Posted on 07/23/2007 2:25:59 PM PDT by redwill
Technology to draw oil from rock in Rocky Mountain states and other unconventional sources is getting another look from companies and the government as the demand for energy increases and supply tightens, especially in the United States.
(Excerpt) Read more at upi.com ...
Oil was more than $78 per barrel Friday, nearing an all-time high. According to a National Petroleum Council report, commissioned by U.S. Energy Secretary Samuel Bodman and released this week, demand will exceed supply by 13 million barrels per day by 2030.
One potential major source of domestic oil is found in shale rock in Colorado, Utah and Wyoming. Interest and experiments rose and fell with the oil price spikes during the 1970s to early 1980s and have risen once again.
"It's an enormous resource," said Daniel I. Fine, an MIT research affiliate. The area was protected for the future with the creation of the Naval Petroleum and Oil Shale Reserve in 1912. "It was understood that one day we would use it at a time when the technology and economics would be right," Fine added.
The oil found in these rocks is called kerogen, organic matter containing hydrocarbons that must be converted to oil and gas. It's unclear how much oil may eventually be produced, but the United States holds 60 percent of the world's shale.
On-site experiments to heat and extract the kerogen are starting on 160-acre tracks leased by the Bureau of Land Management. The 10-year research development & demonstration leases are intended "to test and demonstrate what are considered state of the art methods of recovering shale oil," BLM spokeswoman Heather Feeney said. They can be converted to commercial leases for oil shale after demonstrating commercial production capacity and a BLM review.
Shell is probably the leader in the field, said Jeremy Boak, project manager for the Colorado Energy Research Institute at the Colorado School of Mines. Shell expects to extract from 3.5 to 5 barrels for each barrel of energy used, Boak said, by heating the rocks underground for three or four years, after which the oil seeps through cracks so it can be pumped out. It's relatively efficient, he explained, because it partially refines the kerogen underground and brings it to the surface as fuels requiring little processing: naphtha, diesel and kerosene.
Chevron has partnered with the Los Alamos National Laboratory to recover oil from shale formations in Colorado's Piceance Basin. Fine explained that it will use explosives underground to fractionate the shale, then inject a critical fuel, which creates a hot gas and allows extraction. The need for water and on-site production will have a heavy impact on the environment, however.
Raytheon, known for numerous military technologies, has developed the use of radio frequency, or RF, technology with contributions from partner Critical Fluids Technologies.
John Cogliandro, program manager for Raytheon's oil from shale technologies program, said the new technology is powerful and environmentally responsible. Since it doesn't use steam or heat the actual rock, there's no residue that might enter groundwater supplies, he said.
RF heats much more uniformly and quickly through radiation that targets the hydrocarbon molecules. Cogliandro added that critical fluids release and move the oil, so that the oil seeps through cracks in the shale and is pumped to the surface.
Fine said Raytheon's technology is an advance over earlier microwave feasibility tests -- dating back to the 1980s -- because it heats the shale rock more quickly and it is easier to control while deploying smaller, cost-effective equipment.
Global Resource Corp. uses microwaves to extract oil from shale. While previous microwave tests didn't experiment with different wavelengths, GRC is using a continuing microwave system with variable frequencies. Operating in a vacuum, the microwave frequencies gasify, then condense the hydrocarbons, which turn into gas and liquid oil, said a GRC spokesman.
GRC is using the technology to reinvigorate older wells as well as draw oil from tires, petroleum-based plastics and automobile shredder residue. The company has patent-pending numbers for seven different technologies, and both the U.S. Energy Department and the state of Pennsylvania have given GRC a capped well for experimentation.
GRC CEO Frank Pringle said interest is growing, despite skepticism about the technology: "I know what my process can accomplish, but there's a lot of prejudice against us."
Raytheon is seeking to license its know-how to energy companies that are better able to apply the technology in the field. Oil companies experimenting with shale have shown significant interest in Raytheon's technique, but Cogliandro doesn't think they'll abandon current approaches.
