The Global Scramble for Minerals and
Energy— Its Impact on Colorado
Vince Matthews
Director
Colorado Geological Survey
Harris D. Sherman,
Executive Director
YOUR
Geological Survey !!!
Geology of Water Resources
Geologic Hazards
Colorado Avalanche Information Center
Educate
Assist State and Federal Agencies
Promote Mineral and Energy Resources
Everything you need to know about Mineral and Energy in Colorado
Production of Natural Resources is an
Important Part of Colorado’s Economy
$12.0 billion
Revenue comparison of Colorado’s
Important Economic Sectors (2005)
48%
$ Billion
96%
Minerals
&
Energy
Tourism
Distribution of Colorado Mineral & Energy
Value 2007 ($ Billions)
Uranium
Coal
0.00
Minerals
1.1
Oil
1.8
1.5
CO2 0.5
7.0
Natural Gas
Production of Natural Resources has
Always been an Important Part of
Colorado’s Economy
Boulder 1902
Just off 51st Street
China
India
U.S.
Population Comparison
1400
China
1200
India
1000
800
600
400
U.S.
200
0
China
U.S.
India
Land Area Comparison
10
9
China
U.S.
8
7
6
5
4
India
3
2
1
0
China
U.S.
India
GDP Comparison - 2007
13.8
14
U.S.
12
10
8
6
4
2
3.2
China
1.1
India
0
China
Source: World Bank
US
India
GDP Growth Comparison 2004-06
12
10.4
10
China
8.1
8
India
6
3.5
4
U.S.
2
0
Source: World BankChina
US
India
World Electrical Growth
World
8.3 terawatts
increase (+70%)
China/India/U.S.
4.4 terawatts
World Electrical Growth
U.S.
1.1
India
0.5
China
2.8
World Electrical Growth
Africa
EuropeEurasia
South &
Central
America
AsiaPacific
Middle
East
North
America
China’s Share of World Mineral Production in 2005
Industrial minerals:
Cement
Fluorspar
Rare earths
Metals:
Aluminum
Antimony
Copper
Gold
Lead
Magnesium
Molybdenum
Silver
Steel, crude
Tin
Tungsten
Zinc
%
Rank
45
51
96
1
1
1
24
86
16
9
32
75
22
12
31
35
87
26
1
1
2
4
1
1
3
3
1
1
1
1
Source: USGS, Menzie and Tse
China’s Production and Consumption of
Copper
3.5
Copper production
3.0
Copper consumption
Production
supplemented
by imports
2.5
2.0
1.5
1.0
0.5
2005e
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0.0
1990
Million metric tons
4.0
Year
Source: USGS, Kenzie, et al
Global Impact
457%
Global Impact
Global Impact
307%
Global Impact
457%
307%
Colorado Impact
Difficulty in manufacturing of copper products
Increased copper thefts
Increased costs to the consumer
Copper mine reopening
China’s Share of World Mineral Production in 2005
Industrial minerals:
Cement
Fluorspar
Rare earths
Metals:
Aluminum
Antimony
Copper
Gold
Lead
Magnesium
Molybdenum
Silver
Steel, crude
Tin
Tungsten
Zinc
%
Rank
45
51
96
1
1
1
24
86
16
9
32
75
22
12
31
35
87
26
1
1
2
4
1
1
3
3
1
1
1
1
Source: USGS, Menzie and Tse
Leading Importers of Iron Ore—
1980–2003
160
Million metric tons
140
120
100
80
60
40
20
0
1980
1982 1984
1986 1988
1990 1992
1994 1996
1998 2000
2002
Year
China
Germany
Japan
United States
Republic of Korea
Sources: U.S. Geological Survey Minerals Yearbook; United Nations Conference on
Trade and Development.
Trends in Demand for Steel
Million metric tons
300
250
China
Other Asia
Europe
Americas
200
150
2001
2002
2003
Year
Source: International Iron and Steel Institute.
