Oil shale retort

A number of observers have been pointing to oil shale as the solution to all our energy problems. If oil shale does turn out to be the resource of the future, then our problems are only beginning.

Instapundit sees a “plan to put Middle East oil producers out of business” in this story from the Rocky Mountain News:

[W]ith crude oil above $66 a barrel at the close of trading [on Sept. 20], oil shale is a promising alternative to crude. The Green River shale deposits in Colorado, Utah and Wyoming are estimated to contain 1.5 trillion to 1.8 trillion barrels of oil, and while not all of it can be recovered, half that amount is nearly triple the proven oil reserves of Saudi Arabia.

Other influential voices sharing Glenn’s enthusiasm include Austin Bay, GOP Bloggers, Polipundit, and
Econopundit
.

American oil companies abandoned oil shale demonstration facilities in the 1980’s on the grounds that production was not economically viable. More recently, an oil shale demonstration plant in Queensland, Australia produced 700,000 barrels of oil between 2001 and 2003, and oil shale remains a major energy source for Estonia. At President Bush’s direction and with encouragement from this summer’s Energy Bill, the Bureau of Land Management sought applications from companies for small-scale research, development, and demonstration projects, for which 18 companies have applied.

“Oil shale” typically is not shale and does not contain oil, but rather is a rock known as marl containing organic compounds like kerogen. When heated to high temperatures (referred to as “retorting”), one can obtain an oil-like substance from the rock which can be refined to produce a transportation fuel. Bubba of Belly of the Beast, who worked for two years on attempted commercialization of oil shale, describes the process this way:

If you heat this shale to 700 degrees F you will turn this organic carbon (kerogen) into the nastiest, stinkiest, gooiest, pile of oil-like crap that you can imagine. Then if you send it through the gnarliest oil refinery on the planet you can make this s*** into transportation fuel. In the mean time you have created all kinds of nasty byproducts, have polluted the air and groundwater of wherever you have extracted it.

The fact that large quantities of heat are required to obtain a usable fuel from the rock means that this is a far less efficient source of energy than conventional oil. Shell claims it can produce 3.5 units of energy for every unit input, though one wonders whether the energy content of all the inputs is taken into account in such figures. The lower this ratio, the more the cost of producing oil from shale would rise as energy prices go up. Another implication of the high energy needs for processing is that significantly more greenhouse gases are released per barrel of usable fuel produced. Concerns about greenhouse emissions appear to have been the basis on which
Greenpeace succeeded
in closing down the Australian demonstration plant.

Queensland oil shale mine
Stuart_pit.jpg

The rock expands in size upon heating, meaning you can’t put it back in the ground, and it is carcinogenic. Two metric tons of rock are required to obtain a barrel of synthetic crude. Mark in Mexico (hat tip: Ace) spells out the logistical problems that this raises:

Try to imagine the hole a 33,400,000,000,000 tonne excavation would make. Hello, China. Try to imagine the mountain of waste rock (carcinogenic) because the rock expands, kind of like popcorn, when it is heated to remove the kerogen, so more has to go back than is removed. Hello, Icarus. Try to imagine the poisons produced by the processing of all that shale if it is done above ground, or all the dead fish if it is done in situ. Hello, King of the Wasteland– the Ayatollah of rock-‘n-rolla.


Three barrels of water
are needed per barrel of oil produced, and it is not clear how
current users of that water might be persuaded
to surrender its use for oil shale.

Shell is working on an in situ retorting technology, in which the rock could be heated without being removed from the mountain. They claim to be able to produce oil at a cost of $30 per barrel, and in situ processing should reduce the environmental, energy, and water costs.

Stuart Staniford at the Oil Drum noted another problem with relying on oil shale to replace conventional oil resources– we may need such replacement very quickly, and it will take a considerable amount of time to develop this resource. A recent Rand study concluded it will be at least 12 years before oil shale reaches the production growth phase. And that is a technological assessment, not a reference to the environmental review process. If it takes 15 years to get an oil refinery built and approved, despite well known technology and well understood environmental issues, viewing oil shale as something that could make major contributions to world energy supplies in the immediate future seems highly unrealistic.

Despite these misgivings, I believe that the applications that BLM has received for oil shale demonstration projects should be approved and pursued aggressively. Given these lead times, we certainly need to be developing the ability to exploit this resource, if need be. Bad as this option is, I’m not certain that we have anything better. But unlike the enthusiastic supporters of oil shale, my hope is that we never have to rely on it.


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68 thoughts on “Oil shale retort

  1. spencer

    I’m old enough to remember when the Canadian tar sands were going to be our salvation in the 1970s.
    If the real price of oil is still lower then it was in 1980 why should shale be more of a savior then it was 25 years ago.
    It is amazing how so much of what I am hearing now is a repeat of what I heard 25 years ago.

  2. Hal

    If you follow the link above about “production was not economically viable” at http://www.doi.gov/ocl/2005/OilShale063005.htm, you find that the actual quote is, “… the easing and subsequent collapse in petroleum prices led the companies to conclude that production was not economically viable”. In other words, it wasn’t that production was unviable at $80/bbl, it was unviable at $20/bbl or whatever it collapsed to. If oil prices are going to stay high, then it might well be viable again.

  3. blueshoe

    Deffeyes describes oil shale as containing incipient oil–it might become the easily extractable stuff in a few million years. Of course time isn’t the only condition that would have to be met.
    I’m missing the reasons to be enthusiastic about oil shale. Decades of development have yet to hit on an extraction process that is economically viable. The rising energy costs that are supposed to make oil shale economic also make extraction more expensive–is this not one step forward and one step back? The costs of the inputs and of managing the waste both await their technological silver bullets. Which isn’t to say that oil shale won’t become a politically greased boondoggle in the manner of ethanol.

  4. ken melvin

    Why would anyone spend anything on oil shale? Why aren’t we spending the discretionary $200billion spent in Iraq on alternative energy?

  5. larytet

    contiunue to drive in SUVs and kill yourself and everybody around.
    isn;t it nice to drive 5 days/week 30 miles/day in track to the job and (after dinner) to worry about this or that technology.
    common, let’s be reasonable. US consumer should back up a little bit. destroying the world is not a path we should choose.

