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269 comments on DrumBeat: July 18, 2008
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269 comments on DrumBeat: July 18, 2008
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Offshore Drilling & Shale Oil to the Rescue?
Offshore Drilling
This is an interesting website that shows the onshore producing regions for various parts of the US Lower 48:
http://www.priweb.org/ed/pgws/backyard/sections_home.html
Note that the offshore production in the Gulf of Mexico (GOM) and in the Pacific off California were both extensions of onshore production. Note the lack of any significant onshore production in the coastal region from Florida to Maine (Southeast and Northeast regions). While this does necessarily not condemn the Atlantic offshore region, it certainly is not encouraging.
Shale Oil (Emphasis Added)
http://www.newsweek.com/id/146161
America’s Untapped Oil
Could the Rockies out-produce Saudi Arabia?
There is a fair amount of confusion between the Tar Sands (Bitumen) Play, the Bakken Shale Play and the Oil Shale Play in Colorado. The two former plays are both commercial operations. Bitumen is a very heavy oil that is upgraded into a light oil, and the Bakken produces a thermally mature light oil.
The Oil Shale Play is really a kerogen deposit, a precursor to oil that has to be "cooked" in order to obtain an oil that can then be refined into a usable product. A key question is the net energy output, and as the article noted, there is presently no commercial oil shale operation in the US.
Jeffrey J. Brown
The WSJ has an article on oil shale:
Squeezing Oil From a Stone
It's behind a paywall, but someone liberated it here.
That article says:
Has there been research on using it more or less as it is to generate electricity rather than separating oil from rock for transportation purposes?
I gave a talk at Sandia Labs on Monday, and I asked one of the Sandia guys this exact question, since I had read that Shale Oil is used, in I believe one of the former Soviet Republics, as a boiler fuel. He said that it was, in some cases, possible, but that like coal, there are different grades of Shale Oil quality, and it has to be a fairly high quality kerogen deposit in order to make it worthwhile to use as a boiler fuel.
In any case, I suspect that this may be the future for Shale Oil--stripmining high quality deposits to use to generate electricity. However, the volume of waste ash will be tremendous, and I think that this is really dirty stuff that I suspect will make some grades of coal look clean.
Was your talk in Albuquerque? I would love to see an overview of what you said and have some feeling for the response. I live there and know several Sandians...technocornucopians and speculator-blamers all. I don't bring up peak oil lest I lose my friends...I figure they're smart, eventually it will sink in.
Well, I wouldn't call "all' of them technocornucopians. My talk (in Albuquerque) was videolinked to two other national labs, and it is reportedly being widely viewed on the national laboratory intranet. They are working on posting it on the Internet. We had a very good turnout, and I would say the primary response can be characterized as shock.
BTW, we were given a tour of solar research facilities, and it was very impressive, especially the concentrated solar research facility. I just wish that they had more funding for solar research. FYI--as you probably know, it's not exactly easy (for obvious reasons) to get in. My wife and I had to clear a background security check and we could not bring any electronic devices of any kind in to the facility.
Thanks...I'm glad you talk shocked people and is being widely viewed...that can only be a good thing! I often wonder what kind of progress could be made if all research at the national labs related to nuclear weapons/bunker busters/infrared crowd control guns/ spy satellites....all the military industrial complex bs was halted and they focussed solely on alternative energy research.
Yes I have seen the solar concentrator, you can get a good view from a plane coming or going from the Abq airport. Security clearances are a common topic of conversation amongst the Sandians I know - who's up for review, how long it takes etc. And I really don't know what any of them do other than the basics - computer programmer, mechanical engineer etc...I would lose my mind working there!
impressive, especially the concentrated solar research facility.
Are you willing or able to spill the beans when the masses will see an actual sterling cycle engine that is 'afforable' (cheaper than solar panels as an example)
R&D is not needed. Estonia get 75% of their electricity from burning shale:
http://www.estoniaenergy.com/
For now I guess coal is cheaper (in the US) and the environmental effects of burning shale is of course enormous, but it is easily done on an industrial scale.
Thanks for the info ( WT also).
That led to checking the EIA's country profile for Estonia. They are a net exporter of electricity (most from oil shale) and that business is quite profitable and a substantial source of government revenues.
http://www.eia.doe.gov/emeu/cabs/Baltic/Electricity.html
The stuff is marl, not shale, with kerogen, or former organic life, embedded in it. It will burn if heated with a hot enough torch, but it does not burn very well and much of it does not have enough kerogen to even burn at all.
