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Page added on November 17, 2012
An American Oil Find That Holds More Than All of OPEC
Drillers in Utah and Colorado are poking into a massive shale deposit trying to find a way to unlock oil reserves that are so vast they would swamp OPEC.
A recent report by the U.S. Government Accountability Office estimated that if half of the oil bound up in the rock of the Green River Formation could be recovered it would be “equal to the entire world’s proven oil reserves.”
Both the GAO and private industry estimate the amount of oil recoverable to be 3 trillion barrels.
“In the past 100 years — in all of human history — we have consumed 1 trillion barrels of oil. There are several times that much here,” said Roger Day, vice president for operations for American Shale Oil (AMSO).
The Green River drilling is beginning as shale mining is booming in the U.S. and a report by the International Energy Agency predicts that the U.S. will become the world’s largest oil producer by 2020. That flood of oil can have major implications for the U.S. economy as well as the country’s foreign policy which has been based on a growing scarcity of oil.
The IEA report does not detail where the American oil will be coming from, but the largest deposit is the Green River formation which has yet to tapped in any significant way.
This tantalizing bonanza, however, remains just out of reach, at least for now. The cost of extracting the Green River oil at the moment would be higher than what it could be sold for. And there are significant environmental obstacles.
The operation might require so much water it would compete with Denver and agriculture for vital supplies, the GAO report warned, could pollute underground streams, affect fish and other wildlife, and kick up so much dirt it would leave national monuments in a cloud of dust.
Nevertheless, the federal government has authorized six experimental drilling leases on federal land in an effort to find a way to tap into the riches of the Green River Formation.
Day’s American Shale has a lease on 160 acres 40 miles northwest of Rifle, Colo. It has already produced oil on a pilot basis, and now stands poised, if it gets the necessary government permissions, to produce on a larger scale.
Getting oil from Green River shale is a different proposition than getting gas and oil from other sites by using the controversial method of “fracking,” fracturing the underground rock with pressurized, chemical-infused water.
The hydrocarbons in Green River shale are more intimately bound up with the rock, so that fracking cannot release them. The shale has to be heated to 5,000 degrees Farenheit before it will give up its oil.
Producers have been trying to accomplish that in one of two ways: Either they bring the shale to the surface and then cook it , or they sink a deep shaft and place an electric heater at the base, a process called in-situ. AMSO has been testing in-situ with mixed success.
“We put in a 600 kilowatt electric heater in, 2,100 feet below the surface,” said Day. “The idea was that this would heat the shale and cause the conversion of solid hydrocarbons into liquid oil and gas. These, then, would be brought to the surface.”
Things have not gone smoothly.
“We plugged it in the first week in January,” said Day, referring to the heater. “It burned out like your toaster, only this is a toaster that costs several million dollars to repair. Just in the past month we’ve figured out what went wrong. We expect to re-install in December. If we’re lucky, we’ll put heat in the ground again before the end of the year.”
If everything pans out and if AMSO gets the green light from the federal government, the company’s half-dozen wells initially might produce about 1,000 barrels a day. Later, at peak production, Day estimates they could produce “100,000 barrels a day for 30 years.”
Enefit, an oil producer headquartered in Estonia, has been producing oil from oil shale in Europe for more than 30 years, according to the CEO of its Utah subsidiary, Enefit American Oil. Rikki Hrenko says Enefit brings the shale to the surface, then heats it in retorts.
“It’s more labor intensive to have to mine the shale,” Hrenko said. “But the economics are still quite feasible.” She puts the break-even price at about $65 a barrel. The cost of producing in Utah, she thinks, will be only slightly higher than in Estonia.
Enefit doesn’t lease its Utah site from the U.S. government; it owns it. “We purchased it March 2011,” Hrenko says. The company’s goal is to have all the necessary permits by the end of 2016, start construction, and to be producing oil commercially in 2020 at the rate of 25,000 barrels a day.
Among the hurdles faced by would-be Green River producers are environmental costs, first among them being water consumption, according to the GAO report. Current estimates on how much water might be needed to realize the potential of Green River oil “vary significantly,” the report admits. But water in the arid west already is in short supply, and ranchers and environmentalists eye warily the oil industry’s potential thirst.
Green River Oil Reserves Larger Than OPEC
Water would be used not for fracking, but as a lubricant for drilling. Frank Rusco, GAO’s director for energy and science issues, told ABC News water also would be used as steam “to stimulate the flow of oil.” Water would also be neeeded, as at any work site, for dust control and cooling.
Day said he expects AMSO’s in-situ wells will be water-neutral. Experiments so far suggest that the company may get a barrel of water from the rock for every barrel of oil extracted. AMSO intends to cool its operations using radiators, not water.