"You'll see a lot of pilot projects out in the field being tested. They're going to find where certain technologies work best and then they'll analyze the economics of each," Cogliandro said.
Cogliandro has also received samples of oil sands, or "heavies," from Oklahoma and Texas on which to test the technology. Raytheon's methods had been tried successfully with Canada's tar sands and should work with the heavier oil sands, he said.
Both Raytheon and GRC say their technologies use one barrel of oil's worth of energy to produce 4.5 barrels of shale oil compared to one barrel for 3.5 barrels using older methods.
Boak said these technologies will have to prove how they can do as well or better than the newest techniques in the field.
"The big question for shale oil and heavy oil processing is how far you can make those waves reach out into the rock," said Boak. He emphasized the importance of field tests given the uncertainty in geological formations. GRC said the microwaves can be used as far down as can be drilled.
If the technology leads to commercial viability, only limited investment in refinery extensions and pipeline spurs will be needed because the industry can make use of existing regional refineries.
Microwaves?.........Hmmmm.......Sounds good. he Environazis will find a problem with it though.......
We need to do anything it takes to break our dependence on Arab oil. The lack of action in the face of growing public rage over gas prices shows how out of touch our “leaders” are...
Hogwash--the big question is how much the "microwaves" cost in relation to how much kerogen you get out of the marlstone---
They forgot to mention production cost. They also forgot to mention the oil industry report last week that the oil industry won’t be able to meet demand over the next two decades. This industrial process will cost more than simply producing oil from wells. Same as the last thread a couple days ago.
Sounds like a good margin.....
How about pull out of Iraq and let the Arabs have their war and shut down production for a few dozen years? That will break our dependence on ME oil.
“We need to do anything it takes to break our dependence on Arab oil. The lack of action in the face of growing public rage over gas prices shows how out of touch our “leaders” are...”
When we use up the Arab’s oil, we can start on our own.
Well, that would really suck. If we ceased depending on Arab oil, we'll have no reason to get involved in the ME conflicts and run out of places to invade, demolish and rebuild ;-)
We also need clear thinking about this subject; we're not really "dependent on" Arab oil. We get a majority of our oil from Canada and South America. And it's not even "dependence" per se that is the issue, it's the fact that certain actors use their oil revenues, and stranglehold on the control of big proven oil reserves, to do nasty things. But even if we somehow didn't buy any more "Arab oil" starting tomorrow, the rest of the world still would (oil is sold on the world market, not just to the U.S.), and thus would still fund our enemies.
The lack of action in the face of growing public rage over gas prices shows how out of touch our “leaders” are...
Some would say there's no "lack of action" at all, given our ongoing attention to security issues in the Middle East.
Also, maybe it's not that the leaders are out of touch, but rather, that you've overestimated just how much "public rage" there really is over gasoline prices. I don't really see it, myself. The crossover point will occur when a sizable majority stops its fetishizing of things like ANWR, and its irrational fear of nuclear power; I don't think we're there yet. Many people seem perfectly happy to pay approaching $4/gallon for gas if it means their precious "pristine" ANWR will remain untouched. And so, maybe our leaders are simply responding to that.
If the oil industry can't meet demand, won't prices rise, and thus, couldn't shale become viable, despite its higher production costs?
If they can extract for $20 rather than pay $78, what will they do?
—it also sounds like it came from the PR department , rather than the engineering staff—
The deal is this: production cost will be lower for pumping oil out of the ground. The process won’t beat that, ever.
The Stockholders better get the real scoop.......
Who is paying what?
The process is $20. Drilling and pumping is $5. Guess which product wins in the marketplace.
It doesn't have to "beat" it. Does it?
It can't even match it. Process oil will always cost more than pumped oil while there is oil to pump. If somebody wants to pay a dollar a gallon more just to have process oil they probably also stop at Starbucks every day.
