Environmental Design



The country has become one of the world’s major oil and gas producers since the discovery of the Hassi Messaoud field in 1956. There are now 30 major producing fields, producing some of the highest grade oil in the world. But political unrest has kept production well below its potential for years. The country unwound its control of all production in 1991 and is gradually allowing foreign investment in the industry. Algeria has estimated reserves of 9.2 billion barrels of oil and 127 trillion cubic feet of gas.


Politics, weak domestic demand and lack of investment has so far thwarted the country’s emergence as a major natural gas producer. Bangladesh can’t use all of that gas, and selling it to neighbour India remains highly controversial. The country has proven reserves of roughly 15 trillion cubic feet plus as much as twice that in undiscovered reserves. Total annual production is just 385 billion cubic feet, used mainly to make power and fertilizer. Government officials want to exploit the gas domestically before approving exports.


Economic woes, bickering with producers over royalties and opposition from native groups have stunted the country’s oil industry. Ecuador is the fifth-largest oil producer in South America (534,800 barrels a day), but ranks third in proven reserves (4.6 billion barrels), behind Venezuela and Brazil. Its oil fields are mostly in the northeast, and it has started selling new blocks of its Amazon region, which may have as much as 1.3 billion barrels of oil. But the oil is heavy and sour, so must be blended before it’s put in pipelines.

Equatorial Guinea

Investment began pouring into the country after the 1995 discovery of the Zafiro oil field in the hydrocarbon-rich Gulf of Guinea. The country’s proven reserves total 1.1 billion barrels, and estimated probable reserves may account for a tenth of the world’s total. Offshore boundary disputes with neighbouring countries, now resolved, and allegations of corruption and human rights abuses slowed development in the late 1990s. Current oil production stands at 237 million barrels a day. The country also has significant natural gas reserves.


The December, 2004, peace deal ending a 21-year civil war has sparked new interest among foreign investors in the country’s undeveloped oil fields. Sudan has proven oil reserves of 56 million barrels plus total reserves of as much as five billion barrels, including unexplored areas in northwest Sudan, the Blue Nile Basin and along the Red Sea coast. Oil output is forecast to reach 500,000 barrels a day this year, up from 343,000 in 2004. Under pressure from human rights groups, Calgary’s Talisman sold its stake in key oil fields.


Arid and landlocked, this central Asian country is at the mercy of others to export its proven reserves, including more than 100 trillion cubic feet of natural gas reserves and 546 million barrels of oil. Squabbling with Gazprom, for example, denied the country a way to get its stranded gas to Russia in the 1990s through Uzbekistan and Kazakhstan. Other outlets, such as Iran and Afghanistan, remain too unstable to attract pipeline investors. The legal status of the Caspian Sea has also stunted foreign investment in its offshore reserves.

Demand: China’s unquenchable thirst: Stunning rise in car ownership is key to China’s emergence as the world’s fastest-growing oil market

Shanghai — The auto makers dutifully displayed their hybrid models at the Shanghai auto fair this spring.

Under pressure from Chinese authorities, they knew they had to show an interest in conserving fuel.

But look past the energy-efficient hybrids, which are unlikely to be sold in China for many years, and you soon glimpse the truth of Chinese tastes. The Shanghai show was filled with gas-guzzling luxury models and sports cars, aimed at China’s nouveaux riches and its fast-growing middle class.

Bentleys, Porsches, Rolls-Royces and Lamborghinis were dotted around the exhibition halls.

Ford Motor Co. was touting the China launch of its massive tank-like Lincoln Navigator, beloved of American rap stars. Even Ferrari SpA was forecasting a 50-per-cent rise in its China sales this year, predicting China would be the fifth-biggest market for its ultra-expensive sports cars by next year.

The dramatic rise in car ownership is one of the key reasons for China’s emergence as the world’s fastest-growing oil market. China’s oil consumption shot up 16 per cent last year, with its oil imports soaring 40 per cent in the same period.

The Chinese market is rapidly becoming a key influence on world oil prices. China is believed to account for 40 per cent of the rise in global oil demand in the past five years, and its oil consumption is expected to keep rising at double-digit levels for the foreseeable future.

