First, if Shell is claiming it can do business at $25.00/bbl (equivalent), then you bet your sweet patootie that their actual cost on a full-production basis is a damned sight lower than that.
Second, true producers (as opposed to rent-seekers such as the domestic sugar industry) can and will hedge out their risk in the various futures and forward mkts. Shell has no problem here; they're being opportunistic, and why not? Gov't subsidises everything from mohair to helium -- in theory, why shouldn't Shell claim a piece of the subsidy pie, eh? This is short-sighted of them, to be sure, but given the idiots in the Regress, I very candidly can't blame Shell here. (full disclosure: I don't own one bloody share of Royal Dutch or Shell Transport, or any of their subsidiary companies)
Third, the above is a bit facetious. Shell's ''market risk'' isn't any such thing -- it's government risk, regulatory risk if you prefer, pure and simple. You know, from your own experience, that the Regress, given the opportunity, invariably overregulate EVERYTHING. When dealing with what is an entirely new application of technology, though, Shell (rightly) fears that the DC Dumbshjts will stack SO many regulatory burdens on them that their effort will become uneconomical. You should also take note that the in-situ technology is proprietary -- and ExxonMobil and the boys **do** know how to lobby the bandits on Capitol Hill. You're getting my drift, right?
Fourth, the Saudis are not only not crazy (well, economically speaking at least), they're downright shrewd. If we produce kerogen on the scale that can be done, they're screwed -- and they know it. You bet your life the Saudis are funding every anti-shale group and every anti-shale Regresscritter they can find.
Short answer is: we'll see massive production from oil shale IF AND ONLY IF the other majors get a piece of the pie (doubtless via regulation) AND (necessary condition) the Regresscritters grow a brain AND Saudi bribes are somehow shut out of the picture.
You estimate the time frame on those conditions, mate. Rotsa ruck with your guess, too.
.. FReegards!
The only problem with the model is that as oil shale comes on line, the price of crude oil drops (which hits the mid east), but that drop would be felt by domestic producers as well. While oil shale might work at $25/bbl, there is a lot of production which would not fare as well and would become marginal to uneconomical. The impact on domestic conventional oil exploration would mean that oil shale would have to replace far more than the Saudi's share in say, 10 to 20 years as conventional wells depleted.
Providing a subsidy might help stabilize the market for oil shale producers, but adding 2-3 MMBOPD to the equation cannot help lowering the price for everyone else, not just the jihadis.
The reason the jihadis' resources were developed in the first place is that they were cheap and plentiful, and not subject to the regulatory morass domestic producers get hung up in.
That problem needs to be addressed as well if we are going to achieve energy independance.
Bottom line, oil is a fungible commodity, adding to the supply will drop the bid price for a bbl of oil, and change the economic picture for conventional oil production. Doing so will adversely impact the domestic (conventional) oil industry, which will have the effect of reducing that conventionally obtained supply. Unless shale oil can replace that depleting production as well, we are not gaining on the target of relying on domestic (or non middle-eastern) energy.
Venezuela should be factored in as well, considering Chavez's latest antics.