The winter of 2013-14 offered up a perfect storm of natural gas price spikes and threats to electric reliability. Expect more of the same.
Nuking the Tar Sands
Can nuclear heat allow for low-cost commercial reclamation?
thermal energy from approximately 2 bcf/d of natural gas (approximately 50 percent of the current exports to the United States). Each barrel of synthetic crude oil (SCO) currently requires the following volumes of natural gas:
• Mining extraction: 0.75 Mcf;
• In-situ extraction: Cyclic steam circulation (CSC) – 1.5 Mcf and
Steam assisted gravity drainage (SAGD) – 1 Mcf; and
• Upgrading (hydrogen production): 0.70 Mcf.
Each barrel of SCO also requires:
• 2.5-4 bbl water, typically recycled (1.16 bbl of bitumen to produce 1 bb1 SCO);
• 5.8-6 kW power (5 kW/bbl bitumen); and
• Disposal of 0.10 tons CO 2.
If current production of 1 MMbbl/d of Canadian oil sands reaches 3 MMbb/d by 2017, 40 million tons of CO 2 per year will be generated, equivalent to 8 percent of Canada’s Kyoto Limit at 2012.
Mining and in-situ extraction both require electricity for retorting and upgrading. This typically has been satisfied by gas-fired cogeneration, with plant size ranging from 80 to 420 MW, and averaging 180 MW.
For oil sands, nuclear power can compete with hydrocarbon fuels as a thermal energy source for in-situ extraction and for upgrading with combustion of fossil fuels, and would greatly reduce CO 2 emissions. Nuclear reactors have low fuel costs but high capital costs. A 25 percent increase in capital cost (ACR-700 technology) increases the total cost of steam by 20 percent (1 percent capital/0.8 percent steam ratio).
There has been an approximately 200 percent increase in cost components per ton of oil sand between 2003 and 2008 (see Figure 3) . Overnight costs 2 for nuclear capacity at $3.6 billion ($4,325/kW) and at $5 billion ($6,840/kW) for ACR-700 technology with design capacity of 731 MW have break-even gas prices with natural gas combined cycle with the same MW capacity of $7.50/MMBtu and $10.15/MMBtu, respectively.
The costs as shown in Figure 3 also exclude the cost (tax or CO 2 credits) of carbon regulation, a major driver of the uncertainty in projecting variable cost of incremental nuclear energy. There is a relationship not expressed in the figure between carbon cost and natural gas cost due to the displacement of coal-fired generation. For example, the break-even gas price at $7.50/MMBtu at a capital cost of $4,325/kW can increase to $9.00/MMBtu with a $20/ton CO 2 cost. The break-even gas price can increase to $11/MMBtu with a $40/ton CO 2 cost, and with a capital cost of approximately $5,700/kW.
Economical recovery from existing oil sands production requires a sustainable price for light sweet crude ( e.g., WTI) ranging from approximately $30-$40/bbl. For incremental production, this price is approximately $50/bbl (2008 dollars) to generate an internal rate of return from 15 percent to 20 percent. Application of nuclear power for future production would need a similar price range ($30-$50/bbl WTI).
There is currently no commercial production of oil shale and therefore accurate estimates are difficult to make of major cost components. However, whether surface or subsurface, the major production cost and environmental impact derive from the generation of electricity for heating needed for retorting.