Just a few years ago, China was an oil exporter. Now it’s the world’s second-biggest petroleum consumer, behind the United States, and is increasingly dependent on foreign oil to fuel its booming economy. By 2030, China may be importing as much oil as the U.S. is now.

The transportation sector will soon account for half of China’s oil consumption. Within 15 years, China is projected to have as many as 140 million private cars on its roads — a spectacular rise from the 24 million cars it has today.

Traffic jams have plagued Shanghai and Beijing for years, but anyone who ventures outside the big cities can see the latest astonishing evidence of the car boom. Everywhere there are gleaming new roads, bridges, expressways, toll booths and gas stations.

“The country is building one of the most extensive highway infrastructures on earth, so that it can replace its one billion bicycles with cars,” says a new study published by the Asia Pacific Foundation of Canada. “China will rival the U.S. in the number of cars on its roads within a few decades — if such growth can be sustained.”

Cars are not the only reason for China’s oil-guzzling habits, of course. Its economic modernization has been heavily dependent on energy-consuming industries, such as steel and cement. It has also been wasteful. For every dollar of gross domestic product, China consumes more than three times as much energy as the global average. Even its electricity sector is increasingly turning to oil-fired generators, because of the power shortages that have struck the country recently.

Fully aware of its vulnerability on the oil question, Beijing has unleashed its corporate sector on a global hunt for secure sources. The government has ordered its national oil companies to participate in international oil exploration and production deals wherever they can — and almost regardless of the cost.

Chinese oil companies have responded with such aggressive efforts that they are beginning to intrude on the traditional U.S. sphere of influence in the Middle East and Latin America. Backed by government connections and state financing, these companies often beat their American rivals by offering multimillion-dollar aid packages to pay for everything that a Third World country might need: housing, hospitals, railways, schools and electricity. And they can freely ignore U.S. efforts to isolate “rogue states” such as Iran and Sudan.

Among the most controversial deals negotiated by Chinese oil companies in recent months: a $70-billion (U.S.) deal to purchase oil and gas from Iran; a $700-million line of credit to Venezuela to provide housing aid in exchange for the right to develop 15 oil fields and buy 120,000 barrels of fuel oil a month; a $2-billion line of credit to Angola to reconstruct its war-damaged infrastructure, in exchange for 10,000 barrels of oil a day; and oil deals with Argentina and Brazil that could be worth several billion dollars.

China has also become an active player in many other oil-producing countries, including Russia, Kazakhstan, Saudi Arabia, Indonesia and more than a dozen African countries. Despite U.S. disapproval, China has become a major arms supplier to Sudan, which provides 5 per cent of China’s annual oil imports. Of the 15 biggest foreign companies in Sudan, 13 are Chinese.

All of this was recently topped by China’s biggest move into America’s backyard: two oil agreements in Canada that are seen as foreshadowing much bigger deals to come.

Under one of the deals, China National Offshore Oil Corp. is investing $150-million (Canadian) for a one-sixth stake in MEG Energy Corp., a new company in the Alberta oil sands. The other deal is a memorandum of understanding between Canadian pipeline company Enbridge Inc. and the Chinese company PetroChina International Co. Ltd. that would give PetroChina a stake in the $2.5-billion Gateway pipeline from Alberta to the West Coast, which would supply as much as 200,000 barrels of oil a day to China when completed. Some analysts estimate that up to one-third of Canada’s energy exports could eventually go to China.

In an interview with The Globe and Mail last fall, Chinese Foreign Minister Li Zhaoxing confirmed that China planned to invest in Canada’s resources sector to feed its insatiable appetite for oil and other commodities. He also confirmed that Beijing is encouraging Chinese corporations to buy assets in Canadian resources.

Welcome to the age of scarcity: The world’s thirst is not sustainable as experts predict an imminent decline and fall in oil production

Washington — After two months of fruitless drilling, Austrian-born mining engineer Anthony Lucas was ready to give up on ever finding oil beneath a sandy hill in southeastern Texas.

Then suddenly, the ground rumbled and a jet of greenish-black crude shot out of the Spindletop well, spewing oil 60 metres into the air.

