The metabolism of oil extraction: A bottom-up approach applied to the case of Ecuador

Parra, R., Di Felice, L.J., Giampietro, G., Ramos-Martin, J. (2018): The metabolism of oil extraction: A bottom-up approach applied to the case of Ecuador”, Energy Policy, Vol. 122: 63-74. https://doi.org/10.1016/j.enpol.2018.07.017

Free download before September 9, 2018: https://authors.elsevier.com/c/1XQVW14YGgXhLw

Abstract: The global energy system is highly dependent on fossil fuels, which covered approximately 90% of primary energy sources in 2016. As the quality and quantity of oil extracted changes, in response to changes in end uses and in response to biophysical limitations, it is important to understand the metabolism of oil extraction – i.e. the relation between the inputs used and the output extracted. We formalize a methodology to describe oil extraction based on the distinction between functional and structural elements, using the Multi-Scale Integrated Analysis of Societal and Ecosystem Metabolism (MuSIASEM) to generate a diagnostic of the performance of oil extraction and to build scenarios. The analysis allows generating modular benchmarks which are applicable to other countries. It is shown that oil extraction in Ecuador consumes, per cubic meter of crude oil extracted, over 100 kWh of electricity and 1.5 GJ of fuels, requiring 3 kW of power capacity and 2 h of human activity. A scenario is developed to check the effects on Ecuador’s metabolic pattern of an increase in oil production over the next five years. The strength of the proposed methodology is highlighted, focusing on the adaptability of the method for dealing with policy issues.

Keywords: Oil extraction, MuSIASEM, Ecuador, Metabolism, Complexity

JEL Codes: Q02, Q35, Q41, Q57

Despite efforts to reduce greenhouse gas (GHG) emissions and to shift towards a renewable energy system, oil remains an essential part of the global energy chain, with 3820 Mtoe consumed in 2015, out of a total final energy consumption of 9383 Mtoe (International Energy Agency, 2017). This is partly due to the fact that most renewable systems propose an alternative to electricity, rather than fuels. With sustainability issues tied to biofuels, particularly due to concerns over land use in relation to food security (Rathmann et al., 2010), as well as their low energetic output (Rajagopal et al., 2007), it is unlikely that conventional fuels will be phased out in the near future. Given the huge role that oil plays in societies, it is important to understand its metabolism – intended here as the interaction of internal factors determining the relation between the profile of inputs and outputs – particularly in relation to the internal consumption of energy carriers and other flows and funds (see Section 3.1 for a definition), such as water, chemicals, power capacity and human activity.

The aim of the paper is two-fold: on one hand, to develop methodological tools allowing us to describe the oil extraction process by accounting for various flows and funds across different levels; on the other, to apply the methodology to the case of Ecuador, both characterizing the factors determining the current metabolism and developing a scenario for future extraction and policy.

The MuSIASEM energy grammar has been described and applied in detail – see, for example, Velasco-Fernandez et al. (2015) and Giampietro et al. (2014). Its two main concepts, essential to understand the proposed analysis, are the distinction between primary energy sources (PES) and energy carriers (EC), and the disaggregation between mechanical energy (electricity) and thermal energy (heat and fuels). Fig. 1 shows the formalization of MuSIASEM’s energy grammar. A list of the acronyms introduced in Fig. 1, and used throughout the paper, is also provided in Table 1.

Recent developments in MuSIASEM have seen the introduction of a new conceptual tool called processor (Giampietro, 2018; González-López and Giampietro, 2017; Ripa and Giampietro, 2017; Ripoll-Bosch and Giampietro, 2017), whose aim is to describe the inputs and outputs of flows and funds of a certain process linking it with processes both at the same level and across different levels. Fig. 2 shows an example of a sequential pathway of processors for the fuel chain, starting from oil extraction and ending with transport of fuels to society. Here, the output of one processor becomes an input for the next, and each processor fulfilling a certain function (e.g. “oil extraction”) can be mapped
onto different structural processors. Each processor is characterized by a profile of inputs and outputs. Inputs coming from society (produced by processes under human control) are represented at the top of the processor. The useful output, either fulfilling a function for a following processor or being used by society, is represented by the arrow exiting the processor on the right. Inputs from the ecosystem (blue arrows) and outputs to the ecosystem, such as emissions (yellow arrows), are represented at the bottom.