BETTER ANALYSIS: Oil from ANWR WOULD meet need
Of course, Congressional 'leaders' haven't the 'stones' to sign off on that deal...
It will cost more to bring "process oil" to market than pumped oil. On that we agree (or at least I'm conceding, for the sake of argument - truth is I don't really know, because what if once the infrastructure's in place, the overhead goes down...?). But I think what I'm missing is why that's relevant? or perhaps, what question that's relevant to?
If somebody wants to pay a dollar a gallon more just to have process oil they probably also stop at Starbucks every day.
Huh? Of course no one would "pay more for" the resulting oil from shale. Why would they? But again: how's that relevant?
To use simple numbers, say that pumped oil costs 1/gallon to bring to market and shale oil costs 9/gallon to bring to market. If the market price of oil is 8/gallon, then no one would bother with shale oil. But if the market price of oil rises to 10/gallon, then there is a profit to be made from shale oil.
So whether shale oil "beats" pumped oil matters not a whit, that I can see.
Unless pumped-oil folks can fill the entire world demand at a price that makes process oil unprofitable, your point, while correct, is not relevant. Higher cost production (including shale) will continue to increase (as long as the polar bears aren't more important than people) until the price is driven down to the risk rate of return on the marginally most costly production alternative. This is, of course, confounded somewhat by time lags. But the market will push in that direction.
bump
Way ahead of you - the big coal and shale areas are probably locked up/sold/leased/whatever long ago..
There is probably not a single twenty year period in the history of the oil industry where this would have been true.
Indeed, it is just a vapid worry, as long as a free market is allowed to function. Even today, when you can have all the gasoline you want to buy at $3.00/gal, the industry could not meet the demand if government forced the price down to $1.00/gallon.
So we should look for the left to quit blaming BIG OIL and start blaming BIG SHALE......
—IIRC, Mobil has owned what was known as the Milliken Ranch property since the 1920’s—about when shale was first looked at as an energy source—
Yes, and the so-called “gigantic” domestic oil companies like Exxon-Mobil and such are not even in the top 10 companies competing with Saudi Arabia Inc, Mexico Inc, Russia Inc, Nigeria Inc.....
Environazis won’t allow us to do anything to break free from their Islamofacist allies oil. They don’t even like wind turbines because they kill a few seagulls.
what if the microwaves are powered by reactors or wind?
Yeah, I wondered about that too (won't the price just rise till they equalize?), but I interpreted that statement of his in an expansively charitable way - i.e., that he was just saying that the extrapolated demand curve will exceed the (known) supply curve... after all, the article says the same thing ("demand will exceed supply by 13 million barrels per day by 2030"), which makes equally little sense unless you interpret it like I had to.
Or concentrated sunlight or BIODIESEL!.......
I am perfectly aware that not all oil comes from Saudi Arabia. The fact remains however that the world economy is highly dependent on a commodity over which dangerous and unstable regimes have an undue influence. We are very capable of reducing our exposure to this risk by building large numbers of nuclear, coal, and other power plants in the US.
the rest of the world still would (oil is sold on the world market, not just to the U.S.), and thus would still fund our enemies.
If the US obviously had enough domestic energy assets to limp along without oil imports this would give us tremendous leverage not only over our enemies in the middle east but over Europe and China as well. Oil fields and refineries are big fixed targets. Notice the fit the Saudis threw when Bush mentioned reducing our oil usage in his state of the union address a couple of years ago? They know the score and don't want us to take away their "oil bomb."
maybe it's not that the leaders are out of touch, but rather, that you've overestimated just how much "public rage" there really is over gasoline prices.
People care about things that personally impact them like gas prices, far more than they care about the war in Iraq, ANWAR, and global warming. Unfortunately, the media and politicians within the "beltway bubble" are able to set the agenda in this country with little reference to what the actual man on the street cares about. A prime example of this was the shamnesty debacle. Why do both the President and Congress have historically low approval ratings if they are so in tune with people want?
