3.4.3. Energy Resources

3.4.3.1. Fossil and Fissile Resources

The term energy resource can be defined as "the occurrence of material in recognizable form" (WEC, 1995a) - it is essentially the amount of oil, gas, coal, etc., in the ground. In the IPCC WGII SAR (energy primer, see Nakicenovic et al., 1996) a further definitional distinction was made. Resources were defined as those occurrences considered "potentially recoverable with foreseeable technological and economic developments" and any additional amounts not considered as potentially recoverable were referred to as "occurrences." An energy reserve is a portion of the total, and depends on exploration to locate and evaluate a resource and on the availability of a technology to extract some of the resource at acceptable cost. Proved oil reserves, for example, are defined as "those quantities which geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions" (BP, 1996). Thus, reserves can increase with exploration (new or better information), engineering advances (better economic and operating conditions), and higher prices (better economic conditions). In essence, reserves are "replenished" by shifting volumes from the resource into the reserve category. Reserves can also be depleted through production and can decrease with lower prices. Throughout this section the size of reserve and resource figures are expressed in EJ or ZJ (i.e. 10²¹ J, or 1000 EJ).

For SRES the fossil resource categorization used is reserves, resources, and additional occurrences. The definition of BP (1996) was adopted for reserves. Resources are those hydrocarbon occurrences with uncertain geologic assurance or that lack economic attractiveness. Finally, all other hydrocarbons that do not fall within the reserve and resource categories are aggregated in the category "additional occurrences" (i.e., occurrences that have a high degree of geologic uncertainty, are not recoverable with current or foreseeable technology, or are economically unwarranted at present).

The assessment is summarized in Table 3-5. This account of fossil resources needs to be put in context with the long-run demand for these fuels and their relative production economics. It is the specific demand for these fuels that "converts" resources into reserves (Odell, 1997, 1998, 1999). Obviously, this is a dynamic process that, in addition to future demand trajectories, depends on advances in knowledge and technological progress. The discussion of oil reserves below applies to all hydrocarbon and nuclear resources.

In terms of exploration, the oil industry is relatively mature and the quantity of additional reserves that remain to be discovered is unclear . One group argues that few new oil fields are being discovered, despite the surge in drilling activity from 1978 to 1986, and that most of the increases in reserves results from revisions of underestimated existing reserves (Ivanhoe and Leckie, 1993; Laherrere, 1994; Campbell, 1997; Hatfield, 1997). Laherrere (1994) puts ultimately recoverable oil resources at about 10 ZJ (1800 billion barrels), including production to date. Adelman and Lynch (1997), while accepting some aspects in the propositions behind the pessimistic view of reserves, point to previous pessimistic estimates that have been wrong. They argue that "there are huge amounts of hydrocarbons in the earth's crust" and that "estimates of declining reserves and production are incurably wrong because they treat as a quantity what is really a dynamic process driven by growing knowledge." Smith and Robinson (1997) note improvements in technology, such as 3D seismic surveys and extended reach (e.g. horizontal) drilling, that have improved recovery rates from existing reservoirs and made profitable the development of fields previously regarded as uneconomic. Both of these increase reserves and lower costs. The various arguments and assessments are reviewed in greater detail in Gregory and Rogner (1998). To include all these views and to reflect uncertainty, future reserves availability cannot be represented by single numbers. Instead, a range of values that reflect the optimistic and pessimistic assumptions on extent and success rates of exploration activities, as well as the future evolution of prices and technology, needs to be considered for a scenario approach. To this end, the estimates of Masters et al. (1994) reflect the current state of knowledge as to the uncertainties in future potentials for conventional oil resources. These estimates assess conventional oil reserves at slightly above 6 ZJ, and a corresponding range of additionally recoverable resources between 1.6 and 5.9 ZJ. The figures include estimates of oil that is yet to be discovered.

In addition to conventional oil reserves and resources, oil shales, natural bitumen, and heavy crude oil, together called unconventional oil resources, have previously been defined as occurrences that cannot be tapped by conventional production methods for technical or economic reasons, or both (Rogner, 1996, 1997). In part these resources represent some of the huge amounts of hydrocarbons in the earth's crust that Adelman and Lynch (1997) refer to. Technologies to extract some of these resources competitively at current market conditions are now developed and production has started in countries such as Canada and Venezuela. Masters et al. (1987) put total recoverable resources of heavy and extra heavy crude oil at 3 ZJ, recoverable resources of bitumen at 2 ZJ, and ultimate resources of shale oil in place at 79 ZJ (they do not estimate the proportion of shale oil that might be recovered and hence give resources in place). The extent to which these unconventional resources might be defined as reserves in the future depends on the continued development of technologies to extract them at acceptable costs. Nakicenovic et al. (1996) in IPCC WGII SAR assess all unconventional oil reserves at 7.1 ZJ, with an additional 20 ZJ of unconventional oil resources estimated to be recoverable with foreseeable technological progress.