  6. Rob Sperry

    What the oil “shale” does show is that sustained prices at high levels are not going to happen. You will not see a decade of 100$+ oil, though you may see a year long blip.
    The Future pundit link indicates that Shell is investing 50 million in a 2-4 year study to develop their in suito method. That is such a small amount of money for shell that they must believe this to be of minor significance. They believe this for two reasons; they don’t think prices will maintain high enough levels to justify the expense and they believe there are much easier and cheaper ways to get at new resources.

  7. John

    Spencer
    I couldn’t agree with you more. It has taken 25 years to get Canadian Oil Sands to the point where they are a viable, economic resource. Production costs range from sub $20/bl for developed sites (Great Canadian Oil Sands etc.) to over $30.
    Each barrel from GCOS costs 0.8 mcf of gas to cook the oil out of the tar sand. So the rising price of gas has hit economics. Also water is in short supply in that part of Alberta, so there will be an enormous need to pipe water.
    If you look through the annual reports of the Income Trusts that produce oil sands, or Canadian Natural Resources (Horizon Oil project) you can see the scale of these things. $10bn to produce up to 400k bl/day and a 6-10 year lead time to get into production.
    What is likely is that oil sands will replace declining Canadian crude production (about 2m b/d now). Besides current production of c. 500k b/d (?) there are about 2-3m b/d on the drawing boards, not all of which will be built.
    What they will not do is be a very big net addition to world oil supplies. They are more like coal mines: going to be around for a very long time, but not changing the picture.
    So Alberta is a useful supplement to the energy picture but *nothing* offers as quick wins as conservation. ‘Producing’ 1-2m b/d simply by switching a percentage of US passenger cars to smaller, more fuel efficient vehicles and to diesels (half of new cars sold in Europe are diesels vs. lesss than 1% in the US and a diesel can be more economical than a hybrid), is something the US could do in 4-5 years if it pushed it.
    John
    (remove at to reply by email

  8. TI

    Oil shales as a source of crude oil are are really an energy source of the past. All projects have been abandoned. Oil shale is used now in Estonia like coal in generating power.
    It is easy to calculate that 1 million bpd production of oil from oil shales would mean using 760 million metric tons of rock (in situ or by mining). This amount is nearly as much as the total US coal production in a year. And this would involve a huge amount of energy input.
    Here we see that the oil prices are not decisive for the oil shales use. The problems lie elsewhere. (The environmental damage would be huge, but in a desperate energy situation nobody cares… I have seen the Estonian oil shales production sites. It is not nice. But they still mine it and get the bulk of their electricity from it.)
    All oil from shales projects have been smallscale and experimental and mostly politically conditioned (Germans during the war, Estonians for self-sufficiency). From energy viewpoint, the only rational use for oil shales is for power generation.
    Synthetic oil from coal or shales is not a viable way to substitute natural crude. Where substitutes are needed they mostly use NGLs, that is butane and propane and natural gas (methane), and then electric power. In Eastern Europe many trucks and buses use NGLs, freight and passengers use electric trains, public transport is based heavily on electric vehicles, trams and trolleybuses, trains and underground.

  9. C. H. Hendry

    How do you get exposure to the carcinogenic qualities of the rock? I’m sure it isn’t consumed or rolled around in so how do you get the risk?

  10. Jason

    The hydrocarbons in the shale after cooking/extracting are probably very much like coal tars, being as the materials are near cousins (as the oil shales are similar to both coals and crude oil). This means that the rocks will be a greasy, smelly mess. Handling the materials directly would smear you with carcinogens. Also, some components are volatile, and the remainder will leach into surface waters upon burial of spent rock. Google “Coal Tars” for an idea of what types of materials would be present, and how dangerous those materials are.

  11. Jack

    Does anyone know the post production costs of getting usable product from oil sands and/or oil shale. Both produce something similar to bitumen, which is also a low value biproduct of traditional oil refining. Bitumen (I believe) costs less then the crude input and has to undergo fairly extensive conversion using expensive equipment. Presumably, sand and shale sourced bitumen is similar.
    In the end, the costs per barrel of production of bitumen is not a useful figure. To compare we need:
    Production (capital and operating), transportation and refining costs.
    What does it costs to produce the same product yield as a typical crude slate in an average refinery?

  12. Rick

    Boosting cellulose ethanol(E85) production would help. There are a great many vehicles on the road today that will operate just fine on E85, and the infrastructure is already in place. We just need more production domestically and no trade barriers on imported ethanol.

