Via memeorandum I see that Ken Salazar (D-CO) has a cautionary editorial in today’s Washington Post about oil shale. In it, he reminds people that although technological progress has been made, companies are still a long way from solving the problems involved in extracting oil from those vast deposits, and he wonders what the purpose is in what he calls the BLM “fire sale”:
This sale would be a tragic case of putting the cart before the horse. How is a federal agency to establish regulations, lease land and then manage oil shale development without knowing whether the technology is commercially viable, how much water the technology would need (no small question in the arid West), how much carbon would be emitted, the source of the electricity to power the projects, or what the effects would be on Western landscapes?
While the question of commercial viability doesn’t really belong there, he has a couple of very good points — not least being that R&D is ongoing even now, and the currently-leased land is serving that purpose very well. Unless the companies who are working on the challenge have said they need a different lease for their research (and I haven’t read that they have), I have to agree with him here. Madly auctioning leases when there are still many technologies being explored seems pretty silly — just another example of a confused and reactive government trying to look as if they’re doing something.
The potential, though, is pretty incredible. If energy companies can solve the technology challenges (and it truly is an “if”), then oil shale should be part of the overall US energy plan.
Sunday’s Houston Chronicle had the best description I’ve yet read about the deposits themselves, development and extraction history, and the very real technical challenges involved in doing anything with it.
If the oil industry can learn how to extract oil and gas from the oil shale in a cost-effective manner, the United States could lay claim to oil reserves totaling, perhaps, 800 billion barrels — three times Saudi Arabia’s.
Wow. But look — here’s the Democrats, locking the gates again.
President Bush last month linked oil shale with his oft-repeated calls to open Alaska’s Arctic National Wildlife Refuge and more areas offshore to oil and gas drilling, hailing the “extraordinary potential of oil shale.”
But Democrats have barred the Bureau of Land Management from leasing any federal land for commercial-scale oil shale projects.
Or are they?
In 2005, the Bureau of Land Management launched a program to spur interest in the oil shale, handing out six leases for research and development projects on federal lands, where most of the oil shale is located.
Shell, by nearly all accounts the industry leader in oil shale research, landed three of the leases. The subsequent ban on commercial shale leases doesn’t prohibit research activities.
Doesn’t look like the Democrats are holding anything up, frankly. And neither are the oil companies.
Competitors are pursuing different approaches. Chevron, working with experts at the Los Alamos National Laboratory and the University of Utah, hopes to avoid the need for so much power by extracting oil and gas through a chemical process. Exxon Mobil is investigating using an electric current to heat the shale, and Schlumberger — with technology developed by Raytheon Co. — is examining using radio waves to heat the rock.
Oil Shale Exploration Co. could beat all these players to the punch. It’s considering returning to the mining and retorting method to develop oil shale. The privately held, Utah-based firm announced last month that Brazil’s oil company, Petrobras, and Japan’s Mitsui & Co. had purchased minority stakes in the venture.
“Whoever cracks the nut is going to be sitting high,” said Carroll Campbell, a retired Shell operations supervisor.
It just ain’t soup yet, folks.
The point of all this is that oil shale, for all its potential, is not going to solve our energy needs today. Don’t let the election-year hype fool ya.
Think you’re right that oil shale isn’t going to present a short-term solution, any more than offshore drilling or nuclear expansion will. That being said, grin and bear it isn’t much of a national energy policy. Pragmatism dicates that we start somewhere. Unfortunately, we’ve squandered the last 30 years.
I’m all for a full-court press on energy- from conservation, reduced speed limits, greater auto mileage standards to offshore and ANWR drilling and nuclear power expansion. Our monster economy (and lifestyles) depend upon huge energy resources. Doing nothing isn’t an option- even though there’s few prospects for a short-term silver bullet.
grin and bear it isn’t much of a national energy policy.
No it’s not — I totally agree. But in the short term (and the medium term), that’s really what we (as in, us ordinary folks, not government) are going to have to do.
I’m worried that we (as in government) are going to get (stay) all snarled up in the incredibly wide range of options. It’s partly what’s paralyzed our energy policy for all these years (enhanced, of course, by rigid partisanship).
But all possibilities aren’t pursuible (is that a word?) at the moment, and some are just not good ideas. (i.e. corn ethanol)
Today oil is down 7 bucks a bbl on Bush’s speech to open up drilling.
Im telling you that fear is driving the market. Just the thought we might do something drops the prices. If we actually tried to do something the price would come down.
I firmly believe that if the democrats try to hold this up its for political reasons and that is egregious.
The problem with narrowing the options is that market forces tend to better dictate winners and losers. The government’s backed ethanol- not a great pick. Similarly, it’s favored two relatively flaccid sources (to date anyway)- solar and wind. That being said, nuclear, for example, requires huge capital investments- something that the government is capable of garnering.
Neo- I’m all for expanding drilling. I do believe that there’s a speculation element in the oil market that would respond (now) to aggressive US exploration goals, even if it doesn’t come online for a decade.
It will be interesting to see whether Obama and the Dems go Sister Souljah on the enviro wing of their party and endorse expanded drilling and/or nuclear. I doubt it. Hope I’m wrong.
It finally dawned on me where I was going wrong all this time in explaining the oil industry. People seemed wedded to idea that there are only 5 companies in the oil business. This was driven home to me today when I read Poli’s post over at TMV and then saw the responses.