Structural processors describe a process taking place through a specific technology or method, for example oil extraction with deep sea drilling. The characteristics of these processors reflect the technical coefficients determined by the organizational structure of the plant carrying out the process. Functional processors, on the other hand, describe notional elements of a process whose aim is to provide a function within a wider system: for example, fuel refined for the transport system. The characteristics of these processors are defined by the function that has to be expressed to stabilize the metabolism of the larger whole. Theoretical ecology explains the notional definition of a functional processor in terms of mutual information – i.e. a metabolic network (i.e. an ecosystem) defines a virtual image of the metabolic characteristics of the node (network niche) which is independent of the actual characteristics of the metabolic element of the node (Ulanowicz, 1986).

Table 4 shows an overview of Ecuador’s energy system, focusing on primary energy sources (PES) and energy carriers (EC), including imports and exports. As data for 2016 is not available yet, data for 2015 was used, taken from Ecuador’s annual energy balance, published by the Ministry of Strategic Sectors (Ministerio Coordinador de Sectores Estratégicos, (Ministerio Coordinador de Sectores Estratégicos, 2016)). Oil accounts for almost 90% of the primary energy mix. However, due to a lack of refining capacity, Ecuador is a net exporter of crude oil and net importer of refined fuels.

Leaving electricity aside and focusing on fuels, Table 5 shows the final consumption of fuels by societal sub-sectors, splitting them into GLP, diesel oil, fuel oil and gasoline. The disaggregation of both different fuels and of different societal compartments is needed to characterize end uses and to be able to have a complete overview not only of what is being produced, but also of how and where it is being consumed.

Looking at Ecuador’s 2016 metabolic pattern for oil extraction, we can see that:
– On average, over 100 kWh of electricity are needed for each cubic meter of crude oil extracted;
– Approximately 1.5 GJ of fuels are consumed for each cubic meter of crude oil extracted: most of them (1.3 GJ) are used to generate electricity on site, and the rest to operate machinery;
– As for funds, approximately 0.032 kW of power capacity are needed for each cubic meter of crude oil extracted; and 2 h of human activity, including both direct (operational) and indirect (administrative) jobs;
– Considering water use, almost 8m3 of fluid (water, gas and oil) are extracted for each cubic meter of oil recovered – 0.2m3 of freshwater are consumed per unit of extraction, and almost 6m3 of water are reinjected;
– Finally, the oil extraction step contributes to overall CO2 emissions by producing almost 84 kg of CO2 per cubic meter of oil extracted.

This framework is useful for two purposes. Firstly, it allows us to have a detailed description of the flows and the funds consumed by Ecuador’s oil extraction sector, as briefly outlined, identifying the relevant elements of the system. Given the lack of data on this step of the fuel chain, the metabolic description is valuable for energy analyses.

Secondly, the characterization of these elements in the form of processors allows checking how the combination of various elements of the oil extraction process contributes to its final metabolism, and how changing the relative weight of the elements affects the flows and funds of the final oil extraction processor, as will be seen in the next subsection.

The results for Ecuador showed that currently medium oil dominates the market, and that at the moment the extraction process on average requires, per cubic meter of oil extracted, over 100 kWh of electricity, 1.5 GJ of fuels, 3 kW of power capacity, 2 h of human activity and 6.2m3 of freshwater, of which 6m3 are reinjected. The extraction process also generates, per cubic meter of oil extracted, almost 85 kg of CO2 emissions. The package of indicators that are generated by the approach allows providing an integrated assessment of the performance of the investigated process in the form of a multi-criteria analysis. For example: (i) the profile of inputs of energy carriers (electricity, and fuels) are relevant for calculating the Energy Return on the Energy Investment (mapping both on the speed of depletion of the stock of resources and on emissions of CO2 per net supply); (ii) the requirement of power capacity (technology) is an indicator relevant for assessing the fixed economic costs; (iii) the requirement of labor is relevant both for assessing the economic costs and the opportunity for employment; (iv) the information about freshwater and CO2 emissions is relevant for an
analysis of environmental impact. Future work will focus on organizing this information in the form of a Multi-Criteria Analysis in order to make it available to decision makers in the form of a decision support system.

The analysis of the proposed scenario showed that extraction of new oil resources in Ecuador will shift from medium to heavy oil, but as this will be done mostly within newer blocks, less Base Sediment Water (BSW) will be produced in the process. This will lower the requirement of inputs per unit of oil produced. However, in order to provide a full overview of the overall effect on Ecuador’s oil extraction metabolism, a time dimension must be introduced in the analysis, checking how processors of the current oil extraction structures will change as they age in terms of flows and funds consumed. It is well known that, in general, older blocks consume more resources. This explains why the
simulated processor focusing only on the delta of increased production, based on the exploitation of new blocks, is less energy and water intensive than Ecuador’s 2016 real processor. Thus, the inclusion of a time dimension to the analysis is identified as a second area for further research.

