Tuesday, September 11, 2007

[black gold] why be held to ransom by the arab world

Logical question is - if there are trillions of barrels in Colorado and Shell knows how to convert oil shale, why they aren't developing it?

Since 1981, Shell researchers at the company's division of "unconventional resources" have been spending their own money trying to figure out how to get usable energy out of oil shale. Judging by the presentation the Rocky Mountain News heard this week, they think they've got it.

On the other hand, there are admittedly warnings:

During the 1970s, presidents Gerald Ford and Jimmy Carter had encouraged the development of the oil shale reserves, but the then Exxon company ceased its development project as oil prices tumbled.

I'm going to resist the temptation to comment on why they did this but it's clearly tied up with the middle-east. Secondly, what about the Jack Field?

Known as the Jack Field, the reserve – some 270 miles southwest of New Orleans – is estimated to hold as much as 15 billion barrels of oil.

Thirdly, what about the Angostura Field which the Australians seem to know all about?

Australian resources group BHP Billiton has again signalled its faith in overseas oil and gas investments, committing $327 million to speed development of the Angostura offshore field near Trinidad.

Fourthly, what about the Alberta Sands?

Second only to the Saudi Arabia reserves, Alberta's oil sands deposits were described by Time Magazine as "Canada's greatest buried energy treasure," and "could satisfy the world's demand for petroleum for the next century".

For what is America undertaking the perilous journey to the middle-east, letting itself be held to ransom by OPEC and trying to get into Sakhalin 2, when it could have developed these other reserves?

The answer is twofold:

1. oil prices had to create a domestic crisis;

2. the U.S. had to be in Iraq for various reasons.

It's not easy to convert shale, it's not easy to develop Alberta and the others and it weakens the U.S. position vis a vis Canada and Mexico to do so but it is certainly an alternative.

Inflicted on you by on

10 comments:

  1. Lord NazhTuesday 11 September 2007 at 11:08:00 GMT+1

    Look at the enviro-nuts and you'll find your answers :)

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  2. WolfieTuesday 11 September 2007 at 14:21:00 GMT+1

    As I understand it the problem is about net energy output, shale oil requires far more energy to extract than light sweet. On top of that there is the environmental impact of extraction, you need considerable amounts of fresh water (which becomes horribly polluted in the process). As the world is becoming short of fresh water supplies this doesn't look like a great energy source in the end.

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  3. jmbTuesday 11 September 2007 at 17:40:00 GMT+1

    Oh the Alberta oil sands are being developed all right, but the cost per barrel is much greater.

    From your link:
    In 2005 Alberta's oil sands were the source of about 58 per cent of the province's total crude oil and equivalent production and about 39 per cent of all crude oil and equivalent produced in Canada.
    and
    Annual oil sands production is growing steadily as the industry matures. Output of marketable oil sands production increased to 966,000 barrels per day (bbl/d) in 2005. With anticipated growth, this level of production could reach 3 million barrels per day by 2020 and possibly even 5 million barrels per day by 2030.

    I can't talk about the other places. But in Canada the Oil Sands are producing and being further developed.
    regards
    jmb

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  4. James HighamTuesday 11 September 2007 at 17:53:00 GMT+1

    Right, OK on the shale but what about on the other two in the ocean? On the Canadian fields, one more reason for the SPP.

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  5. Welshcakes LimoncelloTuesday 11 September 2007 at 20:51:00 GMT+1

    Blimey, I think I agree with you politically here!

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  6. Lord NazhTuesday 11 September 2007 at 22:48:00 GMT+1

    The ocean beds are in dispute to exactly how much they really have. Coupled with the fact that only a couple of companies have technology to actual extract from that deep, it makes it very cost-prohibitive to extract it.

    I think it runs 10 million or so per 'test' they do on those fields to test them. Of course if/when they develop well enough to extract from them, the problems will be closer to solved, but they will still have to overcome the enviro-nuts.

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  7. Man in a ShedWednesday 12 September 2007 at 13:56:00 GMT+1

    Shell's position on Oil Shale is perhaps best understood by their recent purchase of the part of Shell Canada they don't own.

    The problem with projects like Shale oil is that they are CAPEX intensive and cannot compete once the oil price drops below a certain level. The Saudi's know this and prove the point every so often.

    However there are rumours that the Saudi's may have less oil and more problems producing it than they have been letting on ....

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  8. James HighamWednesday 12 September 2007 at 18:17:00 GMT+1

    I am certainly modifying my view in the light of the above comments. Difficult one, isn't it?

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  9. Lord NazhThursday 13 September 2007 at 03:58:00 GMT+1

    Yes it is. I may be misremembering, but I think oil has to stay above 60 dollars a barrel for shale to be economically viable. Of course it has been above 60 awhile now, but all it would take is OPEC deciding that Shale was a real threat to bring the price down to the 'death of shale' range just long enough to kill the exploration/use of shale for oil.

    Most of it requires massive R&D, but in the meantime, a massive influx of refining capacity would bring prices WAY down. Only problem is companies are hard pressed to put money into refineries when so many countries are making them spend it on alternatives and they see no 'output demand' in the future to pay for the lost capitol.

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  10. WolfieThursday 13 September 2007 at 12:39:00 GMT+1

    Quite good article :

    http://canada.theoildrum.com/node/2931

    ReplyDelete

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