  13. Bubba

    The problems with oil shale are so numerous and so complex that it really deserves a much more in depth analysis than one of these comment boxes. That said, here I go.
    Oil shale has always been the Pot of Gold at the end of the Rainbow. The calculated potential reserves are so vast that it makes many people starry eyed. Some see giant dollar signs. Others see the key to breaking our bondage to the Middle East. Still others see the solution to Peak Oil. When I first started working on this, I blindly assumed that the technological problems were solvable, but the real headaches would be the political, regulatory, and environmental problems. Now I believe that we won’t have to worry about those problems because the technology hurdles will prevent us from ever getting to worry about the political problems.
    Oil shale, as a scientific term, has no real meaning. Lots of different types of rocks are called oil shale. The Green River Formation in Colorado, Utah, and Wyoming is a marlstone (fine grained carbonate rock) with high concentrations organic material. It was deposited in the center of a very deep lake more than 40 million years ago. In other parts of the world oil shale is comprised of a different assemblage of minerals including a much higher concentration of clay. However, what all these rocks have in common is a high concentration of organic carbon that, with the application of heat, will pyrolyze to form a type of synthetic oil (along with CO2, H20, H2S, NH4, and other nasty stuff).
    So the term Oil Shale is really an economic term. It implies a rock that oil can be cooked out of. It also implies a rock that is relatively accessible to humans (near surface exposure, etc.) To geologists, a more general term for this type of rock is “source rock”. It is the type of rock that all oil which is trapped in conventional oil accumulations, originated from. However, for source rock to create a conventional oil accumulation, geothermal energy is applied at great pressure over millions of years. For humans to get oil out of oil shale we have to add all that energy in over a very short period of time. This is one of the areas where things get sticky.
    Shell’s plan, as it has been reported in the press, is to put electric heaters in the ground and cook the oil out of the rock. (This is not new technology. The Swedes did it in the 1940’s. – Trying to find a link for this). It then flows as a superheated gas through the rock to production wells where it is produced to the surface, cooled, and processed.
    This is all very interesting in theory, but someone needs to start asking Shell the hard questions.
    1. Show us the energy balance. They say the ERoEI is 3.5X but what does this include?
    – Energy to heat the rock (including losses to the overburden, underburden, residual groundwater, areas beyond the heated pattern etc.) Also this heating won’t be isotropic. Some areas will be overcooked and others will be under cooked so the energy needed to pyrolyze the kerogen needs to greatly exceed the theoretical minimum to get a reasonable conversion efficiency for the kerogen.
    – Energy to create the electricity (including line losses, conversion losses and generation efficiency etc.)
    – Energy required to create and maintain the ice wall that is being used as a containment mechanism.
    – Energy used to de-water the ground
    – Energy used to create all the hardware required, drill all the wells etc.
    – Energy used to transport the fuel and then refine it into product.
    – Energy used to support all of the workers needed.
    I suspect if this accounting was done honestly the ER/EI ratio would be very close to 1 if not less than 1.
    (More to come later)

  14. Allen

    No, there are no trade barries with ethanol. The problem is that the it takes just as much energy to produce it as it produces. And that doesn’t get into subsidies. Even if you just look at E85 at the pump and drop the rest of that out of the picture, it’s still costing just as much or more per BTU as regular gasoline. E85 is a solution looking for a problem. Before gas prices shot up, it was the so called solution to pollution. We really need to let that one rest.
    The problem I see with oil shale is 2 fold. The first is that as energy prices go up, it’s cost of production goes up. So the very thing that makes it more economically viable….. makes it less viable. And all those prices make all sorts of other solutions more practical, too. FOr example, look at the new Civic Hybrid. They shaved a lot of weight off the regular Civic to help save on gas milage because the weight the electrical part of the hybrid adds is a lot. A lot of those fuel savings can be gotten by doing that and keeping it a “regular” car. Even more if they decide to drop a diesel engine in a a couple years. All these things are relatively easy changes to make, especially compared to the shale. So the more oil prices stay up, the more likely all these other effecicy changes will be made. And that in turn reduces consumption (or at least it’s growth rate) which make it less probable for oil prices to continue going up. And that makes it less likely that shale will be a good ROI.

  15. Robb McLeod

    Bubba,
    Good comments, but let’s not forget the need for upgrading through hydrogenation of the products. This is a huge input for bitumen, and I suspect it would be just as large for kerogen. How much natural gas can we afford to burn to upgrade low-quality liquid hydrocarbons to those we can pipeline and burn in our cars?

  16. peaknik

    [Allen quote]
    The first is that as energy prices go up, it’s cost of production goes up. So the very thing that makes it more economically viable….. makes it less viable.
    [End quote]
    Exactly! Now read again Bubba’s excellent post and start to count the many energy inputs needed to produce shale oil (or for the matter, oil sands or heavy oil from Venezuela).
    I think this point needs more atention, energy is not just another commodity.

  17. Rick

    The common misconception about ethanol is that is takes more energy to produce than it yields. A U.S. department of energy laboratory indicated a 38% gain in the energy input/output equation. Including planting(in this case corn) harvesting, tranporting, etc. Corn yield technologies are improving rapidly, and sugar cane waste yields are even far more impressive. Check out Brazil.

  18. Bubba

    Allen,
    The product that comes out of this in-situ conversion process is not bitumen. It is actually rather light oil – but with lots of nasties and impurities in it. Also, a lot of methane and ethane AND hydrogen is produced as a byproduct. These create other problems, and the refining of shale oil is very problematic, but it not the same as the upgrading required for Tar sands.
    People tend to equate tar sands and oil shale in their minds, but they are very different things geologically. Oil shale contains organic kerogen that has never been heated and converted into oil. To become oil it needs to go through the pyrolysis process.
    The “oil” in tar sands was light oil once, but the light ends were stripped out of it through biodegredation. What is left is heavy oil and bitumen – long chain hydrocarbons with low H/C ratios. To make this usable fuel hydrogen has to be crammed back in to product.

  19. Barkley Rosser

    Regarding tar sands, I keep reading that there is an estimated 500 billion barrels of oil in that form in Lake Maracaibo in Venezuela. Presumably they should not have a water availability problem there. Of course the current politics do not favor increased reliance on that particular country by the US.

  20. Joseph Somsel

    One wonders if our need for motor fuels will justify supplemental nuclear process heat for tar sands, oil, shale, and heavy oil.
    Or will direct nuclear production of hydrogen or nuclear-assisted coal-to-oil be a better choice?
    Even as a nuclear engineer, I don’t have a solid opinion yet – I’ll have to do some digging.

  21. TI

    Producing synthetic crude from oil shales and other Low Quality Hydrocarbons is basically more like energy conversion, not primary energy production. The EROEI is always lower than using the LQHC for heating and power production. That is why syncrude is produced only in smlla amounts, in exceptional situations, when the oil supply is blocked (or with heavy political subsidies). The Germans and some other countries did this during WWI and WWII, it was done in South Africa during the sanctions. If no oil is available it is produced at any cost, at any EROEI.
    The Peak Oil will not mean the end of oil. This means it will not bring a situation when the syncrude production would be necessary. We must see the big picture. We are nearing an overall energy peak, may be in 10 – 20 years. This means that there will not be available extra energy for low EROEI syncrude production.
    How we see the future if we would like to start a large scale syncrude or biofuel production? Is this a try to keep the oil production at present level, to get the long plateau? Should we keep the oil supply growing like before? Is the present world consumption level just right for a plateu? Ask the Chinese and others. If it is not, how much should it grow? Count in depletion and 2% yearly growth and look how much new/alternative oil is needed globally. Probably 50 million bdp in 10 years. No marginal solutions will help, even taken together. The only possiblity is to learn to consume less oil, less energy.