Some would say there's no "lack of action" at all, given our ongoing attention to security issues in the Middle East.
Iraq is not about oil except in the fantasies of the moonbat left. The action that is needed today is the same that was needed during the oil crisis of the early '70s: More nukes, more coal, more hydro, more anything that is domestic or in friendly countries, more efficiency. Less regulations, taxes, and other roadblocks. Nixon, Ford, Carter, Regan, Bush #1, Clinton, and Bush #2 have all dropped that ball.
Ain't that the truth. "Environmentalists" are not so much pro-environment as anti-human. 21st century Luddites...
You could make the argument that they are misanthropic.
In Hitler’s Germany they used process oil because there wasn’t enough pumped oil. With that they were forced to rationing and they still ran out. Even if price were no object process oil will never produce to meet cheap oil.
Hmm. Well, I guess it varies.
The fact remains however that the world economy is highly dependent on a commodity over which dangerous and unstable regimes have an undue influence.
That's true. And that fact would remain even if we ourselves weren't to use a drop of this commodity from those regimes, which was my point.
We are very capable of reducing our exposure to this risk by building large numbers of nuclear, coal, and other power plants in the US.
Okay, now you're talking more sense: we'd be reducing our exposure to the riskiness of oil prices (due to the unstable-regime factor, etc.). We wouldn't be "reducing our dependence on Arab oil", but reducing exposure to risk of oil's price fluctuations caused (in large part) by those regimes. Correct.
People care about things that personally impact them like gas prices, far more than they care about the war in Iraq, ANWAR, and global warming.
Hmm. I'm not so sure. I see very little "rage" about gas prices (which do affect people) than I see about the Iraq war (which largely isn't affecting most people, and the rage seems to be inversely proportional to the effect anyway). But again, it probably depends where you look/who we're talking about. *shrug*
Unfortunately, the media and politicians within the "beltway bubble" are able to set the agenda in this country with little reference to what the actual man on the street cares about.
See, do you have real hard data that the "actual man on the street" cares as much about gas prices as you're saying he does?
And if so, do you have correlative data showing that this same man on the street is willing to let folks drill in ANWR? (Because if he's not, I really doubt how much "rage" he actually feels)
I don't doubt that most people would answer "Yeah, sure" to a question like Are gas prices too high. That's easy. However, when the rubber meets the road are large numbers of Americans clamoring for us to expand nuclear, open ANWR to drilling etc.? And is the gas-price concern really high on peoples' radar compared to hot-button issues like Iraq? If so, I don't see it. Do you? Where?
A prime example of this was the shamnesty debacle. Why do both the President and Congress have historically low approval ratings if they are so in tune with people want?
I think it's clear they weren't in tune with what the people wanted on that, and realized it.
I still don't think "the people" really want to open ANWR etc. though. (I wish they did!) The (R)s tried this and look at the reaction it got: they were demonized, as usual, for wanting to "rape" "pristine" land.
Iraq is not about oil except in the fantasies of the moonbat left.
I think it's about oil to some extent. I think we don't want terrible, fanatical and/or power-mad people to gain control over such a large proven oil deposit (and the revenues it would generate), and I think that's a big reason we can't afford to take a laissez-faire approach to who rules Iraq. In that sense, it's "about oil".
Of course this is meant in a much different sense than lefties mean, most of whom seem to have a cartoon story in their head according to which when we invade or use military in one of these countries, it's "about oil" because in doing so we can somehow end up "taking" their oil or something.
The action that is needed today is the same that was needed during the oil crisis of the early '70s: More nukes, more coal, more hydro, more anything that is domestic or in friendly countries, more efficiency. Less regulations, taxes, and other roadblocks.
Can't disagree with any of this.
Not while there is cheap oil. Of course, gov't subsidy could equalize process oil and pumped oil, but until then nobody would choose shale over oil reserves if he had a choice. An oil company might do some pilot plant work just in case gov't subsidies come along later.
