Ed Qullen takes on those that think that oil shale production technology is ready for prime time in his column in today's Denver Post. He writes:
It was with some surprise that I read in a recent Wall Street Journal editorial that "Engineers recently perfected refining solid shale rock into diesel or gas, which may amount to the largest oil supply in the world -- perhaps as much as 1.8 trillion barrels in the American West. That's enough to meet current U.S. oil demand for more than two centuries...
But most of the surprise was reading that engineers have "recently perfected" a process to refine shale oil. Search the Internet as I might, I couldn't find any announcements of new technology for extracting fuels from oil shale.
The basic knowledge has been around for more than a century. Colorado folklore has it that some 19th century pioneer on the Western Slope built a log cabin and constructed its chimney from local rock. The first fire set the chimney itself ablaze, and thus was oil shale ("the rock that burns") discovered.
"Oil shale" is something of a misnomer, since the sedimentary rock is not necessarily shale, and the organic stuff in the rock isn't oil. It's a complex of hydrocarbons called "kerogen," and if you heat it under the right conditions, you produce something similar to crude oil, which can be refined into familiar stuff like gasoline and kerosene.
It requires moving about a ton of rock for every barrel of oil, or applying heat in the ground ("in-situ" processing).
Oil shale has been "the fuel of the future" for a long time, and it's likely to stay that way for some time. Go back far enough, when crude oil was $2 a barrel, and you'll read that once the price gets up to $3 a barrel, shale oil will be competitive. If crude is at $20, shale works at $30 -- you get the idea. Now that crude is at $135, maybe shale oil would pay. Let's assume that you could produce it profitably for $85 a barrel. But before you start production, you've got to develop a mine with a reclamation plan, find a big water supply in a desert, then build a retorting plant and related facilities. In other words, you'd need a big up-front capital investment in the billions before you start reaping those windfall profits of $50 a barrel. Then consider that Saudi Arabia has immense reserves of regular crude, and a production cost of about $10 a barrel. How much are you going to be willing to invest in an $85-per-barrel oil-shale plant if some feudal despot can open his taps one morning and put you out of business with $10-per-barrel oil? That's pretty much why Exxon pulled the plug in 1982 on its $5 billion Colony Oil Shale Project in Colorado. The project made sense when prices were rising, but when oil prices fell, it was a waste of resources that could be more profitably invested elsewhere. And there's no guarantee that prices will stay high enough to ensure that shale oil will be profitable.
More coverage from The Grand Junction Daily Sentinel. From the article:
As co-owner of the Swallow Oil fuel wholesale business in Rifle, Kirk Swallow is acutely aware of how much more he, retail stations and motorists are having to pay for gasoline these days. So when he heard President Bush talk last week about trying to remove impediments to oil shale leasing and development on public land in places such as northwest Colorado, he found himself agreeing. "If there's as much oil in these hills as they say there is, and with where the price of crude is at, given the circumstances I think they should go after it," Swallow said...
Glenwood Springs Mayor Bruce Christensen said natural gas development is one reason the Glenwood Springs City Council supports the efforts of U.S. Sen. Ken Salazar, D-Colo., to move slowly and cautiously toward possible oil shale development on federal lands. "Given the impacts that we're facing from the natural gas development right now, I just don't know that western Colorado can support the infrastructure, the social structure, all the things necessary to maintain our quality of life with oil shale layered on top of that," Christensen said. Opponents of a rush toward oil shale development have cited the unknown demands it could place on everything from labor forces to local government infrastructures to regional water and electricity supplies. Parachute Mayor Roy McClung said it's important that the federal government plan ahead with municipalities regarding anticipated impacts from oil shale development. "If it is developed, we want it done responsibly," he said.
A recent study commissioned by the Associated Governments of Northwest Colorado predicted the energy industry will drive a doubling of population growth in the region by 2035. The study forecasts a shortfall of $300 million to $1.3 billion in funding to meet the infrastructure needs created by that growth, and that doesn't include possible growth as a result of oil shale development. Said AGNC Executive Director Aron Diaz, "Ever since the last bust, the local governments have all had a concept that energy production should pay as it goes. To accommodate that amount of growth and the impacts we're going to see, we're going to need a lot of assistance up front." It's important that the federal and state governments help out with the capital construction costs local communities will face, Diaz said.
More Coyote Gulch coverage here.
Update: Thomas Friedman (via The NYT): "It is hard for me to find the words to express what a massive, fraudulent, pathetic excuse for an energy policy this is. But it gets better. The president actually had the gall to set a deadline for this drug deal."
Thanks to grist for the link.
"2008 pres"
9:06:28 AM 
|
|
