Don’t count on running your Hummer on gasoline from oil shale just yet.
Via Green Car Congress,
Shell oil company, one of three companies that have been awarded federal leases to test in situ production techniques for Colorado oil shale, has withdrawn an application for a permit for one of its three oil-shale research and demonstration leases. The suspended project called for heating the underground rock over a 3- to 4-year period. To keep underground water from interfering with the heating and to protect groundwater resources, the company had proposed freezing the groundwater to create a subsurface ice barrier.
Sounded like a promising idea. But last week the Denver Post reported:
Shell spokeswoman Jill Davis said the withdrawal of a permit on one of its three oil-shale research and demonstration leases was done for economic reasons: Costs for building an underground wall of frozen water to contain melted shale have “significantly escalated.”
“We are being more cautious and more prudent,” Davis said. “Because of the nature of research you have challenges. With that in mind, it is taking a little longer to build a freeze wall than we planned.”
Shell’s slowdown does not mean the US Bureau of Land Management will delay plans to issue commercial leases as soon as 2008. “There is no slowdown from our perspective,” said Celia Boddington, national spokesperson for the BLM.
For purposes of amusement, it’s interesting to recall what Seeking Alpha wrote about the Shell project just two months ago:
Over the past few years, more and more apocalyptic stories have been popping up about a supposed phenomenon known as “peak oil.” The theory is that we’re running out of oil, the big powers are keeping it quiet, and as supplies dwindle, world-wide economic chaos will ensue….
The thing is, this theory is utterly false, and can be laid to rest with a single well-established fact: there is more oil in the Colorado shale fields than the entire Middle East had at its peak. The only reason we’re still importing oil is that, at present, it is cheaper to do so than to extract it from shale. Until recently, getting oil out of shale has been a nasty and expensive business.
That’s about to change, though, as engineers at Royal Dutch Shell have applied for a patent on a new method of extracting shale oil cheaply and cleanly…. Amazingly, this method:
- Is cleaner than conventional drilling
- Generates the highest grade of light-sweet crude oil, which burns cleaner than other varieties
- Becomes profitable with oil just north of $30 a barrel (which we’ve already blown past)….
As with most great ideas, the basic concept is simple. In brief, engineers dig holes around the extraction area, into which they insert giant cooling rods. The water in the soil freezes, and forms an “ice-bowl,” which traps the oil and prevents seepage. The center of the formation is then heated, causing the oil to bubble up through the rocks, from which it may then be extracted with ease. The ice-bowl prevents all the nasty chemicals released by this process from getting into the water table.
I’ve been following the oil shale story since my college days in Colorado in the 1970s. It’s remarkable that for over thirty years, the claim has always been that the projects would become economical if the price of oil went up just a little higher. I’ve watched oil prices go up, and then it turns out the projects still won’t fly. Part of the reason may be that a good deal of energy must be expended before you get anything out of this resource. When energy prices go up, the costs of such a project somehow manage to go up too. It’s a big error to count Btus in the shale under the Rockies as if they were equivalent to the crude oil that comes out of the ground if you just dig a hole in the right place.
I still believe that oil sands are more promising than oil shale. However, I don’t think it’s realistic to expect either resource ever to supply a major proportion of our energy needs. And lead times are very, very long.
I wish the engineers for the other oil shale demonstration projects success with their ideas. But I am not as optimistic about the outcome as Seeking Alpha.