On Septemeber 4 the Associated Press reported the following:
WASHINGTON – The United States has an oil reserve at least three times that of Saudi Arabia locked in oil shale deposits beneath federal land in Colorado, Utah and Wyoming, according to a study released this past week.
But the researchers at the RAND think tank caution the federal government to go carefully, balancing the environmental and economic impacts with development pressure to prevent an oil shale bust later.
“We’ve got more oil in this very compact area than the entire Middle East,” said James Bartis, RAND senior policy researcher and the report’s lead author. However, he added, “If we go faster, there’s a good chance we’re going to end up at a dead end. You could end up bogged down.”
For years, the industry and the government considered oil shale – a rock that produces petroleum when heated – too expensive to be a feasible source of oil.
However, oil prices, which spiked above $70 a barrel last week, combined with advances in technology could soon make it possible to tap the estimated 500 billion to 1.1 trillion recoverable barrels, the report found.
That could meet a quarter of the nation’s current oil needs for the next 400 years.
You’d think someone would be following up on this.
More HERE.
Here’s a RAND study on shale, which is probably the one referenced in the article:
http://www.rand.org/pubs/monographs/2005/RAND_MG414.sum.pdf
Seems like the big issue is water: 3bbl of water required for each bbl of oil produced.
The really big issue is where to find legislators with the backbone to tell the watermelons to shove it. Watch the waffling and weathervane activities that are going to occurr when the narrowly passed House energy legislation is considered by the worlds greatest collection of buffooons and poseurs.
The Greens will have the collection of the spineless known as Senators kneeling in front of frozen clam beds with tears in their eyes and wearing ‘Save the Bait’ T-shirt.
Shale oil has been studied for a very long time and may be economically feasible at some point but betting on oil prices staying high enough to justify large commercial investment has proven a bit difficult to square with reality. Aside from that, if the watermelons are putting up this big a fight over a frozen clam bed, what will they do about an area that actually has trees and wildlife?
It’s almost like the major media has a set narrative and ignores anything that deviates from that narrative. Hmmm?
A geologist (who admitted he was not addressing any economic concerns) patiently explained to me (as a liberal arts know-nothing in the 70′s – read Democrat) that oil was a zero sum game. He explained it as a limited number of cookies in the world. If you had the money, wouldn’t you buy all the OTHER people’s cookies, rather than eating your own? When the Arabs are dry, we still have ANWR, shale and Gulf resources. They, on the other hand, will have depleted all their resources.
It’s not a big enough deal to cover right now, and besides, the story of shale oil has been such a “cry wolf” affair for so many years that nobody wants to touch the story in any amount of depth until the stuff is being pumped out of the ground and shipped to refineries.
Shell Oil has an ongoing plan they call “In-situ Conversion Process,” (ICP) which they think may bring the cost of shale oil production to $30 a barrel. Shell has been extremely cautious to say this is only an experiment at this time, as they also know many people have been burned over this, and don’t want to announce anything until they’re beyond doubt.
NPR discussed it here. (June 7 2005)
World Oil Magazine analyzed it here. (Aug 2005)
Rocky Mountain News columnist Linda Seebach described it here. (Sep 3 2005)
My fingers are crossed, but my breath’s not held.
Photon,
Thanks for the link to the Rand study. Some quick takeaways from that article.
Just reaching a “go” decision on shale oil production is 6 – 8 years away. Reaching commercial levels of production is 12 years away and reaching 3 million barrels per day of production (the amount Rand seems to believe would be strategically/economically meaningful) is as long as 30 years away. None of that means it isn’t a good idea, it just orients the mind around the timeframes involved.
Rand guestimates that a 3mbl/day production would yield roughly $20B/year in profit of which roughly half would be returned to the treasury in through leases and such. $10B/yr is nothing to sneeze at but it ain’t gonna turn us into Norway on the Colorado River.
The 3mbl/day production rate would push world oil prices down 3-5% and yield a $15B-$20B benefit to US consumers.
Those are good things but see Effie’s comments above about why not buy everyone else’s oil until they run out. I’ve wondered about that myself although I suspect a good look at that issue would lead to realizing that it is in the US’s best interests to not have the world go bonkers if and when it runs out of petroleum.
The questions regarding the effects of in situ retorting on the Colorado River drainage basin are very real cause for concern. Environmentalists will have a field day but we do need to tread carefully. Water matters, not least of which is the consumption issue that Photon mentioned.
A lot of problems to be analyzed and solved. That’s why stuff like this takes decades and has seen a number of false starts in the past. If it were easy the greedy oil companies would be pumping already.
BTW, I believe Canada has similarly sized deposits of shale-oil fields.