It is not the Big 5 that is our hope………ITS THE WILDCATERS who now have the price supports to make money…..80 dollar a bbl oil is no farther away then just saying were turning them lose to go get it.
That is a short term solution. Oil is in our future in declining numbers for the next 25-30 years. We need green. We need Nuclear. We need solar and wind. We need Hybrids. We need 40 mpg cars. But in the short term we have to get this oil price down to supportable levels. But we have to work hard on developing Green. That is why I have not begun my usual T. Boone Pickens rant.
Years ago Honda put their hybrid on the market…70 mpg. Super. After a couple months it disappeared then returned the next year with 38 mpg. Amazing what a couple billion in kickbacks from all the big oil would do for your MPG.
Neocon — I made a similar argument to your epiphany to Dear Husband (DH) this morning about the oil shale leases. Oil shale is going to be very tricky to get out. Only the majors are going to be able to create the necessary infrastructure (i.e. power plants, for instance) to get that up and running — if it can be done at all.
One of my concerns about those BLM leases going out right now, before anything is known about feasibility — is that there may not be a way for smaller competitive companies to get in there.
I think competition is great.
OTOH, your argument that the wildcatters are going to drive prices down is a bit confounding to me. How much oil do you think is out there on undrilled leases, anyway? It’s certainly nowhere near enough to do more than hiccup at our consumption.
Finally, you said:
But in the short term we have to get this oil price down to supportable levels.
Why?
I’m all for developing green solutions. My qualm is simple: the government has subsidized solar and wind for a few decades with marginal success. Many cling to the belief that solar/wind will ultimately win out, which may or may not be true. Again, I’m skeptical that a handful of government officials will preselect the ultimate winning technologies (cf. Hayek). Ethanol is the most recent example.
Wishing and hoping for Green isn’t an energy policy. (It may have been for Dusty Springfield, but that’s another story.) In this area, pragmatism wins out.
But in the short term we have to get this oil price down to supportable levels.
Why?
So your contention is that 150 dollar a barrel oil is not causing the economic melt down? I believe that these prices are unsustainable by our economy. IF you are spending money on gasoline then you ARE NOT spending it on something else.
Oil shale will never work unless they can use co2 to extract it instead of water. If they must rely on water then oil shell is a pipe dream.
Unfortunately, I think it’s precisely a comprehensive plan that we need in order to move forward. It’s possible that increased drilling and/or oil shale needs to be a part of the plan. Yet history has shown over and over that if we JUST license those things now, people will immediately forget about alternatives to fossil fuels and energy efficiency as soon as the price is lower — until the next time there’s a crisis. People need to cut a compromise. I’ll give you your drilling if you give me serious capital to invest in alternatives and efficiency. (And vice versa.)
Neocon — I think the economic woes we’re facing are perhaps exacerbated by energy costs, but no, I don’t think that’s the sole, or even prime, culprit. Not to say the prices aren’t high, and yes indeed they’re having an effect. But I don’t know that $4 /gal is going to wipe us out.
I agree with pacatrue, who said “people will immediately forget about alternatives to fossil fuels and energy efficiency as soon as the price is lower — until the next time there’s a crisis.”. That IS our pattern. We’ve ALWAYS returned to gorging, snoring complacency when not being pinched.
Change is tough, from moving across town to re-drawing our social landscape because of how we’re going to have to approach energy. Everybody resists change if not being shoved out of the old rutted way.
As a former member of military, US Navy Submarine Service, I believe we have a viable solution to our near-term energy needs. The Navy has been safely operating nuclear power plants in the fleet since 1954. In the Submarine Service, men have been cohabiting within feet of these plants and, to my knowledge, have not suffered for the experience.
I believe that the Navy has only two suppliers of these power plants (Westinghouse and General Electric), and works with a minimum number of designs. I believe that the Government could work with these folks to construct a dry land network of power generation facilities as safely and expeditiously as they do for the Navy. I would advocate a single supplier solution with a single plant design to minimize cost, standardize training and operating practices, and achieve a high level of safety. I bet we could roll a good number of them out within 5 years. This could be one of many paths forward to resolve our energy problems.
The cause of the current woes is cyclical. Every 8-10 years we have a recession. In this case its been 6 years because of two very important features. Rising interest rates designed to slow the speed at which the housing bubble expanded and those caught up in bad decisions. And the sudden and unexpected rise in gasoline prices.
Yet everything is tied in with the rise of gasoline. Oil greases the wheels of commerce and production capacity. Its increase is passed along to consumers. The cost of producing food, getting it to market increased suddenly by the rising costs of oil. this was passed along. Thus core inflation. Inflation rises the feds raise the interest rates. Indirectly the housing interest rates are tied to the fed rate.
So you are wrong and there are not many economists that will not agree that oil prices have cause a large degree of ripples in this economy. The resultant rise of OIL has not just affected prices at the pump but it has caused nearly everything that is manufactured or brought to market to rise much, much faster then would ordinarily happen.
To claim otherwise simply means that the Obama crowd want to continue pushing the notion that Bush and company policies and not Oil prices are the culprit to the economic woes because you and every other Democrat knows that this could be the one thing that beats Obama in the fall and in fact it is the sole reason that Obama in not 25 points ahead of McCain right now.