Marl is a kind of very dirty limestone.
And the volume of tailings, or ash if you burned it, is greater than the original volume. This is because the tailings are not nearly as compact as the original marl.
Ron Patterson
My Sandia source thought that the stuff in FSR's (apparently Estonia) was higher quality than most US Kerogen sources.
The Estonian shale has an average heating value of 9.0 GJ/ton. Is there any numbers for the US?
Sounds like a pre-mixed Portland Cement source...
"Oil" shale?
Sounds pretty simple. And they also point out that oil shale burns with a flame.
Is the energy density of oil shale really high enough to justify mining, heating, extracting, refining -- not even counting the cleanup costs, which we can safely assume any corporation will outsource to the public purse?
Surely the basic calculations have been done many times -- can it be that the process can be profitable if environmental degradation is ignored, and the energy companies are just waiting for the right combination of political will and public desperation to go ahead?
Or is it just another ponzi-type scheme to bilk investors out of money? Maybe the best use for that stuff would be in oil-shale lamps for illumination?
No, it is not that simple at all. The kerogen must be heated for at least two years. The original plan called for it to be heated for three years. A "freeze-wall" must also be constructed by freezing the parameter around the area to be heated. This is to protect the groundwater from being contaminated as in the Wall Street Journal link posted by Leanan above.
Shell shelved its plan to do this until they could do more research.Shell shelves oil-shale application to refine its research
As I understand it that research is still going on and the project has not been restarted as of yet.
Ron Patterson
the current research is focused on how to create a freeze floor and freeze ceiling to complete the freeze house. someone in the earlier research program discovered the need for this by accident.
Makes the tar sands sound by comparison like "easy oil".
Note that the Shale Oil play is widely described as having hundreds of billions of barrels, up to a trillion barrels, of "proven" reserves, which is a very interesting use of the term proven.
Just think how much "proven" geothermal energy there is at the earth's core. Who's up for some drilling?
You obviously don't know anything. You only have to go down to the earth's mantle to get hot. Piece of cake.
http://www.damninteresting.com/?p=567
More seriously, the EROI of drilling for heat energy would seem to be slightly unfavorable.
I guess the Russians didn't find any abiotic oil down there, either.
Perhaps if we all came together in one place, ate beans, and lit our farts in unison, it would solve a lot of the world's energy problems, too.
Dammit Dennis,
You weren't supposed to mention it in public until our patent came through!
We gotta hurry. At work in Argentina is the competition. Uh, I think.
OMG! However, they are missing the crucial "ignition" concept that assures us of prior intellectual property. But I agree, it is only a matter of time before they hit upon it...
Hi guys, love you all. I believe 100% in peak oil, but I've sold out of all my oil contracts now and will short any rally to $136 or back up to $147. I think the commodities cycle has peaked for a few years (Similar to mid '70s).
I guess no one will care about my opinion, that's cool, but just felt posting this was the right thing to do, as I way of saying thanks for all the good info.
Long Yen. Short Equities. Short Commodities.
Peace, Love, Survival.
But you could be wrong of course :-)
Yes I could be wrong.
From a fundamental analysis viewpoint I believe oil at over US$100 per barrel is bad for the world economy, consumers have less discretionary income after paying for gas and businesses have higher expenses, which will result in lower profits. This puts downwards pressure on global share prices which reflect discounted future cash flow. Additionally the Ponzi scheme that is fractional reserve banking began unravelling in 2000 with the dotcom bust, artificially low interest rates by central banks (including Yen Carry Trade) helped to prevent a collapse from 2003-2007 but now interest rates can't really get much lower (at least in US/Japan and even Europe).
So it's time for a global stock market crash, and we've been in one since about mid last year ('07), a year is enough time for reduced economic activity to begin putting pressure on energy prices. So it's time for oil to go down due to demand destruction.
But that's all becoming common knowledge, so let's talk about technical analysis.
The chart you've shown is what really concerns me. Can you see the straight line support that was broken when oil feel below $136? (Look at the low points in the chart before the recent selloff started to see it, it extends back to Jan if you extend the chart). Additionally looking at a month view of oil extending back several years shows oil is as overbought as it's ever been (using RSI), so that's another reason for it to crash.