Knuck:
I believe the Canadian deposits are tar sands.
The previous commentor is correct….usually termed oil sands. A good friend of mine is president of Western Oil Sands in Canada. Visit their website to learn more…
The MSM files the oil shale stories next to the oil sands story, which both sit on the shelf next to the Alberto oil sands stories. shhhhh
I blogged about oil sands a few days back here. Recovery of oil from oil sands will cost under $20 a barrel according to most experts. The water is not used, it can be reclaimed and recyled. Oil from oil sands is closer to large scale commercial reality, than is oil from oil shale. In SITU is the best for oil shale, minimg and extraction is best for oil sands.
There is multiple times the amount of oil locked in oil sands/shale than there is in liquid drillable form.
But for some really good stuff take a look at what the new MPBR nuclear technology can do for the world’s energy supply.
Nuclear, China is well on their way.
My bad, thanks for the correction. I was under the impression that “oil sands” and “oil shale” were virtually interchangeable terms. Here’s an article about oil sands, and their use to produce oil, in Canada where, towards the end, they seem to use the terms interchangeably. There appears to be some greater difficulty extracting the “oil-like” substance from the “shale” than from the “sands”.
Lots of articles about the tar sands talk about it like it’s something that might happen in the future, but actually, tar-sands-to-oil is happening right now. Suncor, for instance, produced 189,000 bpd during September:
http://biz.yahoo.com/cnw/051006/suncor_sept_prodctn.html?.v=1
(disclosure: I’m a Suncor shareholder)
Thanks for the links, Bill.
I found this entertaining and informative:
Back in the Jimmy Carter days, the oil shale in Colorado was a big deadl, leading to the oil boom in Colorado that built all the big glass buildings that are half-occupied now in Denver.
The problem was that oil dropped to $10/bbl again. This led to the oil boom bust in Colorado that emptied a lot of those buildings.
Charlie:
I remember them capping wells out west back then myself.
I read an article somewhere about this not long ago and it mentioned the Rand report. There was also mention that the Bush administraion was lifting some restrictions.
The trouble with Effie’s theory is that it treats this as purely an economic problem, and disregards the mischief the Arabs and Hugo Chavez are getting into with their windfall profits. It’s true that they’ll eventually run out of oil, but if they own or control everything of value in the West at that point, our alternative oil sources won’t be of much use to us.
Bill mentioned the pebble bed reactor, and I think this is the most promising development on the horizon. The two most critical resources in developing syncrude are hydrogen and thermal energy, both of which are readily available from the pebble bed reactor. It can directly replace fossil fuels in the production of electricity, and it can be used to extract much more energy from fossil fuels per unit of carbon dioxide, if global warming is considered a threat.
Not to put too fine a point on it, but the United States has always had more oil available to it than all of the Mideast … it would just be stupid for us to pump it out of the ground yet.
Yes, there, I said it. It would be stupid.
Here’s why: oil is a limited resource (at least, as current science has it). Then, by consuming oil from the Middle East, at lower prices, we are in fact, insuring our future. The oil in the Middle East will eventually all be pumped out of the ground.
At that time, we will have two things: our unpumped oil, and an economy. Saudi Arabia, at that time, will have one thing: our money (which, not incidentally, they haven’t spent developing their economies, but, rather, in building really, really nice homes out in a desert.)
The value of “our” barrels of unpumped oil increase at exactly the same rate as we spend money on “their” barrels of oil. We are, thus, paying the cheaper price, by guaranteeing that “our” oil, when it comes on the market, will be valued at a far higher price.
Once their oil runs out, they, and the rest of the world, will be dependent on “our” more expensive oil, which we will gladly sell to the highest bidder.
So, though you might think it would be smart to start drilling “our” oil now, think of the future. One day, we’ll have all of the oil, they will have some of our money, but they will be giving all of that money back to us to pay for “our” oil.
At the end of the day, we’ll have used up their oil and they will have given us all of our money back purchasing our more expensive oil.
Which side of that equation would YOU rather be on?
The trouble with Effie’s theory is that it treats this as purely an economic problem, and disregards the mischief the Arabs and Hugo Chavez are getting into with their windfall profits. It’s true that they’ll eventually run out of oil, but if they own or control everything of value in the West at that point, our alternative oil sources won’t be of much use to us.
Bill mentioned the pebble bed reactor, and I think this is the most promising development on the horizon. The two most critical resources in developing syncrude are hydrogen and thermal energy, both of which are readily available from the pebble bed reactor. It can directly replace fossil fuels in the production of electricity, and it can be used to extract much more energy from fossil fuels per unit of carbon dioxide, if global warming is considered a threat.
