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Securing an Energy Strategy for Albertas Future

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Title: Securing an Energy Strategy for Albertas Future


1
Securing an Energy Strategy for Albertas Future
Presentation to the Economics Society of Calgary
March 23, 2006
2
Outline
  • 1. The Big Picture
  • 2. Alberta challenges and opportunities
  • 3. ISEEE

3
The Big Picture
l
Global energy demand will continue to growbut
declining conventional oil and gas reserves and
ever-increasing environmental constraints from
water restrictions, to resource access, to
greenhouse gas limits-- present huge challenges
for us and the world.
Night view of earth from National Renewable
Energy Laboratory, Golden, Colorado. Chart from
US DOE
4
Global Energy Trends
  • The global demand for energy will continue to
    grow
  • The demand for oil and gas will remain strong,
    and given the supply situation, real prices will,
    on average, be substantially above historical
    averages
  • Price volatility will increase
  • Natural gas will become a more important
    constraint than oil in both oil and gas supply,
    unconventional supplies will be key
  • There will be substantial growth in the use of
    coal
  • Growth in alternative and renewable energy will
    be strong but will remain a relatively small
    share of total energy the sorting process will
    take a decade or more before the sustainable
    alternatives are clear

5
Worlds Largest Concentration of Energy Resources
  • Almost 50 billion bbls
  • of conventional oil, 150 trillion
  • cubic feet (tcf) of conventional
  • gas and perhaps as much as
  • 1,000 tcf of unconventional gas
  • remain potentially recoverable.
  • Over 170 billion bbls potentially
  • recoverable from the oil sands
  • and ultimate potential of over
  • 600 billion tonnes of coal.
  • -Large potential for
  • alternate and renewable energy.

We have the potential to become a globally
competitive, clean and secure energy super power.
6
Importance of the Energy Sector
  • It is the largest private sector investor in the
    Canadian economy and accounts for more than one
    half of our positive trade balance.
  • Directly and indirectly, it accounts for
    approximately half of total Alberta output,
    income, employment government revenues.
  • Albertas output currently accounts for
    approximately 13 per cent of Canadas Gross
    Domestic Product and Albertas economy is a key
    driver of growth in the national economy.
  • The energy sector represents one of the clearest
    cases of comparative advantage for Canada in an
    increasingly competitive global economy.

7
Importance of the Energy Sector
  • The energy sector directly and indirectly
    accounts for approximately half of total Alberta
    output, income, employment government revenues.

8
Impacts of the Oil and Gas Sector 1971-2004
Source R. Mansell and R. Schlenker. An Overview
of the Impacts of the Oil and Gas Sector on the
Alberta Economy (forthcoming).
9
Converting Potential into Reality
  • There are huge challenges to converting even a
    modest portion of this enormous potential into a
    sustained, high standard of living (including a
    clean environment) for current and future
    generations it is definitely not a slam dunk.
  • We must invest strategically and wisely we must
    maintain those commitments over the longer term
    and, yes, we also need some good luck.

10
Defining Our Energy Future
  • How much of Albertas energy-based economic
    progress can be attributed to research and
    development, entrepreneurship and smart policy
    and regulation?
  • An example Asleep at the Switch Oil Shale vs
    Oil Sands
  • Most of the technology that has allowed rapid
    growth of the oil sands industry today was
    developed over more than five decades of research
    effort. Breakthroughs such as SAGD were
    developed over the 1980s and 1990s under the
    AOSTRA program- a joint government and industry
    research initiative. Without such programs, the
    equivalent oil shales industry in the US has not
    developed.

11
Energy Price Trends
12
Will the future look after itself? Example
Declining Production Values for Conventional Oil
and Gas
13
Increasing Costs of Conventional Gas Production
14
Implications for Government Resource Revenues
15
Projected Impacts of the Energy Sector
16
The Curse of Natural Resources
  • Dissipation / destruction of energy rents through
    inefficient exploitation, policy and regulation
  • Impacts on other sectors (de-diversification)
    during periods of rapid growth
  • Rent dependency (consuming the rents
    complacency lack of investment in extending
    production and value of the resources)
  • Instability

17
Some general challenges
  • Average age of people in the energy and
    environment sector implications for HQP,
    institutional / organizational memory
  • Huge costs of physical and social infrastructure
    to support growth
  • Average age of energy and environmental
    infrastructure
  • Climate and availability of cheap water
  • Density / intensity of development / Access
  • Complexity and uses of technology
  • Cost / value of energy and environmental
    resources
  • Location and mix of energy supplies and markets
  • Need for integrated solutions
  • Policy and regulation associated with all of the
    above
  • Funding Models for Research, Education and
    Innovation

