TUESDAY: John Hess did it again. Three years ago, at the 2008 CERA meeting with the price of oil heading toward its (so far) peak of just under $150/b, he said there was an oil crisis coming, and there wasn't much that could be done about it.

Today at CERA's 2011 meeting, he delivered much the same message. "An energy crisis is coming -- likely to be triggered by oil," Hess said. "Demand is expected to grow on an annual basis by at least 1 million b/d, driven by developing economies and growth in transportation will a project rises to billion cars in 2050 from the current 1 billion cars, he said. "While we are not running out of oil -- we have already produced 1 trillion barrels and have approximately 2 trillion barrels remaining -- we are not investing enough to grow production capacity to keep up with demand," Hess warned.

Hess attempted--and succeeded--to put renewables and oil on an equal plane for purposes of comparison. His disdain for the idea that renewables will play a significant part in the near-term and medium-term future of energy was quite clear when he made this observation: "The energy density of today's best battery is 200 watt-hours per kilogram versus the energy density of gasoline which is 13,000 watt-hours per kilogram" he said. "This law of physics explains why range is such a challenge. Electric-only battery cars will serve urban, short distance driving but will not play a major role over the next 20 years."--KF

MONDAY: Alberta's oil sands have become a significant target of environmental groups, so the province took a proactive approach at this year's CERAWeek meeting in Houston to fight back.

Christopher J. Holly, the head of Alberta's Department of Energy research and technology branch, engaged in a series of journalist interviews the day before the meeting formally kicked off. But Holly's message focused primarily on technology, not the politics, though the two can't be completely separated. Alberta doesn't want them to be; talking about gains in technology in reducing the carbon footprint of oil sands production is clearly seen as an approach the province must take to combat the surge of opposition.

So, for example, Holly noted that the steam to oil ratio at many of the oil sands' in situ projects has dropped to 2-2.5, meaning for every unit of oil produced, whether it's measured in BTU equivalents or barrel of oil equivalents, 2-2.5 units of steam--produced through natural gas--are required. He said older projects that haven't been able to benefit from newer technologies are in the 4-4.5 range, and some of California's projects can exceed a ratio of 5-1. Less steam means less natural gas burned.

"Our Premier (Ed Stelmach) has been very blunt," David Sands, another representative of the government of Alberta said. "We need to make the changes society wants. So we need to offer an optimal product," and that includes environmental considerations, he said. "We have to take those steps necessary to get it done."

The pushback against the Alberta oil sands has had its most visible development in the growing opposition in the US to the Keystone XL pipeline, which would cut across several states, including Nebraska (where opposition has been particularly fierce) to deliver oil to the NYMEX delivery point of Cushing, Oklahoma and then on to the Gulf Coast. But Holly did not take the critics on in his comments on the opposition. He said it is "of interest to us," and that Alberta is now "more cognizant of what is happening in downstream markets." "What we're looking at is following through on the due process," he said of Keystone XL. (The pipeline, crossing a border with the US, needs US State Department approval to proceed.).

To combat the opposition, Holly and Sands both stressed the existence of the Alberta carbon tax as an example of the province's environmental chops, and Holly said they're trying to "get people to look at the information we're putting out in a transparent fashion."

On other issues, Holly said the labor squeeze of 2006-2008 that developed in the oil sands has eased, "and we're going to have a sufficient amount of labor and materials for projects to proceed." -- J.K.

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