  22. biker

    Wow, talking about these oil shales makes good ‘ol drilling and exploration look positively sanitary – could it be that oil companies are using it (at least partially) as a red herring for just this purpose ?
    And yes, I know that cars don’t run on soy milk (yet) Having lived in Prudhoe I believe that drilling opposition is often needlessly shrill and detracts from the conservation/efficiency dialogue we should be having.

  23. John

    Jack
    It is c. $20/bl to extract oil from Alberta tar sands. It is heavy oil but a refinery configured with that can cope with that. Newer facilities it costs more (Great Canadian Oilsands and Suncor have been at this for over 30 years so the site costs are written off).
    My guess is refinery and transport margins are another $10/bl.
    My rule of thumb is over US $30/bl they make money, below that they do not.
    You can access this information if you google.ca ‘oil sands income trusts’– they publish a lot of it publicly. Also the financial forecasts for Canadian Natural Resources (see under the investor part of the website, the presentations re Horizon Oil Sands).
    Berkeley
    PDVSA (the Venezuelan state energy company) does indeed have 500bn of heavy oil reserves. Geologically similar (but not identical AFAIK) to the Albertan ones (which are over 1 trillion barrels). The amount economically extractible is of course much smaller– I think another 200bn which is a Saudi-sized reservoir.
    The problem as you highlight is infrastructure. PDVSA has had most of its professional staff sacked by Chavez as part of the politics down there.
    To actually develop this resource will require 10s of billions of dollars of foreign capital and expertise of the world’s leading oil companies (Shell and Totale are big in Canada). This is not politically acceptable in Venezuela at this time. Chavez is like an Argentine Peronist/nationalist, his ‘leftism’ is populist (shades of Hitler and Mussolini) rather than Soviet (New York Review of Books has just had an excellent series on Chavez and his rise to power– check their website).
    My conclusion is 3-4m b/d is physically possible from Alberta, and a similar amount from Venezuala, with production lasting at least 50 years. But it will take 20 years to get Alberta to that level (and remember each barrel burns 0.8 mcf of gas in its production and Alberta gas is not infinite, although there is the potential for Arctic gas), and Venezuela it will probably take longer. By which time conventional oil from those sources will be almost exhausted.

  24. John

    My general comment is that conservation, and serious conservation, is almost inevitable
    There are no production technologies, alternative motive power sources or new oil reserves, on the horizon, which can possibly substitute for the falls in production from existing reserves PLUS new demand from China and India.
    The way supply will equilibrate with demand is, of course, price. When oil is $50/bl and gas $5/gal, the US consumer will demand, and get, the 50 mpg car be it diesel, hybrid or whatever.
    Something similar is already happening in domestic appliances: a European washing machine (front loader) uses 40% less water and electricity, despite the 40% higher price they have taken 20% market share in the US.

  25. anonymous

    “Bad as this option is, I’m not certain that we have anything better.”
    this is the lousiest argument I have ever heard for stinking up the planet with junk that we can’t afford to use. You have got to do better

  26. Roger

    anonymous –
    Remember, this is the guy whose response to hurricane Katrina was to argue to remove environmentally friendly fuel additives.

  27. JDH

    Anonymous and Roger,
    I advocate doing the research and development at this point in order to preserve oil shale as one option on the table. I view it as a highly unsatisfactory option. I disagree with those who are confident that we can and should count on this resource.
    In general, I certainly do favor a rational comparison of the costs and benefits of efforts to mitigate environmental degradation. Katrina produced a huge increase in the cost of the proliferation of fuel standards in the U.S. If you think what we were doing with air quality before Katrina was just right, then you would have advocated a change in response to Katrina.
    On the other hand, if you take the view that anything that reduces pollution is always a good thing no matter how much it costs, then, yes, you’ve correctly pegged me as someone with whom you are often going to find yourselves in disagreement.
    However, you have both incorrectly pegged me as someone whose sympathies are primarily opposed to yours in the case of oil shale.

  28. Patrick

    “I’m missing the reasons to be enthusiastic about oil shale. ”
    It’s obvious: We have 1.5 *trillion* barrels worth of shale oil in the Rockies, maybe 700 billion of recoverable reserves as a very conservative estimate (probably much higher). That is enough for US energy independence for 100 years at current US usage rates. If we can get this for $40 or even $30/barrel, use it for 100 years, and dont have to pay for a single barrel of mideast oil … the economic and political impact would be huge, and positive for the US.
    The arguments about environmental impact miss a big point here. The density of the oil reserves is huge, something like 1 million barrels, acre.
    Satisfying any environmental requirements would be readiliy affordable, if the oil is extracted efficiently.
    “Wow, talking about these oil shales makes good ‘ol drilling and exploration look positively sanitary – could it be that oil companies are using it (at least partially) as a red herring for just this purpose ?”
    No, that’s just the environmentalists babbling about the 40-year-old technology. BP is now trying in-situ processing that is far better than the strip-mining approach. Better both environmentally and economically. In-situ processing will be far more useful than surface mining, as it can reach all the shale reserves, not just layers near the surface, and it will have similar environment footprint to old-fashioned drilling. Much less ugly than surface mining.
    “One wonders if our need for motor fuels will justify supplemental nuclear process heat for tar sands, oil, shale, and heavy oil. Or will direct nuclear production of hydrogen or nuclear-assisted coal-to-oil be a better choice?”
    The energy ratios for both tar sands and oil shale are favorable, so barring siting issues, the use of nuclear energy as power source for the heat and/or electricity needed for these processes makes sense. e.g. BP’s in situ process requires a lot of heat. Electricity via Nuclear power generation could deliver it, thereby reducing overall fossil fuel use. Same holds true in Alberta. With natural gas prices high, they are looking to nuclear as a possible energy source for processing.