The massive gusher on January 10, 1901, marked the dawn of the age of oil. Until then, a typical well might produce 50 barrels a day. Spindletop churned out 100,000 — more than all the existing wells in the United States combined. By the time it ran dry in the 1980s, the field beneath the well had served up 153 million barrels of Texas tea.

This story begins with abundant oil. Vast supplies of the light fuel spawned new and previously unimagined demand — cars, planes and a transportation revolution.

Oil also made much of the world rich.

But if it can be tapped, it can also run out. Experts theorize that global oil production, which has increased exponentially since 1901, is poised to slump — slowly at first, and then sharply thereafter.

This supply curve predicament is known as “Hubbert’s Peak,” named after the venerable U.S. geologist M. King Hubbert, who accurately predicted in the 1950s that U.S. oil output would peak around 1970 and then inevitably decline.

Kenneth Deffeyes, a geologist who worked with Mr. Hubbert at Shell Oil, now warns ominously that the Hubbert’s Peak for the world as a whole is bearing down on us. He even fixes a precise date for the beginning of the end for oil at Nov. 25, 2005 — U.S. Thanksgiving Day.

“It’s real and it’s here,” argues the author of Beyond Oil: the View from Hubbert’s Peak.

Forget for a moment the demand side of the equation — including China’s and India’s growing thirst — failure to adequately gird ourselves for the demise of oil has put the world on a rocky course of scarcity and high prices, according to a growing horde of Hubbert disciples. Mr. Deffeyes estimates that by 2019, oil production will fall to 90 per cent of its current peak.

“After you drive a car off a cliff, it’s too late to hit the brakes,” he says. “In effect, we have gone over the edge of the cliff.”

For a world hooked on oil, the new supply-demand paradigm promises to be as transforming a period as the oil gushers were to the last century. Whether it happens this year, or in two decades, few would argue that depletion is a preventable event.

Price may well be the first hint of this new global energy reality.

A barrel of crude, which cost as little as $10 (U.S.) a barrel in 1998, is now worth five times that after breeching the $50 barrier earlier this year. A few analysts warn the price of crude could double again in the next couple of years. Even more optimistic forecasters agree that the days of cheap oil are likely gone forever, and that scarcity, coupled with rising demand and a falling U.S. dollar, will mean years of sustained high prices.

“Prices are very sensitive to peoples’ perceptions of whether we’re going to run out of oil,” explains Ted Breton, director of energy market forecasting at Pace Global Energy Services in Fairfax, Va.

That prevailing market psyche has set the scene for a new, higher floor price for oil — apparently endorsed by Saudi Arabia and the Organization of Petroleum Exporting Countries, which controls 40 per cent of global output. Mr. Breton figures the price of crude may slip a bit in the months ahead, but hold at $40 a barrel for a while, with even higher spikes when people occasionally get spooked that the world may be running out.

Two key changes have conspired to make world oil markets much more volatile. There is surging new demand for oil in fast-growing China and India, where the middle class is taking to the road in a big way. And in the Middle East, mega-producer Saudi Arabia appears to have run out of spare production to turn on and off the tap at will.

There will be losers — countries, industries and even workers. Just as powerful locomotives made obsolete almost overnight the vast network of canals built with the blood and sweat of immigrants in the early 1800s, so too will the gas-guzzlers of this century vanish.

There also will be winners, including Canada, which is sitting on 175 billion barrels of sand-laden Alberta bitumen.

“The question is not whether there are buried hydrocarbons. It’s at what price you can extract them, and does the technology advance fast enough as the horizon of fuels recede?” points out Peter Huber, a senior fellow at the conservative Manhattan Institute and co-author with Mark Mills of a new book on the future of oil, The Bottomless Well.

“The horizon is not receding in Alberta. It is receding in the United States because we’ve been pumping for a hundred years.”

Few know that better than John Steinhauser, a retired Denver-based independent oil and gas producer. Now 81, he has spent the better part of three decades trying to squeeze oil out of finds from California to Pennsylvania that larger producers had abandoned or overlooked.

“There are still places where more oil can be found, but not anything like in the past,” he acknowledges.

In Texas and Louisiana, for example, the oil frontier has moved so far offshore that a visitor to Galveston, Tex., or New Orleans might never realize there still is an industry. After draining onshore wells such as Spindletop, producers realized they could tap into the same vast subterranean reservoirs, which extend out into the Gulf of Mexico.

