is a way of getting inside the energy system, getting a sense of its possibilities. I’ve been around for a while, and I’ve never seen anything like it.” The speaker is Bob Taylor. After a long corporate career with a pair of big oil companies, he joined Alberta’s Department of Energy’s as assistant deputy minister for oil development. Now retired, in that job he had responsibility for conventional oil, oil sands, land access, and energy and Aboriginal relationships. Today he is excited about something he believes is much bigger than all of these combined.
An engineer by training, Taylor is part of an informal group of senior patch people who have formed a not-for-profit organization they call the Energy Futures Network. They argue that Canadian policy-makers – whether they work in government, industry or the world of NGOs – should be able to take the longest possible view of resources to make sensible decisions.
"The exact analogy [to the modelling system] is the flight simulator. You can get into the simulator and use the controls to see how the plane will respond. The nice thing is that if you crash the plane, you can learn from your mistakes. You don’t want to crash the plane in real life.”With the help of an Ottawa-based firm called whatIf? Technologies , he thinks they’ve got it. Taylor is excited because he believes he can now feel, touch and imagine Canada’s possible energy futures to the end of this century: No small feat. The trick was to create a computer model that could deal with supply and demand without factoring in price. Economists would call that heresy; Taylor calls it “dynamic and robust.”
His Energy Futures group has just done a simulation of Canadian gas supplies for a government agency, and he believes the results will worry – or should worry – oil sands producers. “Without significant development of Canada’s unconventional gas and a significant reduction in natural gas use,” he says, “Canada will become a net importer somewhere between 2023 and 2030. Even with development of unconventional gas and a less aggressive shift towards natural gas supplied electricity, Canada may become a net importer by about 2050.”
This, he says, has wide-ranging implications for the oil sands, which use gas to produce hydrogen for upgrading, to supply heat for production and upgrading operations, and to generate electricity. “There will be both economic and societal pressure to reduce the use of natural gas for oil sands production and upgrading. The housewife in Chicago will win out on the purchase of natural gas every time.” He adds that “the timing to make the technology changes is short. The life cycle for technology-dependent major capital is anywhere from 15 years to 40-plus years.”
Bypassing Gas: You can imagine the office comedian saying through hands shaped like a mock megaphone: “Helloo-o! Earth to planners! Make oilsands production and upgrading less natural gas-intensive, and start doing it now!”
Taylor’s Energy Network report uses a reference case in which oilsands production reaches 5 million barrels per day. Reducing sectoral gas demand is going to be critical, he concludes if the industry is to avoid industrial turmoil from conflict between consumer needs (remember the housewife from Chicago) and industrial demand.
Is it possible to lower the sector’s natural gas intensity? Taylor believes it is. “We could cut natural gas intensity for in situ production by 30 per cent through the use of solvent technologies,” he says, “and we could cut in half the gas we use to create hydrogen for upgrading. This would save (consumption of) about 1.3 billion cubic feet per day,” by mid-century.
Taylor notes other possible ways to reduce methane consumption. One option could be a different extraction technology: the Chinese government is building a demonstration facility based upon Supercritical Extraction, for example. Another possibility would be to gasify upgrader bottoms. Many ideas are out there.
He thinks more gas savings can be had from Petrobank’s THAI (toe-to-heel air injection) system – a trademarked, patented non-steam process that could be a simpler, cheaper, cleaner and more efficient alternative to SAGD in situ production. However, he says, the THAI process has a significantly higher CO2 output per barrel of production, and the world is now facing an environmental revolution. Worries about global warming could put this technology at risk.
“That is the beauty of a physical model that tracks all inputs and outputs,” Taylor says. “If you want to see how the THAI technology will affect the future, you can put in the technical parameters that show very low methane inputs. However, the system would need to reflect the THAI system’s much greater production of CO2 per barrel of production, compared to SAGD. You win on one side, but lose on the other.”
The CanESS Model: It is important to note that all these conclusions come from a study of natural gas – not the oilsands. In Taylor’s view, his conclusions are less important than the methods he used to get there. He believes the model he hired whatIf? Technologies to develop is revolutionary.
Michael Hoffman, a partner in the company, agrees. “We build tools that really work with numbers,” he says; “they aren’t just mind models. We create tools that enable them to play what-if games. We want models of the system that allow you to explore the system through scenario analysis. The exact analogy is the flight simulator. You can get into the simulator and use the controls to see how the plane will respond. The nice thing is that if you crash the plane, you can learn from your mistakes. You don’t want to crash the plane in real life.”
The Canadian Energy Systems Simulator (CanESS) focuses on Canada’s energy systems. It interconnects some 800 variables, and incorporates hundreds of thousands of StatsCan data points. According to both men, it is eerily able to take you into the energy system, and enables you to feel and touch the way the world will evolve in the decades ahead.
As Hoffman explains, “The core business of our company is to build models that put quantitative data behind a physical economy model. The data we use represent physical stuff in Canada – tonnes of crops, tonnes of coal, gas volumes, barrels of oil, liquids and bitumen. It’s oriented physically, not price oriented; it only looks at supply. When we make assumptions about demand, they are based on bottom-up modeling, using assumptions based on past data. The model is calibrated back to 1976, mostly using government data going back that far.”
Hoffman brings out a laptop to demonstrate how the model works. We are quickly up and running. “The value of this kind of tool is to explore the boundaries of the system,” he says. “Remember: this is a full-system energy model. It explores the whole energy system. It’s not a predictive tool; no one can predict the future. It’s a tool to explore the system. My hope is that policy-makers would want to have a tool like this to inform policy. With a tool like this, you can explore the implications of policy.”
Take the idea of developing biomass as an alternative to gas for the oil sands, for example. He changes a few core assumptions to explore the possibilities. It quickly becomes clear that supply wouldn’t be sufficient to offset much gas demand.
“Well, it just wasn’t as effective as we’d hoped,” he says philosophically, but adds that we should think of the potential. “Since this model provides a full-system context, you can do this in any area to avoid making bad policy decisions. Once we explore policy with this tool, we can say that, at the limit, here’s what we can get from this resource. That kind of information is really helpful in informing the conversation.”
Proof in the Pudding: Taylor and Hoffman see the completion of their contract with Alberta’s Department of Energy as a big step for energy policy-making in Canada. “We have now demonstrated the significance and the power of this system,” says Taylor. “Now we can explore the implications of energy policy options. We can have intelligent discussions about some of the possibilities for our energy future. If we don’t want that future, what assumptions do we have to make? What do we have to change? We can examine that now, and that’s important.”
The proof is in the pudding, and the demonstration the two men provided to the Department of Energy got rave reviews, they claim. “We can now offer people the opportunity to explore questions within the model. We want to assist the energy industry in doing some analysis, and help them answer questions.”
“The Energy Futures Network is a not-for-profit,” Taylor reiterates, “and whatIf? is a relatively low-margin business. We want to work with planners and policy-makers to encourage them to use this tool to help answer questions. We want companies like Imperial, for example, to use this model to help organize their thinking.” Taylor and Hoffman expect the model to be continually refined so that it ever more accurately reflects changing ideas and information about the sector.
CanESS, one hopes, will prevent crashes. As Hoffman said, “You don’t want to crash the plane in real life.” Really.