  29. Ken Goldstein

    How short our memories are!
    I worked at the U.S. Department of Energy’s Laramie Energy Technology Center (LETC) as part of the Synthetic Fuels Corporation task force in the late 1970s & early 80s, & before that as a senior engineer for Talley Industries. Our goal was to prove that in-situ processing of oil shale & tar sand was both technologically & economically feasible. We proved both, based on the price of oil just above $35/barrel.
    Hydraulically fracturing the oil shale was the trick, along with maintaining an adequate void volume using sand as a proppant so that in-situ combustion could occur. We were able to produce sufficient oil from even mid-grade shale to make the process easily viable, & were even working on a mine-mouth power-generation plant. The last problem we were working on was how to control the carbon-hydrogen stoichiometry while removing the trace heavy metals, when we were shut down by then-President Reagan.
    It was the DOE’s responsibility to prove that commercialization was a profitable idea, & we worked closely with Shell, Chevron, & several other oil producers. It was just a very bad decision on the part of the feds to close us down that keeps us from having a lot less problems with foreign oil today.

  30. Barkley Rosser

    Ken Goldstein,
    That was $35/barrel in 1981 or so prices. Now, crude oil did hit $40/barrel in March, 1981, probably its all time peak in real terms, but pretty quickly fell to about $34/barrel and stayed there until the Saudis got tired of the Iranians and Iraqis cheating on the OPEC cartel to fund their war with each other and pulled the plug in mid-1986, causing the price to tank to about $9/barrel, which led then VP George H.W. Bush to run to Riyadh to beg for a surcease due to the commercial real estate crash in Texas that led to the “savings and loans crisis” of the late 80s and early 90s, now a thing of memory fortunately.
    I keep reading that $40/barrel in 1981 is about equivalent to $100/barrel now, although I have not sat down to do the actual calculation. Maybe it is closer to the current $60+/barrel price, whatever it is. In any case, the breakeven price for shale oil looks to be higher than the current price, and that is not taking into account all the problems of water availability and pollution, the former being especially severe in Wyoming and some other parts of the Rockies.

  31. Earnest Iconoclast

    I am absolutely certain that the estimates of how long it would take to develop the technology to make use of “Shale Oil” is wrong. As long as oil is cheap and plentiful, other sources of energy will be pursued only half-heartedly and will therefore continue to disappoint fans who are hoping for whatever it is to replace oil.
    When the oil supply actually begins to taper off and people are faced with a very real and immediate need for a replacement, the research and development of new energy sources will become seriously focused and intense. What it will come up with is hard to really predict. Fusion energy is right around the corner and has been for decades. Fission energy is already quite robust. Fusion research is currently focused on providing jobs and scholarships, not results. Given the current political and regulatory environment, there isn’t really much of an incentive to develop a working fusion reactor. Fission technology is very well developed, but plants aren’t being built because we have the luxury of burning coal and oil instead of using scary radioactive fuels. Shale oil is in the same boat and is probably even behind nuclear power in terms of desirability (aside from any need for actual hydrocarbons as opposed to just potential energy of some sort).
    If the choice is between a fission or fusion reactor and having to turn off the TV, central air, and the microwave, the vast majority will insist on the former.
    Earnest Iconoclast

  32. linsee

    The people who explain above why extraction of oil from shale can’t work now because it couldn’t work 30 years ago are about in the position of the people who explained that there was no future in computing because tubes would never be reliable enough.
    RAND Corp has recently published a major report on oil shale production, available on its web site, and while they are obviously not so euphoric about the results of Shell’s test plot as the Shell people are, they make it clear that in-situ production is potentially economically and environmentally feasible; an engineering challenge, an Apollo project we know how to do, not a quest for desktop fusion.
    The product that is pumped out of the ground is already partially refined — I’ve seen it, in little glass vials, and it’s less viscous than cooking oil (there’s no doubt an official viscosity scale but I’m not familiar with it)
    Search Google News for [ shell shale ] to see what’s been bubbling up lately.

  33. Sigivald

    Ken: I hate to tell you this, but alternative fuels are mostly bullshit. (They’re entirely bullshit in terms of getting rid of a hydrocarbon economy, and mostly so in terms of magically making things better, with nothing those most clamoring for them don’t like – ie, no “environmental” side-effects.)
    Hydrogen? Transport mechanism, not fuel source. You have to get hydrogen from somewhere. That means petrochemicals, or a lot of nuclear plants for electrolysis. (I support the latter, by the way, but oddly the Greens generally don’t).
    Biodiesel? Fine, but unless we want to farm 90% of the usable land in the US, we’re going to have to figure out how to, say, do it at sea, with algae or plankton. Which is also fine by me, but the enviro-lobby will have a giant fit about “endangering the precious oceans with evil GM critters who will kill us all somehow and why can’t be just build windmill cars?” (Yes, I exaggerate, but no, they won’t be happy).
    And of course, there’s still the “carbon” problem for those who care about CO2 emissions. I don’t, but the biggest whiners and screamers and project-killers do.
    (Other “alternative energy” sources of any common suggestion are all electrical, which boils down to A) lots of environmentally unfriendly batteries for your car, and massive expense, plus there’s no way to store electrical power at the mass scale, which is a problem for wind and solar, or B) making hydrogen as in the nuke case, only far less efficiently, so why not just build some nuclear plants?)
    None of that, of course, needs a Federal money-dump, either, nor does funding for the Iraq war matter for them.

  34. mike

    Greenpeace “succeeded”? or failed us all? Because god knows if there are technical hurdles to a solution, then we shouldn’t even try.

  35. blueshoe

    Patrick enthused:
    “It’s obvious: We have 1.5 *trillion* barrels worth of shale oil in the Rockies, maybe 700 billion of recoverable reserves as a very conservative estimate (probably much higher). That is enough for US energy independence for 100 years at current US usage rates.”
    I can serve up sky-pie too: An acre receives about 20 million calories on a sunny day, and the amount of solar heat that falls on just 1 1/2 sq. miles over a single day is equivalent to the energy released by the Hiroshima bomb.
    The problem with both our desserts is converting the energy to the forms we want.
    $30/barrel for oil shale is 10 times what it costs to extract the stuff that drives life as we know it. The economic and political impact from relying on oil shale would be huge, all right.