Rusco doubts substantial amounts of oil could be produced from Green River anytime soon because production is not yet economical. It costs more to produce a barrel of oil here than the oil can be sold for on the market.
GAO’s report says commercial development of oil shale is “at least 15-20 years away.”
Glenn Vawter, executive director of the National Oil Shale Association in Glenwood Springs, Colo., isn’t so sure. Right now, he says, it costs his members somewhere between $40 and $80 to produce a barrel of oil from shale, depending on the technology they use. The price of oil, currently at $86 a barrel, has risen in the past over $100 a barrel and continues to fluctuate. Technology, he points out, is also evolving.
A Canadian oil producer has experimented with using radio energy to heat rock.
“The economics remain a bit speculative,” Vawter said, but he thinks that “big production” might be only five to 10 years out.
There’s no question, says Rusco, that the oil is there, all 3 trillion barrels of it.
“The technology for assessing oil reserves is pretty good,” Rusco said. “I don’t say there isn’t a wide margin of error, but you can have great confidence that there is a very, very large amount of oil trapped down there that could be recovered. It’s just that, so far, it can’t be recovered at a profit.”
36 Comments on "An American Oil Find That Holds More Than All of OPEC"
BillT on Sat, 17th Nov 2012 2:05 am
And there is more gold in the world’s oceans than has been mined in all of history. So what? When the last pump stops and the last oil well closed, there will still be billions of barrels of oil scattered around the world in small pockets and fields. So What?
Did you ever hear of EROEI?
The closer we get to that last barrel, the more of this bullshit we are going to see and hear by the oil pimps.
Beery on Sat, 17th Nov 2012 2:49 am
Not again! Where are all these stupid stories coming from?
It’s getting tiresome refuting all these nonsensical cornucopian pipe dreams. I’m getting to the point where I just want to sit back and let them talk the whole idea of peak oil away and let it come back and bite them all in the bum.
PrestonSturges on Sat, 17th Nov 2012 2:53 am
You notice the call this the “Green River Formation” and not the “Green River Oil Field?”
Beery on Sat, 17th Nov 2012 2:54 am
And isn’t the green river formation ‘oil shale’ – i.e. kerogen (i.e. not oil)? As I understand it, no one has ever extracted oil shale on any profitable basis and it’s unlikely that it can ever be extracted as such.
DC on Sat, 17th Nov 2012 3:12 am
Doesnt kerogen have less energy content than say, firewood?!
MrEnergyCzar on Sat, 17th Nov 2012 3:55 am
With a negative net energy, why bother…
MrEnergyczar
SilentRunning on Sat, 17th Nov 2012 3:57 am
I love how these stories start out with misleading titles, then the article has all kinds of qualifiers.
It’s like if I came home and announced to my wife: I won the $85 million dollar lottery!!!!! But then when pressed, I go on about the lottery ticket I bought **MAY** be the winning lottery ticket. Then I start to talk big about all the great stuff we *could* buy *IF* this is in fact the winning lottery ticket.
MrEnergyCzar on Sat, 17th Nov 2012 4:03 am
the EROEI is probably negative -10..
MrEnergyCzar
PrestonSturges on Sat, 17th Nov 2012 4:07 am
They dig oil shale somewhere in europe and use it directly as fuel for electricity generation in the huge boilers. It creates huge amounts of waste, because after the hydrocarbons are burned you still have all this dirty rubble that’s hardly reduced in volume.
Sharpie on Sat, 17th Nov 2012 4:35 am
The “oil” might as well be on the moon. Energy intensive and thus a waste of time…but hey we’ve gotta keep trying to sustain the unsustainable amirite? Our drive pollute consume lifestyle is at stake. Whatever will we do?
Sharpie on Sat, 17th Nov 2012 4:51 am
But I think the most misleading line I’ve ever heard is “the world will never run out of oil.”
Way to keep the wool over the sheeple’s eyes.
Alan Cecil on Sat, 17th Nov 2012 5:15 am
“Green River Formation”??? Is that like the “Wishbone” or the I formation?
Arthur on Sat, 17th Nov 2012 5:37 am
I think that many are jumping to conclusions here. Heinberg himself recently said that no real EROI studies are available at the moment. And there is no real practical difference between EROI 100 or 10.
http://deepresource.wordpress.com/2012/11/11/eroi-threshold-net-energy-cliff/
If these numbers are confirmed with EROI values higher than 7 or even 5, we might as well join an anti-global warming site.lol
PrestonSturges on Sat, 17th Nov 2012 6:23 am
Nobody has ever asked the people of Colorado, Utah, and Wyoming about how much of their state they want to be permanently depopulated.
But heck, why should West Virginia have all the fun of mountain top removal?