Now broken support becomes resistance so that's why I'm planning to sell at $136.
Now maybe I'm wrong and supply destruction from peak oil will be greater than demand destruction from the ongoing economic collapse, but AFAIC those are the two major forces at work. Either way I'd like to be short equities, and long yen. I admit shorting commodities is riskier.
Also the SPR appears to no longer being filled. Congress has halted deliveries. Reserves appear approximately constant at 706 million barrels.
http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve
http://www.spr.doe.gov/dir/dir.html
Some say that a potato would be as good an energy resource as oil shale. And potatoes probably use less water.
The crux of the shale/kerogen project is to create vertiucal curtains of frozen water (presumably using electricity) and within the curtains, a massive oven to cook the stuff into oil (again, presumably using electricity). Does this sound like it might use just a wee bit of energy to make happen? Good thing we have all this surplus energy to apply.
That is absolutely absurd and will never be economic. It might just possibly make sense to fracture the deposit, supply a controlled amount of combustion air, burn it in situ, and use the heat to drive an electric generator located immediately aboveground. I could just see something along those lines maybe working out.
Assuming that the "ice wall" works during extraction, what happens years later when the electricity is turned off?
Does the "ice wall" simply delay polluting the ground water for a few years? Maybe I'm missing something, but it sounds like a Rube Goldberg solution.
No, Rube's inventions might actually work, and as they are mostly cobbled together from various odds and ends one might have around the attic or garage, they were a darn sight cheaper too.
feed potatoes to slaves running in squirrel cages to generate electricity.
The future is bright.
My calculation says that 93% of the output will be required to light and heat the cages...
The EROEI issue has always been the crux for oil shale potential. At the Denver ASPO-USA Conf., a Steve Mut of Shell gave a presentation about where Shell was in their research and discussed the many issues regarding Oil Shale. His Powerpoint presentation slides are linked here. His last slide, remember this was 2005, says "End of Decade Commerciality Target." At some point in the desperate future, Oil Shale might provide energy. But I suspect the best use for the massive Oil Shale formation is as a platform for wind generators.
Hmm...not invented here, I guess! Must be bad stuff!
Of course, the US has no oil sands-syncrude operations either--thought it mines lots of oil sands for ROAD bitumen. Isn't that strange?!
Currently, oil is not produced from tar sands on a significant commercial level in the United States, although the U.S. imports twenty percent of its oil and refined products from Canada, and over forty percent of Canadian oil production is from tar sands.
http://en.wikipedia.org/wiki/Tar_sands
The reason why is fairly obvious(to me). The US strategy has always been to import..import..import. Energy independence is that tired old meme from that weakie, Jimmy Carter. Besides, the US has a REALLY BIG military to 'guard' all those Gigabarrels, owned by 'people who hate us for our freedom'.
As to energy balance, that's nonsense. The Alberta Taciuk Process(ATP) of external retorting, around for a decade, uses volatiles (approximately 1/3 of the boe of oil shale to heat the kerogen continuously)
http://www.uma.aecom.com/MarketsAndServices/41/64/index.jsp
A report here based on a number of ATP installations says that the net energy(ei/eo) of ATP is .5 or an EROEI((eo/ei)+1) of 3 on primary energy, as good as the tar sands we depend upon now.
http://abrandt.berkeley.edu/shale/Brandt%20_ATP_Energy_and_Emissions_dis...
The largest ATP retorts can process 900 tons of oil shale per hour
producing 16000 barrels per day so a 1 mbpd operation would require about 100 such behemoths. The operation who generate a lot of CO2 based on the type of oil shale found in Colorado.
In other words, oil shale the ATP way would be UGLY and DIRTY just like Alberta (and I hate that too). I'd be willing to go Shell's way but they are playing way too coy with a very straightforward technology(the toaster).
But folks...we are talking about Peak Oil!!!
We need a plan B!!
Anyone who thinks we can dump oil for electricity doesn't know much about oil!
I believe that the threat of the US being able to turn on a couple million barrels per day AT WILL would have a calming effects on international oil markets(far more than a dipshit SPR).
A couple million barrels of shale oil per day isn't going to destroy the planet. We need to do all the good things Al Gore and friends want us to do(close those 24/7 coal plants or sequester the CO2 per Hansen), but business is business--we need that shale oil available (just in case).