  36. Libby

    Why switch to alternative fuels when oil is the cheapest and most efficient source of energy for transportation? Oil is still cheap and there’s no reason for us to artifically “conserve”. When oil prices finally get up to the point where it’s no longer the best source of energy per dollar, we’ll magically all become hardcore environmentalists and end our dependence on oil. In that sense, we’ll never run out of oil as we’ll switch long before oil is depleted. Put for that to happen, oil prices have to shoot up FAR more than they already have. It takes me less than $30 to drive to Vegas from LA. I can easily lose $30 within a few minutes of hitting the tables. Put it in perspective, oil is cheap. I’ll leave the conservation to those in the Church of Alternative Fuels, and continue to worship the Oil Devil.

  37. Bill Woods

    blueshoe: “$30/barrel for oil shale is 10 times what it costs to extract the stuff that drives life as we know it. The economic and political impact from relying on oil shale would be huge, all right.”
    The extraction cost of shale oil vs. Saudi oil tells you a lot about the potential profit margins of the producers–and nothing at all about the economic impact on the consumers, who are paying the market price for oil.

  38. Joseph Somsel

    Sigivald mentioned hydrogen by electrolysis from nuclear.
    Not a great process – here’s why.
    A nuke makes electricity at about 33% efficiency. Electrolysis is theoritically only 50% efficient (half goes to oxygen) and in reality is more like 40% on a good day.
    40% of 33% = 15% overall efficiency.
    Plus you have the capital expense of the electrical generator, the switchgear, and the electrolysis equipment.
    Better to go directly to thermochemical methods.
    A mercury cycle is most efficient but mercury is a bad poison so that’s out.
    The iodine/sulfur cycle is in the lead today. You need 900 deg C heat to crack sulfuric acid, The sulfur dioxide and 400 deg C heat cracks iodic acid to give off H2. Sulfur and iodine recirculate.
    Net output efficiency – about 67%.
    BTW, I see that Areva is hiring a US team to design nuclear process heat reactors.

  39. John J Ray

    Shale is a lot of nonsense. Ethanol is an already available solution and is very environmentally friendly. Using Brazilian production methods it is already competitive with gasoline

  40. David

    I wonder if there were a bunch of people that sat around way way back in the day and said, “Drill for oil in the ground??!! Those over at Shell must be nuts!! That stuff is greasy, smelly, messy, you have to refine it to make it useful, it is HIGHLY capital intensive, it will create pollution, etc etc etc. There is NO future in oil, forget it! I mean come on, what’s next, are you gonna tell me that they will put huge platforms in the ocean and drill there?! AHAHHAHAHAH” And then there were the oil pioneers that reaped the rewards, oh, and their children, and their children’s children, and their children’s children, and on and on…. There are companies that can make refined products from shale and will be able to add capacity quickly. All that and you won’t have to create a new distribution system for the fuel as you would with hydrogen, etc. Happy hunting….

  41. peter m

    All the talk about alternate energy is nonsense. In california 2000 megawatts of windmill capacity produced 5 megs during peak power crisis in 2004. Windmills and solar panels actually degrade the environment. Biodeisel will consume scarce wood, cause soil depletion and erosion, and take up too much agrcultural land needed for food production. Geothermal, hryroelectric degrade environment. US will depend upon petro/hydrocarbon fuel for 80-90% of it’s energy for several more decades. Only nuclear power may reduce this percentage slightly.
    We will not reduce our depency upon oil anytime soon, unless we are willing to drastically alter our lifestyles and accept radical changes in our society, perhaps to Western Capitalism itself. This is what the radical environmentalist movement wants. Their harping on Alternative energy is misleading, deceitful, and a way to avoid serious technological, capitalist, entreprenural thinking on ways to overcome US foreign oil dependency problems.

  42. peter m

    on the ERoEI problem with shale why not use atomic energy from nuclear plants to provide the energy imputs and heat to extract and cook the shale. Extraction of the shale seems similar to coal mining ; processing it into liquid synthetic oil costly but feasible. Rand study says it will take 12 years for full commercial production to take place. Environmental problems with waste disposal/groundwater contamination pose problems but can be overcome. I Do not think that oil will pass peak for another decade but we should start investing in small scale projects for shale extraction now and build it up in stages over a decade so we will be ready when oil really starts it decline from peak.

  43. John B

    I am new to this site and I’ve read many of the comments posted regarding shale oil. For all who doubt that it can be done, check out a company called oil tech (in Utah). The web site is oiltechinc.com. They already can produce it economically, environmentally safe and of a high quality. Oil Tech has received independent validation, and is currently seeking deals as we speak.

  44. DPH

    I did a search on oil shale viability and found precisely what I expected – a hand-wringing, “thousand reasons we can’t do it” piece that nevertheless did not refute that, given the resources required, could allow us to kiss the middle east yahoos goodbye forever.
    If we are running out of oil, and it takes 3 barrels of water per barrel of oil to extract it, the water will be obtained. Carcinogenic rock? Gimmie a break – the only things that aren’t “arcenogenic” are the things they haven’t tested for it yet. Breathing causes cancer, ya know? So, its icky goo – the bottom line is that it _can_ be refined. When push comes to shove, and the middle east yahoos want 150 dollars per barrel of oil, we’ll find some way to make this work.
    We may see the day when “cheap” oil is no longer available. But oil will always be available – all we have to do is quit listening to the doomsday whiners. For each possible source of energy, there is a set of whiners that say we will all die if we develop it. Oil shale, nuclear, wind (“It kills some birds…), U-Name-It – there’s someone against it. The must all be ignored. Then we can have some progress.
    Dave Head