Livelihood sustainability assessment of coffee and cocoa producers in the Amazon region of Ecuador using household types

Viteri Salazar, O., Ramos-Martin, J., Lomas, P.L. (2018): “Livelihood sustainability assessment of coffee and cocoa producers in the Amazon region of Ecuador using household types”, Journal of Rural Studies, Vol. 62: 1-9. https://doi.org/10.1016/j.jrurstud.2018.06.004

Free download until August 15, 2018: https://t.co/ZhyPNetmic

Abstract: Supporting small farmer livelihoods in fragile, biodiverse regions, such as tropical forests, is a priority for many development agencies and national governments. These regions tend to be characterized by recent human settlements, increasing populations and infrastructure development, as well as competitive land use activities, which exert pressure on fragile ecosystems. Improvement in livelihood strategies often focuses on increasing yields by improving productivity, but without taking into account alternative methods, such as better agricultural practices and their dependence on agrochemical inputs, changing land use through crop substitution, or improving product commercialization. In this research, we use household types, defined according to different land use patterns, in the Northern Amazon region of Ecuador to explore the limitations of, and identify future options for, improving livelihood strategies based on small-scale coffee and cocoa production. The results of the different types are discussed in order to highlight the methods’ utility and identify benefits in terms of environmental and social objectives versus economic profitability. Lessons are drawn that could be useful in applications of public policy aimed at the betterment of small coffee grower and cocoa farmer livelihood strategies, which involve thousands of families in the Amazon region of Ecuador, without compromising the environment.

Keywords: Household types, Amazon, Ecuador, Livelihoods, Coffee and cocoa, Sustainability

The main objective of this study is to contribute to the evaluation of agricultural production systems. This is done here by using a typology of four predominant production systems and comparing their performance against a set of indicators. A second objective is to inform decision makers about the differentiated outcomes these production systems have, so that tailored policy interventions can be designed based on the evaluation of past initiatives. In particular, this work focuses on: i) identifying the socioeconomic and environmental restrictions implicit in different land use patterns; ii) analysing how different land use patterns improve livelihoods in terms of income; and iii) identifying how certain public policies can lead to the establishment of particular types or lifestyles, thereby generating an impact on the income of small- scale producers.

After collecting the data, a typology of households was established as a method of conceptualization and empirical analysis. Household types have been largely used as societal functional units of analysis within integrated assessments for rural systems (Pastore et al., 1999; Giampietro, 2003; Scheidel et al., 2013; Williams et al., 2015), as well as often employed to strengthen the focus of policies and interventions associated with rural livelihoods (Gomiero and Giampietro, 2001; Niehof and Price, 2001; Senthilkumar et al., 2009; Serrano-Tovar and Giampietro, 2014; Tittonell et al., 2010; Williams et al., 2015).

The characterization of types was made in terms of land use patterns and impacts upon the environment, whether through the use of synthetic inputs, the implementation of monocultures or the expansion of the agricultural frontier and the consequent reduction in the forested area. The classification of typologies was based on the technical data sheets suggested by the National Institute of Agricultural Research (Instituto Nacional de Investigaciones Agropecuarias), in terms of area, level of agrochemical use, crop combination, etc., with consideration given to these recommendations as thresholds.

One characteristic shared by the different types is the need for crops that guarantee a permanent inflow of cash. In all cases, apart from coffee and cocoa, there are “other crops” (plantain, maize, cassava, rice and fruit trees) that help in providing food security to households. The types defined include farmers who share at least one of the cash crops, as follows: Type 1 contains coffee and cocoa plantations (CC); Type 2 contains only cocoa cultivation (C); Type 3 comprises coffee, cocoa and oil palm plantations (CCP); and finally, Type 4 only has coffee farming (Cf).

Income from coffee and cocoa production represents about 19% of total household income for Types 1 and 2 despite their low yield, whereas it is only 8% for Types 3 and 4. Type 3 earns more from other crops and oil palm, while Type 4 receives the most from off-farm work, although production at the farm still plays a cultural and environmental role.

Under these circumstances, Type 4 performs very well in environmental terms (LIU and 24 ha of forest) and is very close to Type 2 in economic terms. Hence, there is a need to increase income via improving some agricultural practices (e.g., pruning), selecting plants and particularly changing to commercialization, thus making it possible for smallholders to move up the value chain. Unless measures supporting productive activity of this type are implemented, a shift towards Types 1 and 2 could be expected, or even worse towards Type 3 by means of selling or renting their land.