Oil producers began to move offshore in the 1930s and 1940s. Offshore activity exploded in the 1950s as the exploration of a decade earlier began to bear fruit — first at depths of 30 metres and by the mid-1960s in waters twice that deep. By the late 1970s, producers were putting fixed platforms in about 300 metres of water in the Gulf, just beyond the edge of the continental shelf.

That too was quickly explored and exploited, forcing producers into even deeper water. More than 210 km off the Louisiana coast, Royal Dutch/Shell Group’s $1.5-billion Ursa platform floats like a giant octopus a kilometre above the sea floor, boring into pockets of oil and gas as far as eight km away. This is the final frontier in the relentless hunt for oil and gas. Beyond Ursa, the continental shelf drops off sharply into waters so deep that current technology can’t get at the hydrocarbons trapped beneath.

Even as the age of oil recedes, the transition need not be an economic Armageddon, argues Mr. Huber of the Manhattan Institute. Billions of gallons of annual oil consumption can be painlessly shifted to where it’s needed from industries that are wasteful users of hydrocarbons, including natural gas-fired power plants and factories that use oil to generate heat and steam.

He similarly envisions a day when nearly everyone in the developed world will be driving cheap and efficient hybrid electric vehicles, helping to shift 15 per cent of the energy economy from oil to the electric grid within two decades.

Like Shell, the industry will develop new ways to grab the hydrocarbons believed to be locked in the earth forever — in shale, in sand and beneath the world’s oceans.

In the meantime, Mr. Huber says, wasting energy should be a virtue, not a vice, because the faster we use it up, the better we get at finding new supplies, and the less our economy depends on energy.

“Energy begets more energy; tomorrow’s supply is determined by today’s demand,” Mr. Huber and Mr. Mills conclude in The Bottomless Well. “The more energy we seize and use, the more adept we become at finding and seizing more.”

The ability to extract more than a million barrels a day from Alberta’s oil sands is a testament to the use of technology to continuously expand the planet’s energy supplies. Mr. Huber says the demise of abundant oil will put countries like Canada, with its huge oil sands, coal-based methane and uranium deposits, near the top of the energy heap.

And so even as the age of oil recedes in the United States, for Canada, the story may be just beginning. Canada’s oil reserves, including the oil sands, now stand second only to Saudi Arabia’s at 179 billion barrels. (The United States ranks 11th with 22 billion barrels). Over the next decade, investors will sink as much as $87-billion to tap Alberta’s oil sands, nearly doubling output to 2.7 million barrels a day. Billions more will be spent to get that oil to consumers in the United States.

The United States has long been the driver of global demand. With just 5 per cent of the world’s population, it consumes one-quarter of the world’s oil — two-thirds of which winds up in the tanks of ever-larger American vehicles.

But the U.S. consumer is poised to lose its perch atop the global demand pyramid, argues James Gannon, an energy analyst and author of a recent study on the Asian transportation boom for the New York-based energy think tank Inform. He says China and India have joined the United States in sending a signal to oil markets that they will buy up every last drop of crude available, reinforcing paranoia about scarcity.

“We’ve had our way in the international oil market for basically a century. We are the No. 1 customer for just about every oil-producing country in the world,” Mr. Gannon says of the United States.

But that’s about to change. Chinese oil consumption has nearly quadrupled since 1980 to 5.7 billion barrels a day. It is expected to double again by 2025. And the Chinese are only just discovering their own Route 66. By 2030, China will have more cars on the road than the United States, putting a call on the world’s scarce supplies.

“There will be a moment of awakening for the North American consumer — a realization that it is not entitled to stand first in line to quench its thirst for oil before everyone else gets a shot.”

There is another, more sobering way to look at the dilemma facing the world’s big oil consumers. What’s already happening in the United States — the growing gap between dwindling output and rising demand — is the harbinger of what the world faces in the coming decades.

The Spindletop gusher in Texas created the supply, which awakened the world’s thirst.

