Production of oil from proven reserves has either peaked or is nearing its peak at the precise time demand is at an all time high from and is only likely to increase.  One curve is rising (demand) while the other declines (supply) which as we all no leads to massive and disruptive price increases.  

To make matters worse, most of the proven reserves are located in the Middle East, the most volatile region politically on the planet.  Sooner, rather than later the oil companies are going to be squeezed since they don’t really control the resources, they merely provide the means to extract and distribute that resource.  To borrow a saying from the classic science fiction novel Dune (and substituting the word “oil” for “spice”):

He who controls the oil controls the universe.”

You’d think this would make Big Oil pretty damn uncomfortable.  It’s not like they don’t know the reality of this situation (even the Bush administration knows the reality, though they go to great pains to mislead the public about it since that would lay bare their true war aims).  So why aren’t they rushing to develop alternative energy technologies?  

The answer (in part) is after the fold . . .

I have two words for you:  Oil Shale.  But what is it?

Oil Shales are sedimentary rocks containing a high proportion of organic matter (kerogen) which can be converted to synthetic oil or gas by processing.

* * *

The term “oil shale” is a misnomer. It does not contain oil nor is it commonly shale. The organic material is chiefly kerogen, and the “shale” is usually a relatively hard rock, called marl. Properly processed, kerogen can be converted into a substance somewhat similar to petroleum. However, it has not gone through the “oil window” of heat (nature’s way of producing oil) and therefore, to be changed into an oil-like substance, it must be heated to a high temperature. By this process the organic material is converted into a liquid, which must be further processed to produce an oil which is said to be better than the lowest grade of oil produced from conventional oil deposits, but of lower quality than the upper grades of conventional oil.

I grew up in Colorado knowing all about Oil Shale, since it was one of the hot prospects for increasing the USA’s supply of oil, and (theoretically) escaping the hold OPEC and particularly Saudi Arabia had on our economy during the oil shocks of the 70’s.  Why was it so well known to me?  Well . . .

It is estimated that nearly 62% of the world’s potentially recoverable oil shale resources are concentrated in the USA. The largest of the deposits is found in the 42 700 km2 Eocene Green River formation in north-western Colorado, north-eastern Utah and south-western Wyoming. The richest and most easily recoverable deposits are located in the Piceance Creek Basin in western Colorado and the Uinta Basin in eastern Utah. The shale oil can be extracted by surface and in-situ methods of retorting: depending upon the methods of mining and processing used, as much as one-third or more of this resource might be recoverable.

And how much are we talking about here?  Oh, somewhere in the vicinity of 60-80 trillion tons is all, with possible production of 2.1 trillion barrels of oil. A fair dinkum lot of oil as our Aussie friends might say (they have their own oil shale reserves by the way).

Okay, Steven, you might say, this is all well and good, but why haven’t the oil companies done anything to develop this so-called gazillion barrels of oil from oil shale?  The answer is the obvious one:  with oil at prices below $40 a barrel it simply hasn’t been economic to develop the technology needed to convert oil shales to a useable resource.

Below forty dollars a barrel, oil shale is not competitive with conventional oil fields. If oil prices were to definitely stay at over forty dollars a barrel (with no chance of them declining), then companies would pursue oil shale.

Surprise, surprise, surprise!  I wonder if oil prices are ever going below $40 a barrel in the foreseeable future?  Perhaps that why the Bush administration is suddenly so hot to push oil shale development again:

DENVER (Reuters Nov. 23, 2004) – The U.S. government said Tuesday it was ready to resurrect oil shale drilling in the Rocky Mountains, a technology heralded 30 years ago to boost America’s energy output until it failed financially.

About half of the world’s oil shale reserves are estimated to be located in the United States . . . according to the Department of Interior and its agency, the Bureau of Land Management, that oversees public lands.

The BLM said energy companies were keen to develop the area and it comes at time when traditional drilling is hitting record levels in the Rocky Mountain region.