18
Conventional OG and Oil Sands Impacts
19
Alberta (AERI) Priority Areas
Source Alberta Energy Research Institute
20
Need for a new paradigm for deployment
e.g. climate change
21
Overview - Priorities and the ISEEE Model
  • Leading Innovation in Energy and Environment
  • is a Priority Development Area
  • ISEEE is the vehicle to operationalize this
    priority
  • The ISEEE Mission Collaborative,
    multidisciplinary
  • and mission-oriented research, education and
  • innovation to advance and secure competitive
    energy
  • supplies for a sustainable, clean environment and
  • a strong economy
  • ISEEE is aligned with Alberta energy and
    environment strategies which are focused on
  • upgrading, improved recovery, carbon and water
    management, clean coal and alternative
  • energy- and with the national innovation strategy.
  • ISEEE is guided by the MOU (re collaboration and
    capacity building) involving the Government of
    Alberta (through AERI), the University of
    Alberta, the University of Calgary and the
    University of Lethbridge and the MOU with SAIT
  • ISEEE has been developed working in close
    collaboration with industry

22
University President Dr. Harvey Weingarten
  • ISEEE Leadership Board
  • Robert Church, Chair Emeritus, Alberta Science
    and Research Authority (ASRA)
  • Elizabeth Dowdeswell, President, Nuclear Waste
    Management Organization (NWMO)
  • Charlie Fischer, President CEO, Nexen Inc.
  • James Gray, Chair of Canada West Foundation
  • Robert Mansell, Advisor to the President on EE
    and Managing Director of ISEEE
  • Granger Morgan, Head, Dept. of Engineering and
    Public Policy, Carnegie Mellon University
  • Gwyn Morgan, President and CEO, Encana Corp
  • Neil McCrank, Chairman, Alberta Energy and
    Utilities Board
  • Harvey Weingarten, President, University of
    Calgary

ISEEE Managing Director Dr. Robert Mansell
Institute for Sustainable Energy, Environment
Economy (ISEEE)
Sustainable Development Technologies (Alternative
Energy)
Advanced Recovery Upgrading
Water Management
Carbon (CO2) Management
Advanced Policy Research
23
Unique approach
  • Alignment with provincial and federal strategies
    (increases effectiveness)
  • Integration of energy, environment economy
    (leads to more effective and efficient solutions)
  • Integration of energy types (polygeneration leads
    to viability of alternatives that are non-viable
    on a stand alone basis)
  • Integration of research, innovation, education
    and development of highly qualified people
  • Multidisciplinary, collaborative, coordinated and
    mission-oriented research
  • Strong partnerships linkages (builds critical
    mass while reducing duplication and cost)
  • International standards of excellence (makes
    Canada a leader)

24
ISEEE Development Portfolio

Advanced Recovery Upgrading


-Alberta Ingenuity Centre for Insitu Energy
-Conventional Oil Gas -Unconventional Gas
Water Management
CO2 Management
-Alberta Ingenuity Centre for Water Research -Oil
Gas Water -Wastewater

Capture, Storage Use, Transportation Safety
Sustainable Development Technologies
E E Systems, Integration, Policy (includes
integrating elements SOFC, CO2, H2 /
gasification)

25
ISEEE Focus
Sustainable solutions for secure, competitive
energy supplies for a clean environment and a
strong economy
Energy Environmental Systems Analysis, Design
Integration
  • Next Generation Hydrocarbons
  • Advanced recovery
  • Higher value
  • Greener
  • Unconventional
  • Harder to find and / or produce
  • Alternative Energy Systems Technologies
  • Carbon Management
  • Novel Hydrogen
  • SOFC Fuel Cells
  • Bioenergy related bioproducts

26
Building Capacity
  • Building on existing strengths and on new
    opportunities to expand capacity
  • Capacity building through increases in funding
    for Chairs, faculty positions, space, student
    places, and collaborations
  • Goal is increase in U of C presence / brand
    recognition, quality and impact

27
What is the Overall ISEEE Plan?
ISEEE / Energy Environment Integrated 5 Year
Forecast 521 million (419 million with
building costs financed)
Advanced Recovery Upgrading 76 M
Sustainable Development Technologies 130 M
OtherCarbon Management 24M
Water Management 63M
ISEEE Building - 175 M
ISEEE Core - 11M
External
Engineering
Science
Social Science
Haskayne
Law
EVDS
Academic Programming 42M New Capacity (FLE)
1000 Graduate Undergraduate
28
Where are we today?
  • Over 110 million of 521 million committed to
    date.
  • Decisions pending on over almost 300 million.
  • Reallocation of internal resources-- examples 25
    chairs allocated to priority EE development
    areas and another 10 are under development 7
    million invested to free up and fit transitional
    space.
  • Initial funding in place for major new
    initiatives.

29
Business Plans and Applications- ACCESS
  • Application for 48.4 million (over five years)
    in funding for 1000 additional students in energy
    and environment area- submitted to Advanced
    Education Oct. 17, 05 (tuition covers 16.8
    million of total cost)
  • Under MOUs with UofA, UofC, UofL and SAIT, part
    of application for about 2500 student spaces.

30
Item 4 Business Plans and Applications- ACCESS
31
What are the related components?
  • An additional 90-100 faculty and associated costs
    of increased access.
  • Renovated and new space integrated with
    Engineering and Science complexes (including
    replacement of about 40 trailers on campus with
    permanent space) will also increase interaction
    with University Research Park.
  • Increased adoption of team approach involving
    faculty, students,post doctoral students,
    visiting faculty, industry fellows and
    researchers / fellows from other organizations.