GregT on Sat, 17th Nov 2012 9:06 am
“It’s just that, so far, it can’t be recovered at a profit.” = Takes more energy to extract than the economy can support.
Maybe once we finally recover from the “Economic Downturn”, we can continue on our merry way of destroying what planet we have left. Get the economy rolling again, create more debt, consume more resources, put more crap into our environment, and breed more people.
You think we have problems? Our kid’s futures are already not looking all that wonderful.
It’s all good though, they’ll think of something.
Arthur on Sat, 17th Nov 2012 10:31 am
“Enefit, an oil producer headquartered in Estonia, has been producing oil from oil shale in Europe for more than 30 years”
In other words, a shale oil company is able to survive for more than 30 years and ‘not losing its shirt’.
https://www.enefit.com/en/estonia
Again, I am not advocating this, far from it. I want massive investment in renewables a la Denmark and Germany. But it could very well be that peakoil is not now, not in a long shot.
BillT on Sat, 17th Nov 2012 11:56 am
Estonia is hardly comparable to the rest of the world. Some countries still burn a lot of wood, but that does not make it energy efficient.
I hope you are not expecting The EU to have money to do any real anything in the next few years. The whole house of cards is teetering and it is only as matter of where the puff of financial wind will come from that collapses the entire West. Germany is being bled by the rest of the EU and Denmark is not immune to the contagion. It’s only a matter of time…and soon, I hope.
Arthur on Sat, 17th Nov 2012 12:35 pm
Germany is still doing fine and growing as is, to a lesser extent, France. Talk of EU collapse is highly premature. Greece maybe, but Greece is a fruit fly.
Europe is not going to frack, too much environmental concern. If war can be avoided, a big if, Europe will continue to invest in the European supergrid, smart metering, renewables bio, wind and solar and new pipelines to Russia and the ME, via Syria towards Iran. And demand destruction using more efficient cars. Really nobody here buys big new cars anymore. Furthermore the northern European economy has a vast Eurasian hinterland with hundreds of millions of eager consumers, able to pay for these products with raw materials and energy. If US collapse can be postponed thanks to shale, Europe is certainly not going to collapse. The biggest threat at the moment are 1. WW3 starting in the Gulf, 2. US financial collapse, in that order.
Arthur on Sat, 17th Nov 2012 1:41 pm
News just in… Germany’s industry in Q3 has an all-time record revenue, ridiculing any idea of collapse. The news headlines stress the consequences of the austerity measures for the populations of Greece and Spain, but these measures are a sign of strength and not weakness, as politicians in Europe are serious about keeping public finances in order, where Washington still shows no sign of willingness to address the structural one trillion $ deficit.
http://www.z24.nl/speciaal/feeds/anp/artikel_394392.z24/_Recordomzet_voor_Duitse_DAX-bedrijven_.html
It is telling that the vast majority of Spanish and Greek population is desperate to stay in the EU, despite the very harsh measures imposed on them by the north. Nothing they fear more than falling back on their shabby drachme and peseta.
Others on Sat, 17th Nov 2012 4:02 pm
“The shale has to be heated to 5,000 degrees Farenheit before it will give up its oil.”
What is the EROEI and what is the depletion rate. Only the rosy part is told, not the other side.
Article also says million wells were drilled, what happened to them, we they all depleted.
Others on Sat, 17th Nov 2012 4:12 pm
2 companies have already started producing Biodiesel from Algae. Soon this will expand and will challenge this shale oil.
LTJX on Sat, 17th Nov 2012 4:16 pm
Sharpie is very concerned about the statement that ¨the world will never run out of oil¨. But who said this? Maybe I am missing it, but I do not see any such statement in the article or in the other comments – I see it only in the comment from Sharpie? I believe this is known in debate terms as a ¨Straw Man¨ argument (i.e. an argument raised, only because it is very easy to knock down).
Kenz300 on Sat, 17th Nov 2012 5:06 pm
Biofuels can now be made from trash or waste. The world produces a lot of trash every day that can be converted into biofuel.
Every landfill can now be converted to produce biofuels, energy and recycled raw materials for new products. This is much more sustainable than burying the trash. Since the trash is already being collected the inputs to the process are very inexpensive.
Will the cost of producing shale oil be able to compete with second generation biofuels made from cellulose, algae or waste? We can have local energy production with local jobs in every community using second generation biofuel technology.
Beery on Sat, 17th Nov 2012 5:17 pm
““Enefit, an oil producer headquartered in Estonia, has been producing oil from oil shale in Europe for more than 30 years”
In other words, a shale oil company is able to survive for more than 30 years and ‘not losing its shirt’.
https://www.enefit.com/en/estonia
Again, I am not advocating this, far from it. I want massive investment in renewables a la Denmark and Germany. But it could very well be that peakoil is not now, not in a long shot.”
