The Wicks Report - a gentle cough

Last week a report went to the British Government suggesting that nuclear power is an answer to their coming energy shortfall problems. The report is known as the Wicks report, and discusses Energy Security for the UK. In light of their transition from energy independence to the point where current imports of 25% of natural gas supply will rise to somewhere between 45 and 70% of supply by 2020 the report is timely. (That being now just over ten years away). The report would suggest that there is no need to panic – that renewable energy is on target to provide 15% of all energy by 2020, Increasing the contribution from nuclear power will take a little longer and it is suggested that a program be put in place to get 35 – 40% of UK electricity from nuclear by 2030. However in para 2.27 it states as one of the assumed conditions for the future it predicts that

In contrast North America becomes much less dependent on imports, dropping by almost a half, as production from Canadian oil sands increases.

Given the current level of US imports (recognizing that some come from Canada) the questionable reality of this assumption brings the value of the rest of the report also into question. (The US imported roughly 12 mbd of crude in May, of which roughly 2.2 mbd came from Canada, and unlike the report - see below - I do not see US current production being sustainable that long).

The report recognizes that, for the next decade, the UK will still rely on fossil fuels, demand for which will accordingly increase. And so what is the UK Government to do? The report suggests that the first step is to reduce demand, the second to move to adopt technologies that don’t rely on oil and gas – while reducing carbon emissions, and thirdly it recommends mitigating the energy security risks inherent in the use of fossil fuels. The scope of the problem is illustrated with this figure.


As you may note, UK production is dropping rapidly as a percentage of total use.

Unfortunately the report is better at stating objectives such as these than in providing realistic ways in which they can be accomplished. As an example it talks about the desirability of opening a “Southern Corridor” that will allow natural gas to be brought into Europe from the Caspian and Central Asia. This is, no doubt, a reference to the Nabucco pipeline that is being pushed as a way of bringing, among other things, Turkmen gas into Europe through a pipeline that bypasses Russia. The problem is that while the customers for such a pipeline are all very keen on the idea and sign promising proclamations the folks that would supply the natural gas are being strongly “courted” by Russia and so far have not actually agreed to provide all the gas required to make Nabucco a reality.

Coal is largely written off as a resource with the report noting

In 1954, production peaked at 227 million tonnes from around 900 pits employing some 700,000 miners. By 2008, a deep-mine workforce of 3,660 produced some 8 million tonnes from 18 underground mines.

In regards to oil and natural gas the national supply peaked in 1999 and is now declining at some 5 – 8% a year, so that imports now account for 26.5% of energy used. This is in spite of:

2007 saw the highest number (111) of offshore exploration and appraisal wells drilled since 1996. 2008 saw almost as many (105), with a strong emphasis on exploration. Over the past three years this strong drilling has resulted in more than 400 million boe being discovered each year. And the latest licensing round produced, at 171, the highest number of licences ever offered, to 99 companies.

One of the problems that the UK face (and others have the same issue) relates to the desire to cut carbon emissions. Thus the present energy plans see a cut in the UK use of coal – interestingly enough, however, the report notes “coal projects can be producing within two to five years of an investment decision should high growth in coal demand resume.” So this remains a rabbit that can be pulled from the hat, when circumstance dictates, and internationally the report projects an increase in global coal use going from the current roughly 4 billion to 7 billion tons by 2030, though the growth rate is anticipated to decline over time, as carbon concerns grow.

Coal imports and exports by region through 2030

In terms of oil and natural gas the report has no problem in projecting global oil demand at 106 mbd by 2030. Given that they project both China and India increasing the number of vehicles in each country by a factor of 10 that seems remarkably low. (I was going to say optimistic but I suspect that depends on how you view the number).

To meet that demand the report recognizes that production outside OPEC has probably peaked and thus all the increase will come from just some of the OPEC members. (There is that "small" caveat mentioned at the beginning – the US need from OPEC is seen to decline since the report projects that half the US need will be met from the Canadian oil sands – para 2.27). The following graph comes from the IEA (but last year).