This doesn't have anything to do with anything. Hitler was running a costly war-machine, not a free-market economy, and it ran out of resources because it was bent on waging war. This doesn't prove it's impossible to get those resources (if that's what you're saying - it's not clear what you're saying). Shortages - of rubber, metals, etc - are common in wartime but this does not somehow prove that rubber, metals etc are impossible to bring to market.
Even if price were no object process oil will never produce to meet cheap oil.
Price is certainly NOT no object. Price is basically the only object. But the price (of oil) just has to be high enough (and it was you, not I, who insisted the price would keep rising indefinitely) to make shale oil worth producing; if it is, then (absent other barriers like regulations, etc.) one assumes people will do it. If you think not, you haven't explained why.
That said, I admit I don't know whether process oil will ever "produce to meet" cheap oil, because I don't know what one thing "producing to meet" another thing means. (I doubt it really means anything.) But who cares if it "produces to meet" (whatever that means) pumped oil? Again, I'm puzzled as to what you think that has to do with anything.
There is apparently another way to run out of oil than to suck the wells dry. You could get bombed to crap in a war.
If the shale oil process produces at $20, then it is profitable as long as oil on the open market is above that.
That may make it a lower-profit supply, but profitable nonetheless. Government guarantees to purchase 2 billion barrels a year from shale for the next 20 years at $30 barrel would be a good use of government money from an energy security perspective.
If market prices stayed above $30, it wouldn’t cost the government a dime because the producers would sell on the open market rather than take the government’s $30. But domestic production would be guaranteed a profit in case OPEC tried to manipulate market prices for pumped crude lower to squeeze them out. It would effectively eliminate the risk to capital investment that developing the shale oil will require.
You may have me confused with Goldman-Sachs. Not even Peak Easy Oil Theory contends the price will rise indefinitely.
Gov’t subsidy won’t work that way. Besides that, nobody would build that much plant for zero profit when there is oil to be pumped at decent profit.
Now, yes we are. Like many other commodities, oil is fungible. However, if we were to ratchet up the production from shale, to produce sufficient quantities whereby world-wide oil production far exceeded the demand, prices would drop like a rock. At that point, the US should cut all purchases from ME countries.
A price guarantee isn’t the same as a subsidy. The only way for it to end up as a subsidy is for the market price of oil to fall below $30.
Compared to the $78 today, that would be worth it just in lower pump prices to Americans, not to mention the added energy security.
Where can oil be pumped and delivered to refineries today by American companies for $5 ? Their balance sheets do not show a 90% gross profit margin. They don’t even show the 50% gross profit margin that the $30 oil from shale price guarantee I suggested would provide.
Canada is extracting oil from their sand, and their “Environazis” have allowed it under the condition that the land be returned to a natural state, not left trashed and useless. If our oil companies would guarantee to me, a tree hugger, who knows I do not own this world, but my Father the Creator does, that they would clean up their mess, and plant new trees or grass or whatever, then go ahead. But I’ll be watching! Or my grandkids:)
Unless you don’t own the oil, some sheik or someone named Hugo does.
My mistake, you're right. You just said that "the oil industry won’t be able to meet demand over the next two decades". I assumed this was a prediction of a price rise. Guess not? Or, are you just saying that you think, while the price will rise, it will never rise enough to make harvesting shale for oil profitable? If not, why not?
These extrapolations always fail for three very good reasons:
1) They never take into account how humans will react;
2) They cannot take into account new inventions;
3) They are outside of the effects of unintended consequences like the economic catastrophe that resulted from government policy decisions prior to the Great Depression.
A simple analogy would be this: A person prone to such thinking must never, ever be allowed to sit on the flight deck of an airplane because he will extrapolate the climb-out after takeoff to be a sure sign the aircraft is headed for outer space, and during the final approach to land, the extrapolation of the flight path always ends up striking the ground at a fatal angle well short of the runway.
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