  45. Craig

    Very interesting discussion. I read an 80 page Rand report on this (recent – less than six months ago). Production from US oil shale is estimated at only 2 million bpd in 20 years and 3 million bpd in 30 years. To speculate, perhaps we can at most triple that production at “full capacity”. The world currently uses 110 million bpd. 8-9% is no doubt a HUGE number … but it is less than half our current usage (and who knows how much that 110 will increase in 30 years). With all of the other types of energy production/conservation, $50 – $70 oil (which has certainly not “crushed” our economy) means that the laws of economics will respond in kind.
    The nightmare scenerio of an OPEC embargo becomes less likely as oil prices rise. As China gets cozy with OPEC, and tries to angle for influence, the likelihood that OPEC would embargo also reduces over time (although, it could attempt an embargo of Western interests). China’s economy depends on exports to the West, and will continue to for a very long time. So, OPEC would most likely continue to supply oil to China, and China would most likely want to continue to see prosperity for its largest trading partners.
    In the extreme case that we have a (non-nuclear) WWIII over something like Israel, Taiwan, Kashmir, or Tibet, an embargo would be ineffective – Necessary resources would simply be taken by force. I suspect that economic forces will allow the global economy to adjust slowly over time, and that energy will continue to be nothing more than an inflationary pressure … albeit an ever-increasing component.
    However, as an American, I will never underestimate the power of innovation. Conservation, alternative energy sources, and continued exploitation of existing energy sources will continue to supply all of the energy we need to drive the global standard of living ever higher. We should consider early development tax credits but, we should always let dynamic economic forces dictate timing and scale of those adjustments. Throwing billions at a hydrogen highway, when the economics don’t necessitate it, is just a waste of taxpayer dollars. Crushing gas taxes, as seen in Europe, is even worse. Conservation is a problem to be solved by innovation, not socio-engineering by finger-wagging politicians.

  46. Perdido Dad

    What if I told you that a low-density plasma technology already exists which requires no water for extraction, uses no natural gas, produces no greenhouse gases, performs significant upgrading during extraction, and costs only a fraction of current extraction technologies using electricity? Bah-Humbug!… you say.
    Yet, it is true. We currently have a plasma extraction technology which has been proven in independent testing by Core Laboratories, Calgary to extract bitumen from oil sands with the benefits listed. It is currently being pursued by one of the major oil companies in the Athabasca region in Canada, and may prove to be applicable to oil shale as well.
    The irony is that no one in the U.S. believes us… probably including you. The DOE, oil companies, and politicians will not even consider the possibility. Is it any wonder why new technologies do not emerge to take advantage of U.S. oil resources?
    We have the technology and are ready and willing to prove it. Any takers?
    Perdido Dad

  47. sfg

    Shale oil development holds the key to our future economic well being and is the key to perhaps the worlds economic future as well.
    The largest shale oil deposits in the world happen to be buried in a very friendly country: our own….
    …and once the development begins, the oil cartel that has been for so long now, kicking back,putting their feet up, and having their way with oil prices, will suddenly find themselves ratcheting down oil prices faster than you can spell S-H-A-L-E….
    We can take care of our own…we can help the world…We can then have some breathing room in coming up with the NEXT source of energy we will need in a couple of hundred years. And this part is critical: Let’s get ourselves in a position to achieve that next level of energy need long before we have to depend on anyone else ever again.

  48. Dan P

    If we are doing all this to just get transportation fuel, why don’t we just run E85? Ethanol is not a carcinogen (hell you could drink this fuel if they didn’t add the 15% of gasoline to the mixture), ethanol can be made from corn, it has 105 octane, and it does not produce any greenhouse gases. An ethanol plant in Brazil is self sustaining, they just use some of the ethanol that they make to power their plant.
    Why pay the farmers subsidies if we can have them grow our power source? It seems so illogical. One of the down sides to ethanol is that you need more fuel to get the same power as gasoline. This is because ethanol doesn’t burn as hot as gasoline. However, with 105 octane we could increase the compression ratio of the engine, thus increasing the efficiency of the engine. This would make up for a good portion of the loss of power from the lower generation of heat.
    Since we’re on the subject of energy, why don’t they make nuclear power plants undergound? They use to test nukes underground with minimal environmental damage. If they had a melt down of a nuclear power plant that was underground, the devastation would be minimal. We would only need a handful of nuclear power plants to power the country. This seems like a much more environmentally and efficient way to produce energy, especially over burning coal.

  49. Tilo

    It appears that this discussion is technologically way behind the times. Most of the issues that are raised here have been addressed and overcome. A small Utah company has already built a processing facility and proven the viability of the process. The process is discussed and described in this web site.
    http://www.oiltechinc.com/profile.html

  50. Aygeear

    In case it hasn’t been mentioned before, Shell isn’t the only company that has explored insitu production of oil from shale. During the 70’s and 80’s OXY completed a prototype insitu retort and operated it successfully. It was the model for a large scale development that was later cancelled when President Reagan killed the Synthetic Fuels Corporation in 1984.

    In 1998, I was employed as a consultant to update techno-economic studies for the OXY insitu retorting process. The results of that study showed that oil from shale could be produced in commercial quantities for $30 to $40 per barrel based on a 20% return on equity. At that time, MYMEX prices for light sweet crude were $14 to $15 per barrel.

    Obviously, at today’s oil prices, even considering inflation the insitu production of oil from shale looks economically attractive.

  51. Kevin

    First of all, it seems like most of you are in favor of non-renewable energy which is idiotic. We need to find a RENEWABLE energy source – wind, solar, etc. In terms of non-renewables, fuel cells are definitely a step in the right direction but nuclear is not. Nuclear energy is being touted by the energy companies as “clean”, which is a crock. Although nuclear doesn’t produce greenhouse gases, the issue of nuclear waste is an even bigger threat than greenhouse gases. Until there is a viable, safe way to deal with nuclear waste then nuclear is a horrible resource to use.
    I do agree that we need to move away from foreign oil dependency and improving fuel efficiencies in our automobiles, power plants, and factories is one of the quickest and easiest ways for us to spend less on foreign fuel.
    Shale oil is a sad replacement for crude. And give up the Oil Tech Inc talk. Their process involves mining and then extracting which is completely unfeasible. The Shell or OXY process of insitu retort is much more interesting and viable than mass strip-mining and processsing.
    Ethanol is a much better alternative – especially sugar-derived ethanol. Sugar burns hotter than corn and is 8x more efficient. Unfortunately, the corn lobby is much stronger than the sugar lobby and so the corn industry is artifically supported by the government. We also need to remove the tariffs on imported ethanol. We don’t impose massive tariffs on imported crude oil, so why should we on imported ethanol. The things this government does to support their own pocketbook (and their supporters) is almost criminal.