Erm… Arthur…
The link seems to indicate that this is a shale oil process. ‘Shale oil’ is nowhere near the same thing as ‘oil shale’.
Arthur on Sat, 17th Nov 2012 5:36 pm
http://en.wikipedia.org/wiki/Shale_oil
“Shale oil, known also as kerogen oil or oil-shale oil”
Are you sure, Beery?
Please Enlighten us and wikipedia.
PrestonSturges on Sat, 17th Nov 2012 7:18 pm
OK, wikipedia says oil shale = shale oil and the Bakken is “tight oil”
Fracking technology makes if confusing, because now relatively light oils are being extracted from shale. So we hear much more about tight oil being extracted from shale in our own state.
So we think of the Bakken as a “shale oil field” field, with oil in low porosity rock (with natural fractures) that produces oil that was of commercial quality even 50 years ago. And it’s called an “oil field.” The wikipedia artice says this should be called “tight oil.”
http://en.wikipedia.org/wiki/Tight_oil
The Green River is what I think of as “oil shale” which has a much high liquification point, high sulfur and metal, and requires additional refining steps.
But yeah wikipedia says oil shale = shale oil.
PrestonSturges on Sat, 17th Nov 2012 7:19 pm
And in Europe “soccer” is called “football.”
Arthur on Sat, 17th Nov 2012 9:01 pm
“But yeah wikipedia says oil shale = shale oil”
Uh, no.
Wikipedia: “Shale oil, known also as kerogen oil or oil-shale oil”
Shedding some light in the darkness:
http://deepresource.wordpress.com/2012/11/17/oil-shale-shale-oil-and-tight-oil/
PrestonSturges on Sat, 17th Nov 2012 9:19 pm
Soccer, football, don’t care.
SOS on Sat, 17th Nov 2012 11:22 pm
Oil Patch.
SOS on Sat, 17th Nov 2012 11:28 pm
The oil coming out of the Bakken is some of the best crude in the world for refining etc. There is no shortage of oil and never has been. I have no idea what the point of claiming there is a shortage might be. The climate thing is just as false.
Both peak oil and climate change are part of the same political agenda, both are false political concepts designed to capture political power and wealth for those directing the agendas.
Poltiticizing changes in weather is about as rediculous as passing laws and regulations that limit or stop oil production and then claiming the falling production is proof of vanishing supplies.
SOS on Sat, 17th Nov 2012 11:37 pm
Does anybody think solar or wind could be of value in producing the electricity needed to cook the oil out of this rock?
Exxon built an entire city at Rifle Gap Colorado in the late 80s early 90s to mine this shale. They pulled out when they could no longer control costs and regulation was over bearing. I think that project was doomed to failure. These new methods will certainly pan out in time to keep our engines running.
Sharpie on Sun, 18th Nov 2012 4:13 am
I know LTJX, it’s definitely not written in this article lol. “The world will never run out of oil” is a quote I’ve read many times here and elsewhere. What irks me most is that Americans will continue to be complacent to our energy predicament if they believe lies like that.
All I usually say to counter that is: of course we’ll never run out of oil if it takes more energy to extract what remains.
SOS on Sun, 18th Nov 2012 10:15 am
Lets see, if you were trying to make an argument trying to undermine legitimate facts and graphs that show adequate supplies of oil for as far as the eye can see and you wanted it to be “like a math equation” you might come up with something like EROEI.
There is a 30% – 50% margin on first barell now with costs falling over time as infrastructure is paid for and costs are recovered. These are the kinds of gross profit margins the energy business needs because it is so capital intensive.
Again, what is the point of denying oil is plentiful?
PrestonSturges on Sun, 18th Nov 2012 4:37 pm
Anyway, the Bakken holds good oil in shale with natural fractures.
The Green River formation holds sludgy oil-sands type oil in shale that can’t be recovered even with fracking, so the best recovery method to date is strip mining on a vast scale. Downstream processing is much worse than oil sands and hasn’t been done commercially.
Wikipedia says 1/6 of the formation has shale with 20% or more recoverable oil content so there might be some promise there. Where is that? Under a city? A national park? An essential western water shed?
SOS on Sun, 18th Nov 2012 8:33 pm
There will probably be no strip mining in the Green River. The effort was started once in a big way but abandoned after considerable investment.
Even in the wide open Canadan tar sands they are learning to extract by drilling and enhanced recovery using heat. Nuclear power plants have been proposed to provide the heat. This method is gaining favor but the mining will continue.
The land is good for nothing else and when they are done it will return to nature. In 500 yrs it wont have mattered.