2004
China
2005 – Opened 70,000 new supermarkets
2006 – Became #3 car manufacturer
11th Five-year plan
– 42% increase in capital investment
- Plan to build the equivalent of three Manhattan
Islands
Price of Scrap Iron
559%
Ball mill gets real Leadville welcome
Image courtesy of Leadville Herald Democrat
U.S. molybdenum exports
Molybdenum Exports
41,400
45,000
40,000
34,500
35,000
30,000
21,900
25,000
20,000
15,000
10,000
5,000
0
2003
2004
2005
MOLYBDENUM Price
997%
Ball mill gets real Leadville welcome
Image courtesy of Leadville Herald Democrat
MOLYBDENUM Price
997%
MOLYBDENUM Price
MOLYBDENUM Price
~ 100 Known
Occurrences of
Molybdenum
Precious & Base Metal Increases
Platinum
255%
Aluminum
144%
01/03 - 01/09
Gold
Silver
205%
367%
Palladium
284%
Lead
800%
Nickel 630%
Tin
229%
Zinc
497%
Antimony
Bismuth
159%
671%
Germanium
Iridium
411%
193%
Selenium
Tellurium
1620%
8
1123%
Cadmium
908%
Chromium
581%
719%
Magnesium
354%
Manganese
580%
Titanium
Cobalt
Rhenium
685%
Tungsten
Vanadium
2060%
600%
531%
Increase in Coal Spot Price
37
40
35
30
25
20
17
15
2004
10
5
0
2005
2005 Coal Price
Spot versus Contract
2007
$29.75
37
40
35
30
24.4
25
20
15
10
5
0
Contract
Spot
Metal prices fall further than during Great Depression
The price of key industrial metals has fallen further over the last four months than
occurred during the worst years of Great Depression between 1929 and 1933, according
to research by Barclays Capital.
By Ambrose Evans-Pritchard
Last Updated: 7:29AM GMT 03 Dec 2008
“Chinese companies and their rivals are
scouring the globe from Australia to
Africa for access to the raw materials
needed to sustain the Asian nation’s
growth as commodity prices surge.”
--June 23, 2006 (Bloomberg)
Renewable Energy
WIND
- Neodymium
- Molybdenum
- Iron Ore
SOLAR
- Cadmium
- Tellurium
- Indium
- Germanium
- Gallium
- Selenium
- Silicon
- Copper
Strategic and Critical Materials with uses in Alternative Energy applications
for which the U.S. is dependent on imports for 50% or more of consumption
Commodity
Antimony
Barium
Bismuth
Cobalt
Gallium
Germanium
Indium
Manganese
Nickel
Platinum group
Rare Earths
Scandium
Selenium
Strontium
Tantalum
Tellurium
Tin
Titanium
Vanadium
Zinc
Primary Sources
China
China
China, Mexico
Kinshasa,Australia
China
Belgium,Canada
China, Canada
Gabon, S. Africa
Canada
South Africa
China
China, Russia
Canada
Mexico
Brazil
Belgium, Germany
Peru
Australia, S. Africa
Czech Rep., S. Africa
Canada, Mexico
Applications in Alternative Energy
Thermoelectric/paraelectric materials
Thermoelectric/paraelectric materials
Thermoelectric/paraelectric materials
Photovoltaics (solar cells)
Photovoltaics, paraelectric materials
Photovoltaics (solar cells)
Solar cells, thermo/paraelectric materials
Photovoltaics
Fuel cells
Fuel cells, para/thermoelectric mtrls
Fuel cells, para/thermoelectric mtrls
Thermoelectric/paraelectric materials
Solar cells, thermoelectric materials
Thermoelectric/paraelectric materials
Thermoelectric/paraelectric materials
Solar cells, thermoelectric metrls, semiconductors
Thermoelectric materials
Solar cells
Fuel cells
Photovoltaics, fuel cells, thermoelectric mtrls
120
Percent
imported
100
80
60
40
20
0
In
um
i
d
S
e
el
um
i
n
Te
llu
m
ir u
V
a
an
um
i
d
R
EE
um
l
A
a
in
al
G
li
um
M
G
P
n
Zi
c
r
e
e
v
in
li
S
om
r
B
REE = Rare Earth Elements = 15 + 2
neodymium,
lanthanum,
terbium,
dysprosium
Toyota Prius
“The biggest user of rare earths
of any object in the world!”