Estimates of ultimately recoverable reserves of gas are less controversial than those for oil. Proved reserves are high, both in relation to current production (BP, 1996) and to cumulative production to date (Masters et al., 1994). Masters et al. (1994) and Ivanhoe and Leckie (1993) note that gas discoveries need to be matched to an infrastructure for gas consumption, which is currently lacking in many parts of the world. Hence, exploration has been limited and the potential for discoveries of major quantities of gas in the 21 st century is high. Estimates of gas reserves and resources are being revised continuously. The most up-to-date information is represented by the figures of the International Gas Union (IGU, 1997a), which give conventional gas reserves of 5.4 ZJ plus 9.4 ZJ additional reserves, including gas yet to be discovered. On the basis of IGU comments that some of their regional estimates of reserves are extremely conservative, Gregory and Rogner (1998) suggest an optimistic estimate for ultimately recoverable reserves of 28 ZJ (5.4 ZJ reserves plus 22.6 ZJ additional reserves, including quantities to be discovered), using the same ratio of optimistic to pessimistic reserves as Masters et al. (1994).

In addition to conventional reserves, reviews of the literature indicate very substantial amounts of unconventional gas occurrences. Rogner (1996, 1997) estimated resources in place for coal-bed methane (CH₄) of 10 ZJ, gas from fractured shale of 17 ZJ, tight formation gas of 7 ZJ, gas remaining in situ after production of 5 ZJ, and clathrates at some 980 ZJ. The magnitude of these estimates is also confirmed in IPCC WGII SAR (Nakicenovic et al., 1996), which gives 6.9 ZJ unconventional gas as current reserves, and an additional 20 ZJ as recoverable with current or foreseeable improvements in technologies. The largest resource occurrence of all fossil fuels (even exceeding coal) is estimated to be methane clathrates. Also called hydrates, methane clathrates represent gas locked in frozen ice-like crystals that probably cover a significant proportion of the ocean floor and have been found in numerous locations in continental permafrost areas. Technologies to recover these resources economically could be developed in the future, if demand for natural gas continues to grow in the longer run, in which case gas resource availability would increase enormously. The implications of such developments are considered in some of the SRES scenarios.

Coal reserves are different in character to oil and gas - coal occurs in seams, often covers large areas, and relatively limited exploration is required to provide a reasonable estimate of coal in place. Total coal in place is estimated at about 220-280 ZJ (WEC, 1995a; Rogner, 1996; 1997; Gregory and Rogner, 1998). Of this total, about 22.9 ZJ are classified as recoverable reserves (WEC, 1995a; 1998), over 200 times current production levels. The question is the extent to which additional resources can be upgraded to reserves. WEC (1995a; 1998) estimates additional recoverable reserves at about 80 ZJ, although it is not clear under what conditions these reserves would become economically attractive. Over 90% of their estimate of total reserves occur in just six countries, with 70% in the Russian Federation alone. Further coal resources are known to exist in various countries, some of which might be exploitable in the future, perhaps at high cost. However, in some countries the environmental damage from coal mining will prevent possible additional reserves being developed. In the IPCC WGII SAR, Nakicenovic et al (1996) estimate that, in addition to today's reserves, a further 89 ZJ could, at least in principle, be mined with technological advances, a figure in agreement with the WEC (1998) estimates.

The picture for uranium and thorium reserves is different again. Current proved uranium reserves recoverable at less than US$130/kg amount to some 3.38 million tons (WEC, 1998) or 2 ZJ in once-through fuel cycles. This extractable thermal energy would be some 60 times larger if reprocessing and fast breeder reactors are used (Ishitani and Johansson, 1996). These reserves are sufficient to meet the needs of an expanded nuclear program well into the 21st century, even without reprocessing and fast breeder reactors. The ultimately recoverable global natural uranium resource base is currently estimated at around 29 million tons, which corresponds to 17 ZJ without reprocessing and about 1000 ZJ with reprocessing and fast breeder reactors (Nakicenovic et al., 1996). Additionally, very limited exploration for new reserves has occurred in recent years because of the relative abundance of existing known reserves and the drop of real uranium prices from US$150/kg in 1980 to about US$30/kg in 1996. The exploration and development of uranium deposits today is probably on a par with that of the oil industry 100 years ago, while thorium occurrences have hardly been assessed. Uranium and thorium are minerals contained in deposits in the Earth's crust and their long-term availability will be determined by the same process dynamics, in terms of knowledge and technology advances, as for their hydrocarbon counterparts. Once new reserves are required, given the comparison with the oil industry over the past 100 years, the potential for exploration to yield major discoveries at acceptable cost is enormous. From the perspective of occurrence alone, uranium resources are already known to be immense, especially if low-concentration sources such as seawater or granite rock are considered. In summary, the development of nuclear power throughout the 21st century, even based only on once-through reactors, is unlikely to be constrained by uranium (or thorium) resource limitations.

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