. . . “U.S. companies have developed and patented new technologies to develop oil shale that are both economical and environmentally friendly,” [A Department of Interior spokesperson] said.

The Rocky Mountain region has been high on the Bush administration’s list of areas to increase oil and natural gas production, much to the dismay of environmentalists.

Well hooray for us right?  Let’s start developing that oil shale and give the finger to the Middle East forever.  Right?  Well, it ain’t that easy folks.  You see, despite what the Bushites would have you believe, extracting “oil” from oil shale is a messy, and environmentally dirty process.  Here’s what you need to do:

There are two conventional approaches to oil shale processing. In one, the shale is fractured in-situ and heated to obtain gases and liquids by wells. The second is by mining, transporting, and heating the shale to about 450oC, adding hydrogen to the resulting product, and disposing of and stabilising the waste. Both processes use considerable water. The total energy and water requirements together with environmental and monetary costs (to produce shale oil in significant quantities) have so far made production uneconomic. During and following the oil crisis of the 1970’s, major oil companies, working on some of the richest oil shale deposits in the world in western United States, spent several billion dollars in various unsuccessful attempts to commercially extract shale oil.

Now let’s be clear about this.  This isn’t mining where you tunnel into some mountain looking for a vein of ore.  This is more like strip mining where you gash great holes in mountains, devastating the landscape.  I’ve seen the original prototype oil shale project in Western Colorado that was pursued in the late 70’s and early 80’s.  

It’s frankly a little disheartening to look at.  Half of a small mountain had essentially been blown off, and after processing, giant heaps of slag were left behind.  And that was one small experimental project.  If this thing ever ramps up, we’re talking entire mountain ranges that would be ruined by this “mining.”

The other issue is the water needed for development.  There isn’t very much of it in the Rocky Mountains where most of this stuff is easily accessible.  So they’d essentially have to do this:

By some methods, the oil shale has to be mined, transported, retorted, and then disposed of so at least 40% of the energy value is consumed in production. Water is also needed to add hydrogen to the oil shale oil before it can be shipped to a conventional oil refinery. The largest deposit of oil shale in the United States is in western Colorado (the Green River Shale deposits) a dry region without surplus water. The oil shale can be ground into a slurry and transported via pipeline to a more suitable pre-refining location.

Some forms of oil shale exploitation has all the normal environmental effects from open-pit mining, the pre-refining stage to get crude oil may emit ash, pipelines must be built to an oil refinery, and the waste rock must be disposed of, rock which incidentally is a known carcinogen. Oil shale rock expands by around 30% after processing due to a popcorn effect from the heating. Some scientists have found that shale oil produces four times as much greenhouse gases as conventional oil. But then again, that is only some methods.

So they likely have to pulverize this stuff into a powder, add water and pipe the mess to somewhere they have even more water in order to full process it.  The environmental impacts of such a large scale enterprise are likely to be enormous.  But environmental impacts don’t bother companies who already have invested billions in this resource and want to get their money back along with control over the international oil market.  I’m guessing that they believe (hope? fantasize about?) that they can get this up and working about the time Saudi production starts to dip significantly, making the US (and the oil companies who have pursued this literal “pipe” dream) the new Big Gorilla in the energy market.

Now maybe it will come to pass and maybe it won’t.  But even starting up the production process will have a severe deleterious effect on the environment.  It will continue reliance on a dirty energy resource, create additional environmental hazards (see Estonia, for example), hinder development (at least in the US) of cleaner technologies, and only add to the runaway greenhouse gas effect that is already starting to impact our climate.  In other words:

“We face a switch either to clean energy sources or to fuels even dirtier than today’s, such as shale oil. It beggars belief that anyone would choose the latter.”

New Scientist editorial, 2000.

It does beggar belief, but sadly that’s just what I (and others) believe the Bushies and their Big Oil patrons have in mind.

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