But there are no more Spindletops — discoveries so vast that they create their own demand. Today, each new find, however significant, doesn’t begin to satisfy the world’s thirst. Indeed, the chasm between new discoveries and demand has been on an ever-widening course since the early 1980s.

At least for oil, the age of bounty has given way to the age of scarcity.

Supply: Are Saudi reserves drying up? Outsiders believe Saudi oil production will soon peak then sharply decline, leaving a huge gap in world supply

The penny dropped as Matthew Simmons, a Texas-based energy investment banker, sat listening to oil geologists from one of the world’s most secretive of companies.

“Our oil challenges: aging fields, rising levels of water, and complex formations,” said the Saudi Aramco geologists in a presentation in the Saudi oil city of Dhahran.

Aramco, which controls 98 per cent of Saudi Arabia’s oil reserves, has had its doors shut to the outside world for more than 50 years, keeping energy experts guessing about how much oil the kingdom actually has, and how long its gigantic fields can feed oil-thirsty economies such as the United States.

But this revelation from Saudi Aramco’s oil geologists in 2003 was enough for Mr. Simmons to spend the next two years trying to solve the mystery surrounding Saudi oil fields.

“This was like a basketball coach saying: I got the world-class athletes, but they are just really old; they are losing their eyesight, and they’re starting to use walkers,” says Mr. Simmons, the chairman of Simmons & Co., and former member of U.S. Vice-President Dick Cheney’s energy task force.

Mr. Simmons is one of those “petro pessimists” whose research shows that the entire Saudi oil system is old and fraying; that its oil production will soon reach an apex, and that the ensuing decline will result in the world confronting an immense oil shortage.

He disputes Aramco’s assessment of Saudi oil reserves and future production, pointing to the increasing reliance on pumped water to maintain production from its five big fields, which account for 90 per cent of the kingdom’s oil output.

Saudi Arabia produces 9.5 million barrels a day, or more than one-ninth of this year’s expected global daily demand of 84 million barrels. The Paris-based International Energy Agency, or IEA, which advises 26 industrialized countries on energy issues, estimates Saudi Arabia has 261.9 billion barrels of “geologically proven” reserves, which are enough for another 25 years to maintain its leading position in the oil market.

Over all, Saudi officials claim, the kingdom may contain up to one trillion barrels of ultimately recoverable oil. It’s the only producer in the Organization of Petroleum Exporting Countries (OPEC) cartel that keeps a buffer of spare capacity to swing oil markets when warranted.

But the recent oil price surge, and Saudi Arabia’s apparent failure to use its spare capacity, suggest the kingdom’s position in the oil supply-and-demand equation is changing.

“The biggest question is how quickly and how much Saudi Arabia can bring from its reserves to the consumer markets,” says Dr. Fatih Birol, chief economist at IEA. He says the Saudis will have to open their energy sector to foreign investors in order to make this happen.

Experts say the Saudis, on whom the world is relying to fill the supply gap created by a massive demand from China and India, are unlikely to do it alone. The country’s public finances have been tight for the past decade for a number of reasons, ranging from the huge costs associated with the Persian Gulf War; to public support for the increasing number of unemployed youth, to more spending to counter the threat posed by Islamic militancy. Its budget swung to a surplus only last year when oil exports rose to more than $100-billion (U.S.), sharply up from an expected $77-billion.

Concerns related to Saudi Arabia’s dwindling clout in the global oil markets have also caught the attention of the U.S. government’s Energy Information Administration (EIA), which tracks data across the world’s major producers.

The most critical question facing the world energy market, says Erik Kreil, an analyst at EIA, is whether Saudi Arabia can still influence the world markets by manipulating its excess pumping capacity.

“Saudis have been producing at their maximum capacity. And whatever they have in the spare capacity is heavy oil, which refiners don’t want. If Saudis want to sell this oil then they have to give a heavy discount, which will bring the whole market [down] with it,” Mr. Kreil says.

Limited foreign participation in investment has also prevented Saudi Arabia and other major OPEC members from fully benefiting from the major technological advances that have taken place in the past two decades in the oil sector. These are mostly patented by U.S.-based international oil service companies.

“We think the most strategic issue in the oil industry is that two-thirds of the world’s oil and gas reserves are closed to the free flow of capital; and we think this is an important barrier to increasing the production capacity,” says Mr. Birol of IEA.

