Look out Colorado, Utah and Wyoming. The rest of the country is starting to realize that oil shale could yield trillions of barrels of hydrocarbons to power the economy and diminish our dependence on foreign oil. It won't matter to them if the area becomes a national sacrifice zone. Here's a post from The Moderate Voice. They write:
The only real option America has if it hopes to free itself from the shackles of Middle East petro-politics anytime soon is to find new sources of domestic petroleum. Am I suggesting that we drill ANWR? The truth is that it doesn't make much of a difference if we do or don't. ANWR is a red herring -- it only has enough petroleum to support America's domestic needs for just one year -- maybe two. However, we have another source of domestic petroleum that has the potential to make a big difference: oil shale.
Oil shale is a type of rock that has a petroleum precursor called kerogen trapped inside of it. Using a variety of mechanical and chemical processes, this kergoen can be extracted and upgraded into liquid fuels like synthetic gasoline and synthetic diesel. The United States has the largest oil shale resources in the world. Most of America's oil shale deposits are located in the undeveloped Green River Formation, which straddles Colorado, Wyoming, and Utah. According to the Rand Corporation, as much as 1.1 trillion -- yes, trillion -- barrels of synthetic petroleum could be recovered from the Green River Formation. According to the U.S. Department of Energy, that is four times the size of Saudi Arabia's proved reserves of conventional oil, and approximately equal to all of the proved reserves of conventional oil on earth!
Oil shale has received little attention in recent decades, but some Americans probably remember hearing about the resource during the Arab oil embargoes. In 1980, at the height of the embargoes, the U.S. Congress created the Synthetic Fuels Corporation, which was, in part, intended to develop America's oil shale industry. When the Synthetic Fuels Corporation was created it was incredibly expensive to squeeze petroleum out of oil shale, and the plan was to invest in research and development to pioneer cheaper methods to produce shale oil. House Majority Leader, Rep. Jim Wright of Texas, thought so highly of the bill that created the Synthetic Fuels Corporation that he described it as "the most important bill we'll act on during this decade, beginning an initiative we should have started in the 1950s." However, by 1985, after the Arab embargoes ended and the price of oil plummeted, the incentive to invest in oil shale plummeted as well. Nearly every oil shale project in America was abandoned. With conventional oil selling at less than $25/Bbl, why would anyone want to invest in oil shale, which looked like it would never break the $80/Bbl profitability threshold?
Over the past few years though, a few things have changed. First, the price of oil has again skyrocketed. And, unlike in the 1980s, the price of oil does not look like it will come down again. This is because the peak in global production is fast approaching while demand is surging: limited supply and higher demand can only mean higher prices. Moreover, the Persian Gulf oil powers will likely continue to inflate oil prices as their stranglehold over the petroleum market tightens. As a 2005 Citigroup report noted, "...the days of $25 oil are long gone and unlikely to return any time soon." Governments and businesses around the world are now forecasting long-term oil prices above $40, $50, and even $60 a barrel. These could all be conservative estimates.
The second major change relevant to oil shale is that several companies operating under the radar screen have developed radically cheaper oil shale production methods over the past few years. Shell is confident that a new technology it is pioneering could produce shale oil profitably if the price of crude settles above ~$25/Bbl. According to a 2006 report in BusinessWeek, an Israeli company may now be able to produce shale oil at a cost of $17/Bbl. And, according to a 2004 DOE report, an Estonian firm believes that it can produce shale oil profitably with crude prices as low as $13/Bbl.
Assuming that these figures are remotely accurate, shale oil now appears to be significantly cheaper than conventional crude. In addition, it appears to be significantly cheaper than any biofuel or coal-to-liquids solution. For the first time in history, America's vast oil shale resources are economically viable.
Economically viable? Who says? Not Shell. The company recently scaled back their operations. Where will the water come from to produce the kerogen? Let's hope that oil shale does prove economically viable -- we still don't know.