HONG KONG — China is set to tighten its
hammerlock on the market for some of
the world’s most obscure but valuable
minerals.
--August 31, 2009 (The New York Times )
World faces hi-tech crunch as China eyes
ban on rare metal exports –August 24, 2009 (London
Telegraph)
China Tightens Grip on Rare Minerals
–August 31, 2009 (New York Times)
As hybrid cars gobble rare metals,
shortage looms –August 31, 2009 (Reuters)
China Considers Rare-Earth Reserve in
Inner Mongolia –September 2, 2009 (Bloomberg News)
2004
2003
Cement producers
1. China
2. India
3. U.S.
22% Imported
China Consumes ½ of all the concrete in the world
U.S. cement manufacturing is 81% foreign owned
Fertilizers
Potash
$50/ ton > $200/ ton in 2008
Nitrogen urea $1000/ ton.
Sulfur
$50/ ton > $500/ ton in one year
Energy
Fertilizers
Agriculture
Sep-08
May-08
Jan-08
Sep-07
May-07
Jan-07
Sep-06
May-06
Jan-06
Sep-05
May-05
Jan-05
Sep-04
May-04
Jan-04
Sep-03
May-03
Jan-03
Sep-02
May-02
Jan-02
Sep-01
May-01
Jan-01
Sep-00
May-00
Jan-00
( 2000 = 100 )
800
700
600
500
400
300
200
100
0
Metals/minerals
Dr Colin Thirtle, Professor of Development Economics, Imperial College London
U.S. Energy Split
Coal
Oil
Natural Gas
U.S. Energy Split
94%
6%
Commodity
Percent of U.S.
energy supply
Coal
22.8
381
0
Oil
39.8
306
67
8.4
481
89
Natural Gas
23.6
206
16
Hydroelectric
Biomass
Solar
Wind
Geothermal
2.5
3.6
.1
.3
.3
-
-
Uranium
Percentage Price
Increase 2003-07
Percent Imported
(2007 Net)
Source: EIA, Annual Report 2007
World Coal Consumption
COAL Consumption- China
China’s Production and
Consumption of Coal
2,100
Coal production
Coal consumption
1,700
1,500
1,300
1,100
900
700
Year
2005e
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
500
1990
Million metric tons
1,900
Coal Spot Price 2/06 – 2/09
$38China
per ton
begins
importing coal
$140 per
ton
COAL Consumption- India
COAL U.S.
China/U.S. Coal
54% of world production.
51% of world consumption.
Colorado’s Coal
is becoming
increasingly
desirable
Colorado
Impact
Colorado Coal Production
1960-2007
Colorado is the seventh largest coal producer in the nation.
Colorado has the seventh largest bituminous coal reserves in the nation.
Colorado has the largest reserves of bituminous compliance coal in the nation.
World Nuclear Consumption
NUCLEAR- China
NUCLEAR- India
China : 32 new plants by 2020
4 per year through 2015
9 GW to 60 GW
India: 17 new reactors by 2012
NUCLEAR- U.S.
The last nuclear power plant came on line
in 1996
Since then has U.S. nuclear generation -Increased?
Decreased?
Remained flat?
NUCLEAR- U.S.
Last nuclear power
plant came online.
And, the largest nuclear power
generator in the world?
The United States generates as much
nuclear energy as—
France,
Germany,
Spain,
Sweden,
United Kingdom
combined!
World Nuclear Power Consumption
436 Plants Operating
44 Under Construction
50 - 60 Countries Applied to
IAEA
The world’s existing 436
nuclear reactors currently need
180 million pounds of uranium
each year.