Despite these doubts, Saudis dismiss the talk of their oil output peaking.

“The world in general and Saudi Arabia in particular has ample oil available to supply the world’s needs for a long time to come,” Saudi Arabia Oil Minister Ali al-Naimi told an international oil summit in Paris last month. He claimed the kingdom can increase its output to 15 million barrels a day in the near future from the current 9.5 million barrels, and can continue to produce that much for another 50 years.

Still, Mr. al-Naimi says OPEC, led by Saudis, has lost control over prices. “Despite our best efforts, Saudi Arabia and OPEC have had little ability to curb the rapid rise in prices,” he says, blaming speculative buying in the futures market for the recent price surge.

For some, this is no less than an admission from the biggest oil producer that its grip on the market is loosening.

“Even under the most optimistic scenario, Saudi Arabia may be able to maintain current rates of production for several years, but will not be able to increase production enough to meet the expected increase in world demand,” Mr. Simmons says.

“This admission is a wake-up call.”


On 26 April 2005, the new City of Gatineau adopted a final version of its draft construction regulation No. 504-2005 containing a clause that prohibits the construction of straw bale structures throughout Gatineau territory. This clause will take effect some time in June 2005, unless it is changed before that date. Here is the text of the clause, which can also be found on the City of Gatineau website http://www.ville.gatineau.qc.ca/urbanisme/pru/CD/Projet%20de%20r%E8glement%20504%20construction/Texte/Construction_Projet_2005-04-26.pdf

The message from the City of Gatineau is:
-Innovative ecological building techniques are not welcome – or officially allowed.
-If you absolutely insist on using such a technique, we may allow it, but we are going to make it as difficult as possible for you to obtain approval, and there is no guarantee you will get approval even if your building meets or surpasses municipal, provincial and federal building code requirements.

New Zealand first to levy carbon tax

New Zealanders will pay an extra NZ$2.90 a week for electricity, petrol and gas when the country becomes the first in the world to introduce a carbon tax to address global warming.

It is expected to add about 6% to household energy prices and 9% for most businesses but will help the economy in the long run, according to Pete Hodgson, the minister responsible for climate change policy.

Mr Hodgson set the tax yesterday at NZ$11 a metric tonne of carbon emitted. It will come into effect in two years. ‘If we are going to tackle climate change, we need to start taking environmental costs into account in the economic choices we make,’ he said.
The tax, planned after New Zealand signed up to the Kyoto protocol, would make polluting energy sources such as coal and oil more expensive than cleaner ones such as hydro, wind and solar, he said.

The experiment will be watched closely by bigger countries which are also com mitted to reducing carbon emissions but are failing to reduce energy demand.

The government estimates the tax will raise about NZ$360m a year but has said it will not increase revenues.
‘It will be balanced by other tax changes so there is no net increase in government revenue,’ a government spokesman said yesterday.
The most energy-intensive businesses will be exempted so they are not forced to shut or relocate. In return companies such as Comalco, which uses 15% of the country’s power, and Carter Holt Harvey, the country’s biggest sawmill, must commit to reducing carbon emissions.
New Zealand, which produces about 29% of its electricity from gas- or coal-fired power stations, has a record of introducing the idea of green taxes but then not implementing them. In 2003 the government planned to impose a methane tax on farmers because flatulence of cows and sheep was responsible for more than half of New Zealand’s total greenhouse gas emissions. But that was abandoned after criticism from farmers, who labelled it a “fart tax”.

Reaction to the carbon tax was mixed yesterday.

“It’s good to see there are no surprises,” said Tom Campbell, the managing director of Comalco’s aluminium smelting operations.

A government spokesman said the tax would have long term benefits for the economy: “If New Zealand does nothing _ our emissions will continue to rise as will the future cost of reducing them. If we can curb our growth in greenhouse gas emissions now, we will be better placed to make a smooth transition to more challenging commitments after 2012.”

Other countries, especially in Europe, have energy taxes which are weighted against producers but New Zealand is believed to be the first to ask the public to pay directly for the costs of reducing global warming. Proposals for a Europe-wide carbon tax were abandoned in the 90s.