Oil imports and exports by region through 2030.

Given that increase in production, and the growth of the biofuels industry to reach 3.2 mbd in 2030 (the IEA figure) , although there is some question left floating in the report about the reality of both sets of numbers

Natural gas will be one of the big winners. While increases in US domestic production remain uncertain as to size, and Russian production is unlikely to increase much, there are anticipated to enough supplies on the global market through 2030 to meet the international need. This transfer between countries is to be facilitated by a significant growth in the LNG market.

Natural gas exporters through 2030.

It is interesting to note, under the category of risks, that the report says:

For all three fuels, physical supply risk due to geological constraints may be effectively ruled out as a serious concern since there are sufficient proven reserves and even larger remaining resources.

However, the geopolitical and economic risks are such that the large sums of investment needed to exploit these reserves may not be made or may not be timely, meaning some markets are potentially left undersupplied or prone to volatile or high prices. In addition, as resources become more concentrated, supply disruptions in certain regions may have a larger impact on physical availability.

2.59 The consequences of a supply disruption for oil are generally considered less grave than for gas delivered by pipeline since in the event of a disruption of one source, the liquid nature of oil – both literally and figuratively in terms of the global oil market - mean that supplies can be shipped from other regions and purchased from sellers with relative ease on the spot market.

And for those of us concerned about peak oil, it has the following words of wisdom:

Firstly, the peak oil debate tends to focus on conventional oil production and often excludes natural gas liquids (NGLs) and other unconventional sources such as oil sands, and oil shales.

Secondly, the fundamental constraint on production is typically considered to be the geological scarcity of oil, leaving out other important factors such as technological progress, future demand for oil and its link to the oil price, access to and investment in the development of existing resources, and political instability or resource nationalism that limits the amount of recoverable oil.

All I can say is that he doesn’t read the same sites, and follow the same debates on the issues that I, and most of the folk that I talk with about this, read. Most of the subjects that he says that we ignore are covered, from time to time, in these pages. This is the global projection for oil production in 2030.

Oil reserves by country Source: BP Statistical Review 2009 for 2008 production and exports; and IEA World Energy Outlook for 2030 production estimate reference scenario

Now if you want to go down to the second line you will note that it says that Canada will export 943,000 bd in 2030 and produce 1,900,000 bd I am going to presume (given the statement about America getting half its oil from the Alberta sands) that this is conventional oil – though when I see that the US is still supposed to be producing 6.5 mbd I don’t see how it can be.

One of the interesting curves in the report is how the UK is supposed to get to the low carbon emission rates that are being promised. The following figure shows the relative proportions of different fuels that are anticipated to be needed for the different scenarios.



Now if the far left column is the base case, you can see how much other sources are going to have to contribute to bring the overall figures down. And you can see the advantages that adding more nuclear power will bring to those columns and the overall number.

The report is not confident that, in the intermediate term (that covered by the report) the UK will be able to provide all the renewable energy supply that it needs. It may however be able to provide enough biofuel. Bear in mind the recent start of the wood-fired station fed from plantations in the UK.

In terms of the overall picture in both the short and long term the report concludes that the UK cannot become energy independent but must import the oil it needs for transportation. (Electric cars won’t have a significant impact). Talk of independence is “unrealistic.”

And so the final conclusions are – become more efficient and save energy, develop technologies to minimize oil and gas use, and to allow coal use without generating GHG. (One concept that is proposed is underground coal gasification – which I will put on the list for a Sunday Tech discussion).

There are some nice graphs, and some philosophy, but unfortunately I think that some of the projections in the report are considerably over-optimistic, particularly those dealing with oil supply. Given that the rest of the report has a significantly reduced value.

Turns out that I wasn't the only one that is not impressed. The Economist even went so far, in commenting on the bleakness of the picture, to tie the story to "posturing politicians."