Sorry about the double post. I blame the fershlugginer Typekey interface.
Charlie,
I, too, remember the oil shale excitement and bust during the early 1980s. I was living in Durango, CO at the time. It devastated the economy of Grand Junction as well as devastating the lives of some good people. The father of one of my friends committed suicide when he invested heavily in the oil shale development of the west slope that never materialized – he lost all of his money. So, whenever I hear someone talking about developing the oil shale in Colorado, I think, same song, different tune – it’s just a bunch of hype. Color me skeptical.
You might consider the following from one of my fellow econobloggers, James Hamilton of UCSD:
http://www.econbrowser.com/archives/2005/09/oil_shale_retor.html
Very good description of what recovering oil from oil shale requires, plus a wealth of links.
I understand the Saudis are keeping very quiet about exactly how much oil they have left. That would make a lot of difference to the economics, I think.
I’m not technically competent on the ins and outs of oil shale production. But there is one obvious thing that should be kept in mind: The production of any viable alternative to traditional oil in significant amounts will put downward price pressure on traditional petroleum prices. And if Saudi Arabia feels threatened by oil shale production, they could — if they can — ramp up production and knock traditional oil prices so low that they make shale production economically unfeasible.
As much as we may all fear/dread the “end of oil” at the moment it’s still a relatively plentiful and relatively cheap commodity. The alternatives will be viable only when oil’s price flexibility is genuinely gone. And that may not be for decades.
Or it could be next year.
That’s what makes development of these alternatives so touchy.
This breakthrough isn’t being shouted from the rooftops either.
I’m betting on hydrogen. Perhaps major pebble-bed reactor investment will be necessary to get it off the ground, but it looks like solar will kick in eventually and power it long-term. It’s definitely the easiest sell politically.
Hey, we could go to the moon in under a decade; is it crazy to think we’ll be on our way to solar-generated hydrogen in under three?
DaraLundy,
understand the Saudis are keeping very quiet about exactly how much oil they have left. That would make a lot of difference to the economics, I think
Oil guru Matt Simmons has analyzed Saudi reserves and has concluded that they are vastly overestimating them and have done so for the last two decades. His view is that there will be no miracles in extraction or exploration technologies, and that the fact, in his view, of vastly overestimated reserves will soon make itself felt on oil prices. Simmons argues that oil prices today are very low, and that we will exceed $100/bbl in the near future and remain in triple digits.
Simmons’ argument has much merit (not least due to the fact that he’s the only non-Saudi to have actually inspected the Saudis’ main oilfields firsthand). The oil crisis is likely to get much, much worse. About time we followed the French example: muzzle the environmentalists and go whole hog for nuclear. And shale, when oil gets up into the triple digits.
I’m very impressed with the progress the Weizmann Institute is making and the EU-Israelie collaberation.
Frankly, the first time I read about it I was upset that American companies had not been involved to a greater extent in such research with Israel.
Talk about driving factors of survival and need.
This is an area that the EU is far, far ahead of in terms of a reality check.
I agree wholeheartedly witht he analogy of moon walks and solar power.
The only reason the energy of the sun has not provided an economically stable energy supply as of yet is do to the laziness(especially in America) with regards to ‘subsidizing’ and encouraging large scale research.
Israel21c is alwasy an interesting read along with the normal tech stock trends especially in the medical fields.
Yeshooroon,
…the energy of the sun has not provided an economically stable energy supply as of yet…
Just what is it you think Ol’ Sol has been up to these last gajillion years?
But thibaud, if shale and tar-sand oil are economically viable at $30, why would the price go to $100?
In any case, though, $100/bbl oil is constant-dollars comparable to oil in the ’80′s ….
Knuckle,
hehe ummmmm heating pre-pubescent protoplasm?
I rather thought the sun was just smilin a lot according to Ol’Sol’s marketing guru, Mr. Happy Face
on a rather gloomy note…
cycle of death
carbon life forms die, a mass goo gels for thousands of years(it seems time to create oil has been reduced from millions), someone sucks up the remains of death and ships it worldwide where people pay for it, the money goes back to supporters of death who spread their jihad suicide pack of death to their followers who then literally export death around the world. Billions are spent to suck death out, transport death, pay for defense of death. Now, none of this has to do with my feelings on going to war. I’m glad we did for the purpose of ridding the Middle East of the heart of darkness in Saddam.
But its to just make a point. One is quick to add usually that solar power cost so much. In all honesty – compared to what? Oil drilling? Maybe if that were all it took.
on a happy face note
light every day hits the earth round about 24hours a day with nary a need to pay another country, an enemy, zealots of mass destruction, or even pay for the defense of it. No one can embargo the light, shut it off, raise the price of light, or corner the market on light. It happily rolls itself out every morning to say Hello, I’m here would you like a pint o’sunshine?