  52. Aygeear

    Let’s set the record straight. Renewables such as wind, solar, geothermal, tides, etc. all produce electricity as the final product. Thus, they are useless as transportation energies for trucks, ships, and aircraft. Until the technology is developed to replace gasoline, diesel, and jet fuel, we will still need to rely on non-renewable fossil fuels. Wide use of fuel cell technology is decades away…what will we do in the meantime as our oil supply dwindles rapidly and oil prices skyrocket? We will use crude oil extracted from shale, gasoline produced from coal, and supplemental fuel extenders such as E85 and biodiesel from soy beans. I believe the OXY MIS (Modified In-Situ) shale oil process will be the winner because it is self-sufficient in energy, and entails the least surface and environmental disturbance.

    Nuclear energy is the cheapest, cleanest, safest way to provide our electric energy. Anti-nuclear fanatics harp on nuclear waste disposal as a huge threat. Yet they ignore the fact that for the entire time the WORLD has been generating nuclear energy there has never been a documented case of injury or death from nuclear waste disposal. Furthermore, new technologies such as the pebble-bed reactor make it physically impossible to have a “run away” reactor and greatly reduce waste fuel radioactivity.

    Ethanol, whether derived from corn or sugar or biomass, has exactly the same energy content. As a transportation fuel it is a poor substitute for gasoline because of its lower mpg. Thus, more total gallons are required than gasoline. There isn’t enough arable land available in the U.S. to grow enough crops to support the demand for ethanol as a transportation fuel. Its best use is as a fuel extender, such as E85. Removing tariffs to encourage importing ethanol is a stupid idea. We are at the mercy of foreign nations because we import 61% of our crude oil. Why would we want to give foreign nations further control of our economy by depending on imported ethanol. It’s like trading lung cancer for bone cancer.

    Visit this site for more information on this topic:
    http://home.earthlink.net/~oilandyou

  53. sebastien chaney

    how do get a job as a track hoe operator at this plant how much money can you make per year

  54. AMOC/SHALE PROJECT

    We are the other oil shale company in Utah. We use coal and plasma gasification. It is totally green. We have spent over a year working the bugs out with some very tech smart people that love the planet and want it to become cleaner. We are not going to add to this planet’s problems by repeating old technology. We have a different new system that works. No bad water no slag to get rid of. All products will be usable for future generation to come. Just wait you nay sayers. Think out of the box. There are many answers to life as life changes and science grows.

  55. Michael

    Myopia.
    First, let me say that I am NOT a tree-hugger. All of these arguments are persuasive, but the perspectives from which most are written seem somewhat myopic. Consider the Chinese. Their philosophy teaches them to make decisions through a prism which reflects not the immediate consequences of any action, but of the consequences to further GENERATIONS. In about 50 years, there will be a race to obtain the remaining liquid petroleum. This is not conjecture, the amount remaining is finite. The only point of conjecture is whether 50 years is actually too much time. More and more of the earth’s population are availing themselves of the means to use petrochemicals.
    Given that certainty, the countries that retain their petroleum reserves (in any form) until the last will wield enormous power. You New Age types may beat your breasts and decry man’s inhumanity at that fact, but it remains true. I am an historian, and in my studies I find that man always reverts to his true self- opportunistic, avaricious, expert in self-preservation. These may sound like indictments of character, but in fact these are the qualities that propelled man to the top of the food chain.
    Petroleum and natural gas are already being used as means to extort: In Russia Putin has already used the auspices of Gazprom to attempt to subdue unruly former vassal states, and it will only get worse.
    In Europe and the American west water barons taught us those downstream the facts of life: He who has the switch has the power.
    Consider that most of the middle east was largely populated by sword wielding, camel dependent tribesman less than a hundred years ago. Now, because of oil, they have immense wealth and power, AND OIL ISN’T REALLY A RARE COMMODITY YET. Imagine when it is.
    Given those facts, this is one time when I hope the conspiracy theorists have it right. I HOPE that some means of developing the full potential for using oil shales reserves has been verified and shelved, because in the not too distant future, that’s going to buy our security. I HOPE that we resist, for a time, drilling into the vast reserves we know are waiting in Alaska and off the continental shelves because that, too will buy our security. In the meantime, while the oil is drained from foreign lands, we have and will continue to feel the pain when the occupants of those lands attempt to exert their influence over our way of life and our economy. I think the pain will cause us to be more efficient, or to devise other strategies of energy and that’s a good thing too; there will come the day when the last drop of petrochemical flows from the tap, and what then? Best to have the solution at hand. Many civilizations have come and gone during the 4000 years of China’s existence. Maybe if we are to survive we too should start looking a little further over the horizon.

  56. Phil

    Rand is still talking about a 12 year production window. With ANWAR, Prudhoe Bay, etc. the U.S. should move agressively on its shale holdings. Haven’t heard much about OXY’s in situ, but they are not part of BLM’s 3 successful applicants. Is OXY separately exploring on its own leases. My belief is that Oil Shale is our future energy source. Keep on blogging, its very interesting.

  57. Albert Comunale

    Lets not develope oil because of enviromental problems or supposed other problems. Seems everything we do nowadays depends on someone doing a never ending enviromental study first. Other countries go ahead and do it but we study and study. China is going to drill for oil off the coast of Cuba and the drilling fields extend halfway to Florida. Moreover, they can drill horizontially and get some of our oil, assuming we wanted to drill for it. Now if olny we had this kind of thinking back in the early 1900’s. The automobile would have never become the modern method of transportation because of all the polution it would cause. I wonder what we would be doing with all the horse manure we would now be generating with all the horses we would need if it were not for the automobile?
    Ameica was a leader in the world but lately it seems we will be taking a back seat while we watch the rest of the world move on to new and greater things.

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