Oil Shale—An Investment We Can’t Afford

Have you seen this headline around the internet? “The U.S. Government’s Secret Colorado Oil Discovery” There are people out there who trying to get people to invest and others selling “special reports.”

First, they will give you this free report, which is questionable in its accuracy! It goes something like this:

Ten months ago, the U.S. Energy Department announced the results of a land survey…

It was conducted to determine the official amount of oil a thousand feet deep in the Rocky Mountains…

They reported this stunning news:

We have more oil inside our borders, than all the other proven reserves on earth.

Here are the official estimates:

8-times as much oil as Saudi Arabia

18-times as much oil as Iraq

21-times as much oil as Kuwait

22-times as much oil as Iran

500-times as much oil as Yemen

And it’s all right here in the Western United States.

While the above information may very well be true it’s what their not telling you that is the kick-in-the-head. Oh, they tell you that it is “oil shale,” and give you a brief summary of how the oil is extracted from the shale as follows—“ It feels grainy to the touch and… greasy. You see, what’s inside oil shale has huge governments, Big Oil, venture capitalists, and even everyday investors scrambling to stake a claim.”

Oil shale — when heated — oozes bubbling crude.”

Wow, sounds great and especially the part about everyone “scrambling to stake a claim.” If they really are investing in this method of oil production and extraction, at this time, then they are probably going to be in for a rude awakening.

Now, let’s go back to the, first, quote above—“Ten months ago, the U.S. Energy Department announced the results of a land survey…”

The fact is, that this was first brought up during the 70s oil crisis. Shale is a real source of oil and there is a lot of it in the U.S. The relativity low price of oil has kept us from tapping this resource since oil extracted from shale is much more expensive than crude straight out of the ground.

Once again, let’s take a look at this quote—“Oil shale — when heated — oozes bubbling crude.”

Sounds simple enough…right? Now let’s look at some details they failed to mention.

There are two main methods of extracting oil from shale - surface mining and in-situ.

With mining, the oil shale can be mined either by traditional underground mining or surface mining from the ground and then transported to a processing facility. At the facility, the shale is heated to 450–500 °C and enriched with hydrogen (via introduction of superheated steam). The resulting oil is then separated from the waste material.

More recent but less exhaustively tested technology may enable the shale to be processed at somewhat lower temperatures with the addition of catalyzing bitumen. Carbon rich waste material from the process may be burned in electric power plants. The lighter and more hydrogen rich fractions of the original shale kerogen are available for further refining in fairly standard oil refineries after the catalytic process is complete.

With in-situ processing, the shale is fractured and heated underground to release gases and oils. Most of these methods are still experimental.

The Shell Oil Company has been developing a new method under the name the Mahogany Research Project that uses electrical heating in Colorado, some 200 miles (320 km) west of Denver. A heating element is lowered into the well and allowed to heat the kerogen over a period of approximately four years, slowly converting it into oils and gases, which are then pumped to the surface. This greatly reduces the footprint of extraction operations—to no more than a conventional oil well. It could also potentially extract more oil from a given area of land, as the wells can reach much deeper than surface strip-mines can.

Then, there are environmental considerations which they fail to mention at all.

Surface-mining of oil shale deposits has all the normal environmental effects from open-pit mining. In addition, the pre-refining process to obtain crude oil generates ash, and the waste rock (a known carcinogen) must be disposed of. Oil shale rock expands by around 30% after processing due to a popcorn effect from the heating; this waste then needs disposal. Oil shale processing also requires water, which may be in short supply.

The energy demands of blasting, transporting, crushing, heating the material, and then adding hydrogen, together with the safe disposal of huge quantities of waste material, are large. These inefficiencies, plus the cost of environmental restoration, mean that oil shale exploitation will only be economical when oil prices are high (and projected to remain so).

Currently, the in-situ process is the most attractive proposition due to the reduction in standard surface environmental problems. However, in-situ processes do involve possible significant environmental costs to aquifers, especially since current in-situ methods may require ice-capping or some other form of barrier to restrict the flow of the newly gained oil into the groundwater aquifers.

We face a switch either to clean energy sources or to fuels even dirtier than today's, such as shale oil. It beggars belief that anyone would choose the latter." -New Scientist editorial, 2000.

So, why shouldn't we use it? Simple—it would be a greenhouse disaster!

Greenhouse emissions from the production of shale oil would be nearly four times higher than from normal oil. Scientists, such as the CSIRO, have found that global greenhouse emissions need to be reduced by at least 70% if we are going to avoid the worst impacts of climate change, such as coral bleaching on the Great Barrier Reef.

Also, shale oil produces highly toxic dioxins, which have been linked to cancer, reproductive problems and immune system defects.

Now back to the financial aspects of mining oil shale.

The Stuart project was near the southern end of the Great Barrier Reef in Queensland, Australia; it has now been shut down.

The Stuart project was over four years behind schedule and more than $130 million over budget. It was propped up by federal government subsidies worth nearly $55 per barrel or up to $36.4 million per year. In 2001, former partner Suncor pulled out of the Stuart project amid concerns about its commercial viability and environmental impacts.

So now I will jump up on my soapbox and say…Rather than supporting polluting industries such as shale oil, governments should be helping develop clean, renewable energy and fuels such as solar and wind power, and hydrogen fuel cells.