It is the future direction of men with brains to unleash the known energy within each drop of sunlight. It should be a national direction every bit as important as the NASA directives to the moon in the past and to Mars now.
In fact, I wrote the President and staff that the nation should make a national declaration just as JFK did in going to the moon. I’m sure along with millions of other emails, they were quite impressed with the idea… ahmmm, not.
Serwiouswy, If you think about the future implications and rewards for such a program, its not so silly to go forth in that direction. I understand W likes Texas and Texans grew up on oil as much as mother’s milk, but we got great sunlight down here too.
What are the benefits?
1) Free energy – (only cost is post-production)
2) Unlimited supply with no embargo possible
3) Never changes grade, so processes to harvest the energy can only improve and are not dependent upon geological formations(once captured energy can be distributed and stored anywhere)
4) Environmentally favored especially up front
5) Job Creation – every roof an opportunity for small business
6) Technological advancement and achievements in this area could lead to inventive uses in other areas
7) To advance such technology keeps us competitive with the rest of the world (the behemoths of Ford and GM, the lobbyist, and the politicians should learn a lesson by now -> Honda in 74, Toyota today) and we need to learn from past mistakes
The obvious long term benefit is a new energy self reliance built upon not only oil, gas, coal and nuclear energy, but of individual self-reliance from house to house and even car to car. It could lead to actual overall reduction in cost of living for every single being on the planet as new systems get cheaper by production rate improvements just like Dell has reduced cost in computers. If the nation were to gear up for solar panel production the way computers are manufactured – cost with reduce along the same lines.
9) Middle East cannot play nations against nation over oil fields in corrupt games leading to warfare, coups, and so many other areas of blackmail and intrigue for survival(not that all these issues will disappear, but the control factor will no longer be strictly in the hands of a few crazed zealots who preach hatred or and death supported by the consumption of their product)
10) As manufacturing processes come online for efficient and cheap production of such energy capture, it will enable many third world countries to come online faster to the world of information heretofore limited by lack of resources or the ability to pay. Such examples as phone communications are already being implemented with simple solar panels
11) Billions of dollars directed to areas of the world which spread hate would be redirected to spending within national boundaries. Cash flow in, not out. Exports could increase as well if America were to be competitive.
12) Ultimately lives are saved if less wars are required for the nations interest of survival(of course, some idiot jihadist could still attack us for the latest hollywood movie release)
The recent advances in the field like the one shown at the Weizmann Institute, plus other breakthroughs like super thin photovoltaic cells used in the cloth of a tent by the US Army are great indicators that indeed solar energy is a viable long term alternative. If the Army is investigating its use in warfare, its time has come around.
And in fact, if the government would subsidize solar energy as much as oil, coal, and nuclear fields we would be 15-25 years ahead of where we are today. Not just in research goals and technology, but in practical use in every day tax credits nationwide for those who add solar energy as an alternative source. The cost would’ve already been reduced by factors of production increase.
Of course lobbyist for oil, coal, nuclear have every reason to redirect funds from such research and ‘subsidies’ into their own pockets. And I actually do not have a problem with these programs to help us be energy independent. What is discouraging however is the puny amount afforded such new technology which could benefit so many. Solar power gets 1% if that much compared to the others. The subsidies are non-existant and federal government incentive falls behind completely on all levels. State by State bueacracy instead inhibits the technology from spreading.
Israel is smart to concentrate(literally) on solar power. They have a huge vested interest in seeing that they help to truly light the world.
Eventually, nano-technology will have a role to play too in guiding this energy resource for cheap production, storage and use too.
Here’s to the future! If Bush cannot see the light today, then maybe the future President will or maybe the people will rise up in a ground swell of informed support for such new directions. One can always hope.
Be calm, silly Americans. Nothing here, nothing to see, move on, move on. Bye bye. Oil shale is foolish, Alberta extraction technology never work for shales, Chinese companies making multi billion dollar investment in Alberta just fooling around, just want oil, no interest in useless, hopeless technologies, thousands of Chinese engineers go to Northern Alberta for fresh, cool, clear, sixty below air. Bracing, healthy. Those thousands of Chinese engineers not smart, never copy anything, never ‘borrow’ technology, much less useless Canadian stuff, never work anyway, Americans stay niiiiice and sleepy, Chinese never, never gonna bother nice sleeeepy Americans, shut up roundeye and be quiet.
This will be a breakthrough and will make a lot of difference in economics.