Is oil shale the solution?
November 15th 2007 09:33
Did you know that the US is sitting on a huge resource for oil and that its potential yield could be three times the amount of reserves in Saudi Arabia? It's true. The resource is called oil shale and it is found in a place referred to as the Green River Formation. This oil reserve is spread across three western states: Colorado, Utah, and Wyoming. The oil industry has known about this for a long time, but it hasn't been utlitized because the oil resides in rocks and the process of extracting the oil has been environmentally and economically prohibitive. All that could change in the near future, though, according to an article from Fortune magazine. Apparently, Shell has achieved a key breakthrough:
How much oil could come from the Green River Formation?
Even at peak production, this oil wouldn't be a panacea -- but it could really help:
According to Shell, we won't see any oil from the Green River Formation before 2015. Still, this story is encouraging. Ideally, I would like for the US to be solely dependent on infinitely replenishable resources (oxygen, wind, etc.) for its energy needs. However, this could potentially provide us a bridge to get to those alternative fuel sources. In the meantime, it could alleviate the economic and security dangers of our current dependence on foreign oil. Compared to where we are today, that sounds like a good news story to me.
Vinegar has developed a cutting-edge technology that, according to Shell, will produce large quantities of high-quality oil without ravaging the local environment - and be profitable with prices around $30 a barrel. Now that oil is approaching $90, the odds on Shell's speculative bet are beginning to look awfully good.
How much oil could come from the Green River Formation?
Shell declines to get too specific about how much oil it thinks it can pump at peak production levels, but one DOE study contends that the region can sustain two million barrels a day by 2020 and three million by 2040. Other government estimates have posited an upper range of five million. At that level, Western oil shale would rival the largest oilfields in the world.
Even at peak production, this oil wouldn't be a panacea -- but it could really help:
...considering the U.S. uses almost 21 million barrels a day and imports about ten million (and rising), even the most optimistic projections do not get the country to the nirvana of "energy independence." What oil shale could do, though, is reduce the risk premium built into oil prices because energy traders could rest easy knowing that the flow of oil from Colorado or Utah won't ever be cut off...
According to Shell, we won't see any oil from the Green River Formation before 2015. Still, this story is encouraging. Ideally, I would like for the US to be solely dependent on infinitely replenishable resources (oxygen, wind, etc.) for its energy needs. However, this could potentially provide us a bridge to get to those alternative fuel sources. In the meantime, it could alleviate the economic and security dangers of our current dependence on foreign oil. Compared to where we are today, that sounds like a good news story to me.
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