And there is always the chance that we will have a breakthrough allowing us to maintain an infinite rate of increase in our consumption of a finite fossil fuel resource base. In the mean time, we should support the UN led effort to repeal the laws of nature.
http://www.glossynews.com/artman/publish/laws-of-nature-repealed-1291.shtml
"And there is always the chance that we will have a breakthrough allowing us to maintain an infinite rate of increase in our consumption of a finite fossil fuel resource base."
and those clever saudi's have come up with just that breakthrough (at least according to this latest piece of saudi gibberish)
"Saudi Arabia insists it would be able to pump at 12.5 million barrels per day for as long as the market needs"
"A variety of new technologies, including multiple lateral wells and microscopic robots swimming through rock pores deep underground, will allow Saudi Arabia to start recovering much more of the oil from its fields..."
The Saudis are using miniature submarines to loosen the oil - like the technology shown in the film Fantastic Voyage.
Actually, building the "microscopic robots" isn't the main difficulty. The hardest part is finding billions of tiny Raquel Welches to pilot them.
Really, I'm just trying to be serious here... :)
The quickest way to a couple of million barrels of extra oil is to drive slower and drive less. Turn the heat down to 65 and the AC up to 75 adds a few more. That's just for starters. Imagine what carpooling and reasonable, reliable bus service could do. http://news.yahoo.com/s/csm/20080715/cm_csm/ydillin
All this oil shale is simply stupid. Are we a nation of morons?
You left out the part about parking the motorhomes and the party barges. We may not have as much fun, but we will have a lot more fuel.
I'll write the letters to the dealers who sell those things, but could I use your return address?
The energy density of a potato analogy comes from Udall/Andrews's timeless article Oil shale may be fool's gold. Less often remarked is their observation that you'll find higher energy content in other foodstuffs, like granola and Cap'n Crunch.
Ex situ approaches would quickly drain/pollute the local watershed - impacting inflow into the Colorado as well. Shell's in situ toasters are estimated to use 1/10 the water, but at a 1.2 GW electrical demand for every 100 kbpd. Oh, and the elements need to be made of highly conductive metal - silver/copper/gold. And what do you do with the field when you're done?
Oil shale is a colossal non-starter. It goes way beyond the usual tap vs tank analogies.
Oil Shale Development in the United States : Prospects and Policy
Potential Ground Water and Surface Water Impacts from Oil Shale
Check out the analysis for water impact in Table 2 of the second document.
Sure-- use my return address. I'm used to abuse from the stupid.
Today the local radio mouth was yammering on about how absolutely un-American it was to even think that we would have to change our way of life or our expectations to go where we want when we want and eat what we want-- etc. Al Gore and Barack Obama were held up as proof of the left wing conspiracy that wants to destroy our country.
One thing I do like from our local radio guy is that he calls Obama "Changey Changerton".
Maybe we should at least turn the air conditioning up to a temperature that's actually comfortable given that in the summer it's potentially possible to dress in summer-type clothing. Bundling up in sweaters on a hot summer day to survive the air conditioning is not only crazy, it's unpleasant. I'm a big believer in air conditioning, I really am, but I prefer it to be used for comfort, not for a different kind of discomfort.
So what your saying is that you hate America? If we set the A/C above 68, we've let the terrorists win.
At least you have electricity to run your A/C. Millions of Americans are having/have had their home's energy shutoff, through the fault of none of the usual terrorists.
The terrorists must have won in Japan where the salarymen work in 82-degree offices!
Yes, yes they have.
I know, I work in one of those saunas!
Ah, yes.
Jeffrey - the MMS has an excellent page on Gulf of Mexico : Maps and Spatial Data. Select one of the "General Purpose Maps." Leases to fields to pipelines to rigs.
If you are going to use a low grade fuel, there is a tremendous amount of Peat around the world.
"... the world's largest peat bog, located in Western Siberia and the size of France and Germany combined , is thawing for the first time in 11,000 years. As the permafrost melts, it could release billions of tonnes of methane gas into the atmosphere, greatly exacerbating global warming."
Peat doesn't get the press coverage that is deserves - either as a potential energy source or its role in global warming.
That would be Lars Larson, I'm guessing. Sounds like his brand of douchebaggery.