180
80 million
pound gap
160
140
120
100
Million Pounds
80
60
40
20
0
Needed
Produced
Uranium prices
Source: Cameco
Uranium-vanadium districts and mines, Colorado
Colorado Impact
Three new mines
opened in Colorado
in 2008
10,000+ claims filed on federal lands in Colorado in 2005-6.
10,000+ claims filed on federal lands in Colorado in 2007.
World Oil Consumption
OIL CONSUMPTION- China
Source: BP
OIL- CONSUMPTION India
Source: BP
OIL- U.S. Consumption
U.S. OIL PRODUCTION - 1900 to 2050
1.6
billion
barrels
PEAK 1970
40% less
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
U.S. OIL PRODUCTION - 1900 to 2050
GONE: 2/3 OF
U.S. OIL HAS
BEEN USED. IT’S
HISTORY.
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
How do you communicate what
“2/3 of something gone” means?
In 1969, M. King Hubbert Predicted
that World Production
would Begin Declining in 2000.
90% 2004
80% 2000
50% of the OIL
Consumed by the
Human Race
Used Since 1986
90% of the OIL
Consumed by the
Human Race
Used Since 1959
1094 Billion
barrels
Consumed
70% 1995
60% 1990
50% 1986
40% 1980
30% 1975
20% 1969
10% 1959
Start 1859
1% 1924
5% 1948
(data from Arnulf Grubler, 1998; BP Statistical Review of World Energy, 2008)
Copyright J. D. Hughes GSR Inc, 2008
Population
Per Capita Consumption
Total Consumption
45 times
8.6 times
5.3 times
OIL
OIL
COAL
HYDRO
WOOD
Year
Year
Renewable
11%
COAL
Non-Renewable
89%
Percentage of 2007
GAS
Year
(data from Arnulf Grubler, 1998; BP Statistical Review of World Energy, 2008; U.S. Bureau of Census, 2008)
Copyright J. D. Hughes GSR Inc, 2008
85% of the world’s oil comes from just 20
of the 65 producing countries
54 of the 65 producing countries are in decline
Mexico’s declining
production
at Cantarell field
accelerating
Mexican state oil company
Pemex said Wednesday
that production at its
Cantarell oil field, the
world’s second-largest, will
drop faster than expected.
08/03/06
2005 producing 2.2 million
barrels per day
2009 producing 0.6 million
barrels per day
1 of 65 producing countries
USA
Peak 1970
Source: BP Annual Energy Report
5 of 65 producing countries
Mexico
Norway
UK
Indonesia
Peak 1997
Source: BP Annual Energy Report
USA
50 of 65 producing countries
Peak ~2000
Source: BP Annual Energy Report
45 small producers
USA
61 of 65 producing countries
Brazil
Algeria
Canada
China
Kuwait Iraq
UAE
Venezuela
Nigeria Iran
Libya
Peak 2004
Source: BP Annual Energy Report
45 small producers
USA
63 of 65 producing countries
Qatar
Angola
Flat 2004
Source: BP Annual Energy Report
45 small producers
USA
64 of 65 producing countries
Source: BP Annual Energy Report
Flat?
45 small producers
USA
65 of 65 producing countries
Source: BP Annual Energy Report
Slight Increase
FSU Former Soviet Union nations
45 small producers
USA
Crude Oil Prices
Wattenberg
oil well near
Longmont
16th
Largest oil
field
Colorado Impact
50.0
Colorado Oil Production - 1960-2006
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
Rangely still has large reserves (57R/65P).
Commerce City refinery will be processing Canadian oil sands.
20
06
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
19
70
19
68
19
66
19
64
19
62
19
60
0.0
Oil shale is being
seriously re-appraised.
World Natural Gas Consumption
NATURAL GAS CONSUMPTION - China
NATURAL GAS CONSUMPTION - India
NATURAL GAS CONSUMPTION - U.S.
Natural Gas – America’s Silver Bullet?
