Wednesday, November 14, 2012

3 Trillion Barrels of Oil Equivalent from Green River Kerogens: What Does It Mean?

More Oil Than OPEC

There's no question, says Rusco, that the oil is there, all 3 trillion barrels of it...

...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). _ABCnews

Will Advanced Kerogen Production Put a Ceiling on Global Oil Prices?

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. _ABCNews
But in reality, in situ production would be cheaper in the Utah, Colorado, and Wyoming than mining in Estonia -- if producers used a cheap enough source of abundant, high quality heat. In fact, being able to produce a resource of 3 trillion boe, at a price of between $60 and $70 a barrel, might seem to place a price ceiling on global oil.

The only problem is that it will probably take 20 years before the technology and cheap process heat are ready to meet the government regulations and prevailing prices for oil.

Yes, it will probably also be 20 years before modular high temperature gas cooled nuclear reactors are approved in the US and produced in high enough numbers to be placed at Green River well heads.

But even when the technology, the cheap heat, the environmental approvals, and the market prices all come together, there is still the problem of getting the oil to global markets. The big price gap between WTI and Brent points out the problem nicely. Adding refined oil shale kerogens to the North American mix would not help the problem of lack of access to ports.

Getting the product to market is a serious problem, in a political environment where the US Democratic Party has stonewalled the exportation of abundant shale gas, and obstructed construction of LNG terminals in US ports. When you have agendas of political energy starvation afoot, the cost of doing energy business shoots up accordingly.

The truth is, US demand for oil has been on a downward slope. US shale oil production has grown exponentially, and looks to continue doing that for another 10 years or so before plateauing. US demand for oil shale kerogens at this time is minimal. Everything will depend upon global prices, government environmental regulations, and government policies that support the export of petroleum products from the US.

Until those matters are settled, the possibility that 3 trillion boe's of Green River kerogens will put a price ceiling on global oil, will have to remain a distant possibility.



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