32
Business Plans- Space
  • Business plans for approx 600,000 sq ft of new
    and renovated space submitted to Alberta
    Infrastructure and Transportation at the end of
    May 2005.
  • Phase I ( approx 400,000 sq ft)- Cost is 140
    million expected funding from Govt of Ab.
  • Phase II Cost is 60-80 million financed on
    basis of leases to partnering organizations,
    mortgage and fund development.
  • Planning money approved. Contract for functional
    planning awarded to HFKS Architects and work
    began in Sept. 05. RFP for Architectural design
    went out in Feb 2006.

33
  • Proposed ISEEE Building Plan on the U of C Campus

34
Collaborations- Examples
  • On-going work with U of A and U of L to build on
    MOU and pan-Alberta initiatives joint school of
    energy combining EE plans and funding requests
    e.g., Joint submission of ACCESS applications.
  • Discussions with Ontario and Quebec universities
    to extend coalitions (e.g., the Western Canada
    Fuel Cell Initiative and joint resource and
    environment initiative with Queens).
  • Discussions with AERI and Alberta Ingenuity to
    expand support and capacity.
  • Meetings with other post-secondary institutions
    to explore opportunities for expanded
    collaboration.
  • Advanced discussions with Stanford, National
    Renewable Energy Laboratory, and Lawrence
    Berkeley Labs to complete MOU and initiate joint
    projects.

35
Partnerships Examples
  • Direct Energy evolve partnership (energy
    savings, chairs, scholarships, research)
  • Shell investing in our future (founding
    industry partner in AICISE, research chairs,
    supporting students, ISEEE Fellow)
  • TransCanada - (ISEEE Fellow, research funding,
    sponsored forums, Alberta value-added project)
  • Alberta Government (seed funding for research
    projects, expected ACCESS funding for new student
    spaces and capital facilities)
  • Alberta Ingenuity (base funding for Alberta
    Ingenuity Centre for In Situ Energy- AICISE)
  • TransAlta (ISEEE Fellow, graduate funding,
    other components under development)
  • EnCana (Chair and other components to be worked
    out)

36
New Research Programs-examples
  • Next generation in situ recovery and upgrading
    (dispersed nanocatalysts, in situ hydrogen
    generation)
  • Advanced seismic monitoring and modelling of
    flows in underground reservoirs
  • Hydrocarbon conversion using solid oxide fuel
    cells
  • Legal, regulatory and policy frameworks for
    alternative energy
  • CO2 monitoring, capture and storage (including
    risk assessment)
  • Treatment and use of produced water
  • Integrated modelling and analysis of energy and
    environment systems
  • Spatio-temporal modeling of ecosystems and
    resource management
  • Smart drilling technology
  • Emissions and health
  • GHG emission mitigation alternatives
  • Polygeneration and electricity exports

37
Why are these investments essential?
  • The current shortages of personnel in the energy
    and environment sectors of our economy will only
    worsen as baby boomers retire in increasing
    numbers.
  • Our focused expansion of undergraduate and
    graduate programs is tailored to address the need
    for highly qualified professionals and to advance
    the development of new processes, technologies
    and practices within the energy sector.
  • The collaborative, multidisciplinary and
    mission-oriented approach will better equip
    graduates with knowledge of energy transformative
    technologies, as well as provide valuable
    workplace experience and the drive to innovate.
  • Under a business as usual scenario, future
    growth and prosperity is at risk. Declining
    conventional oil and gas production, coupled with
    growing environmental and other constraints will
    have increasingly negative implications for the
    province and the country.

38
Why are these investments essential?
  • At the same time there are opportunities to
    increase recovery of conventional oil, increase
    the large potential for unconventional oil and
    gas and the potential for alternative energy.
  • For example, just a modest 10 percentage point
    improvement in the recovery and upgrading rate
    for the 90 of the oil sands resource that is too
    deep to mine translates into an additional 260
    billion in GDP, 100 billion in labour income and
    29 billion in government revenues.
  • These investments are focused on the development
    of technologies and people that will greatly
    increase energy supplies, reduce emissions and
    increase jobs and incomes, while providing
    substantial gains in returns on investments.
  • The energy sector accounts for over half of the
    entire Alberta economy and is a major driver of
    the Canadian economy. Given the opportunities we
    cannot afford to not invest in the future of this
    key sector and its major contributions to
    continued economic growth and prosperity.

39
Seminars, Workshops and Lecture Series
  • Distinguished Lecture Series (begins Feb 16)
  • Visiting Speaker / Seminar Series on going
  • Alberta Energy Futures planned for April
  • Research Development Workshops on going

40
Thank you !
  • CONTACT ISEEE
  • The Institute for Sustainable Energy,
    Environment and Economy
  • Room 220, CCIT Bldg.
  • University of Calgary
  • 2500 University Drive NW, Calgary, AB T2N 1N4
  • Ph. 403-220-6100 Fx. 403-210-9770 info_at_iseee.ca
  • www.iseee.ca
  • (You may also email me directly
    rmansell_at_ucalgary.ca)
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