The analysis of the surplus generated by each type helps in identifying the reasons why households have chosen different productive patterns. It can be seen how cocoa has gradually replaced the cultivation of coffee. According to the Third National Agricultural Census (2000), 49,389 ha of coffee and 7751 ha of cocoa were present in the area, while, according to our study, there were 44,580 ha of cocoa and 9500 ha of coffee in 2013 (Fig. 2). This is consistent with our results, as Type 2 has a higher surplus than Type 1, which has the lowest surplus of all and depends largely on off-farm work for guaranteeing livelihood. Until 10 years ago, large-scale landowners dominated oil palm plantations. Only recently have smallholders engaged in oil palm production, thus giving rise to Type 3. Despite the fact that plantations are still young (four to eight years), they already show the highest surplus (US $144.63); however, from an environmental point of view, they are the least interesting of all, because they involve a HIU, with forest only covering 4% of land, and the number of families that have benefited from that is very low (4.5%). One can understand why private enterprises and even the central government are interested in this type (profits, but also greater GDP and taxes). However, this type also re- presents more environmental impacts and a greater degree of dependency for the households (a large fraction of their income is ex- pended in buying agrochemicals from the very same intermediaries who are commercializing palm oil). These reasons do not make this type, in our view, an option for future development.

Creating types for an analytical case study in one of the most important areas of the Ecuadorian Amazon, with highly biodiverse ecosystems and significant forest cover, allows for visualizing different land use patterns linked to economic resource generation as a means of subsistence. This behaviour is strongly linked to public policies being developed in the sector, where it is believed that oil palm monocultures could be a better alternative revenue source for farmers. However, as shown in Types 2 and 4, its utility is very similar to Type 3 (oil palm), but with a much lower dependence on intensive agrochemical use in the case of Type 2 and a practically null value in Type 4, which hardly uses agrochemical inputs. The differentiated performance of types should encourage the design of tailored interventions to address the problems encountered by each of them, promoting those types with less environmental impact, but which still provide the necessary means for livelihoods and incentives for the conversion of the types with more impact.

The intensity of land use, marked in large part by the expansion of the agricultural frontier and the reduction in forest cover on farms, is much lower in Type 4 than in the other types, making this form of production more desirable in environmental terms. However, this type shows a limitation in terms of income generation, as nearly 35% of its income comes from off-farm work performed by dayworkers. This aspect is important to consider in the development of agricultural programmes oriented toward jump-starting production, where time dedicated by farmers is an important variable, since this type would not have any time restrictions when either adopting a more labour-intensive agricultural practice or expanding the agricultural frontier. In contrast, Type 4 reflects the practical impossibility of adding crops to a farm, since agricultural use of the available land surface is found to be at 96% capacity.

Identifying the land use and economic income corresponding to types has also revealed the fact that Type 2 represents the lowest labour demand per hectare, an aspect that could be useful for pushing programmes focused on cocoa production, in which labour availability, on the one hand, and profitability per hectare for cocoa and coffee, on the other, should be analysed.

De activos tóxicos a ingreso tóxico

Los científicos del cambio climático han establecido el límite de aumento de temperaturas en 2°C a partir del cual el proceso sería completamente irreversible. Este nivel viene determinado por la concentración de CO2 en la atmósfera. Evitar sobrepasar este umbral implica dejar de utilizar una cantidad ingente de combustibles fósiles que hoy en día las empresas hidrocarburíferas consideran activos; son los llamados activos tóxicos, pues no pueden ser explotados para mantener el clima bajo control. Dada la relación entre PIB y consumo de energía, esta investigación presenta una metodología de cálculo y resultados para encontrar umbrales de ingreso per cápita más allá de los cuales se sobrepasaría el umbral de temperatura, por lo que esos niveles de ingreso podrían ser considerados como “ingreso tóxico”. La investigación encuentra que en el período 2032-2043 se alcanzaría el rango de ingresos de 10,745-14,155 USD per cápita (dólares constantes de 2000) a partir del cual la estabilidad climática estaría en peligro.

El Documento de Trabajo 2015_07 de CEPROEC, elaborado por Fander Falconí, Rafael Burbano y Jesús Ramos, presenta una metodología de cálculo de ese nivel de ingresos per cápita medio mundial que daría lugar a un consumo energético tal que las emisiones de gases de efecto invernadero implicarían una concentración de CO2 en la atmósfera tal que se sobrepasarían los 2°C de aumento de la temperatura media de la Tierra observado por los científicos como nivel crítico. Ver Figura 3.

El documento realiza una serie de escenarios bajo algunos supuestos de mejora de la eficiencia energética, crecimiento económico y crecimiento de población. Los resultados, en todos los casos, muestran que el nivel de ingreso tóxico se alcanza en muy poco tiempo y el valor del mismo varía en función de los supuestos.

Una versión en inglés del documento se encuentra en revisión en la revista Energy Policy.