Natural Gas Electrical Generation vs Natural Gas Imports
5000000
Electricity from Natural Gas
4500000
4000000
3500000
3000000
Imports
2500000
Electrical
2000000
1500000
1000000
Natural Gas Imports
500000
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
U.S. Monthly Natural Gas Production
2000000
8,900
30,180
Well Completions
1800000
1600000
Rockies Trends
1200000
1000000
Avg Reserves per Well
Reserves
Average Initial Production
IP
1200
600
800000
1000
1128
500
528
800
400
600000
600
300
400
400000
439
200
200000
286
200
100
0
0
1998
2007
1998
2007
0
Ja
n95
Ju
l-9
5
Ja
n96
Ju
l-9
6
Ja
n97
Ju
l-9
7
Ja
n98
Ju
l-9
8
Ja
n99
Ju
l-9
9
Ja
n00
Ju
l-0
0
Ja
n01
Ju
l-0
1
Ja
n02
Ju
l-0
2
Ja
n03
Ju
l-0
3
Ja
n04
Ju
l-0
4
Ja
n05
Ju
l-0
5
Ja
n06
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l-0
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Ja
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l-0
7
Million Cubic Feet of Gas
1400000
Colorado Drilling Permits
Approved
Colorado Drilling Rigs
Source: Baker-Hughes
Source: Baker-Hughes
Colorado Impact
1,600
1,400
1,200
1,000
Colorado Natural Gas
Production 1960-2007
800
600
400
200
0
Colorado is the seventh largest gas producer in the nation.
Colorado has the fifth largest gas reserves in the nation.
Colorado has the largest reserves of coalbed methane in the nation.
Location of the 78,000+ wells that have been drilled for oil and gas. About half are dry holes.
Natural Gas Prices
8
$6.50
7
6
5
4
3
2
1
0
$2.00 +/- $0.50
21st Century
Natural Gas Prices
Colorado has all, or parts, of seven of the top 50 natural
gas fields in the nation!
Gas Price Needed to achieve a 10% IRR
Piceance Basin
Morgan
Stanley
Encana
Morgan
Stanley
IHS
4/08/09
Delta Petroleum
Drilled 163 Colorado wells
Last month announced a loss of $459.7 million
Next day stock dropped 41%
Natural Gas – America’s Silver Bullet?
60%
From
Most
Recent
FOUR
YEARS
(data copyright IHS Energy, Diagram prepared and copyright by EOG Resources Inc., 2006)
Natural Gas – America’s Silver Bullet?
Conservation
Natural Gas
Oil
Wind
Solar
Geothermal
Biomass
Efficiency
Coal
Hydro
Nuclear
Hydro Generation - China
Hydro Generation – U.S.
Geothermal
Energy
Direct Use
Electric Generation
Geoexchange Heat Pumps
Below the 690 apartments—not to
mention the gyms, bars, dry cleaners and
movie theater—that make up the 15-acre
Linked Hybrid residential complex in
Beijing, China, are 660 geothermal wells
that eliminate the need for air conditioners
and boilers. Each well funnels water 325
feet beneath the ground into bedrock,
where the constant 55ºF temperature either
heats or cools it before it’s pumped back
to the surface and piped through the
building’s concrete floors. The system will
reduce energy costs by up to 30 percent in
the summer and up to 40 percent in the
winter.
The Escalator Dilemma
Natural Forces are Working Against Our Goals
The future is here!
Are we ready?
Overall Impacts
Coloradans will suffer from effects of inflation
Coloradans may see increasing shortages of critical
raw materials
Pressures will mount to develop more of Colorado’s
natural resources
Conflicts may arise with multi-national corporations
operating in Colorado
How do we turn lemons into lemonade?
So– What is CGS doing?
Working with GEO on geothermal electrical generation.
Encouraging the use of Geoexchange heat pumps.
Studying the potential of CCS.
Studying the potential of alternative energy
minerals in Colorado
Trying to reduce our energy consumption
Trying to increase public understanding of our
energy situation.
“The world is a football field now and
you’ve got to be sharp to be on the
team which plays on that field.
If you’re not good enough, you’re
going to be sitting and watching the
game. That’s all.”
--Rajesh Rao, founder and CEO of Dhurva Interactive
The End!
Of the talk, that is.