An initial exploration well 40 miles northwest of Rifle,
Colorado, owned by American Shale Oil LLC. It sits atop part of the Green River
Formation of shale, believed to contain 3 trillion barrels of oil.
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.
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.
Courtesy Roger L. Day/American Shale Oil LLC
Source: Breitling
Oil & Gas Co. By ALAN FARNHAM Nov.
13, 2012
Bakken Formation in North Dakota and Montana and Canada
In the grasslands of western North Dakota, one of
the country’s richest oil men is using a controversial gas drilling technology
to develop what could be the biggest domestic oil discovery in the last 40
years.
The oil lies underground in a shale rock formation
stretching across western North Dakota, northeast Montana, and into Canada’s
Saskatchewan Province known as the Bakken. Thanks to hydraulic fracturing or
“fracking” and high oil prices, oil production in the akken has exploded. It
went from a mere 3,000 barrels a day in 2005 to 225,000 in 2010, according to
the government’s Energy Information Administration. EIA thinks it will produce
350,000 barrels a day by 2035, but most analysts think that estimate is far too
low.
According to Harold Hamm, president of the energy
company Continental Resources, it could produce a million barrels a day by
2020. That’s only a fraction of the 9.8 million barrels a day the country
produces and an even smaller fraction of the 19.2 million it consumes, but it’s
significant.
Breitling Oil and Gas Corporation operates the
drilling site.
Eagle Ford
Formation Texas
By Matt Badiali, editor, S&A Resource Report Wednesday, November 17, 2010
My friend Cactus Schroeder shocked the audience here in Zurich,
Switzerland.
Cactus is a true
"wildcatter" – an independent oil explorer – from Abilene, Texas. He
joined us in Switzerland for Stansberry Research's annual Alliance Conference.
During his talk, he told us a recent giant Texas oil discovery, the Eagle
Ford shale, was the largest oil field discovered since super-giant Prudhoe
Bay in Alaska in the 1970s.
The field is still
relatively new. Investors who get in the right companies today could double their money within three years
as production ramps up.
The Eagle Ford is a
huge shale formation beginning near the Mexican border and sweeping 400 miles
northeast, almost to Houston...
It's what we call an
"unconventional"
oil and gas play... meaning it isn't a traditional reservoir, where we can
drill a well that acts like a straw and sucks the oil and gas up. Instead, the
Eagle Ford is a series of thin rock layers, like pages in a book. The oil and
gas are trapped between the pages, which makes traditional oil drilling
useless.
Developing the tools
to extract shale gas is singularly responsible for an explosion of U.S. natural
gas reserves. Now, those techniques are unlocking the largest oil discovery in
decades.
Today, the Eagle Ford
is the most sought-out acreage in the lower 48 states. The Eagle Ford's
recoverable oil potential is around 4.7 billion barrels... if we get just 3% of
the oil out. And we usually get 30% out of an oil field.
If improved extraction
techniques manage to get another 1% out of the field... that will produce
another 1.6 billion barrels. The oil companies can do the math. And they're
swarming to acquire acreage now... One group bought land in the region in 2007
for just $250 per acre. This year, it sold that land to a major oil company for
up to $30,000 per acre.
One of the stars of
the play, EOG Resources (EOG), owns 580,000 acres of Eagle Ford. EOG believes
it will recover 690 million barrels of oil, which would double its current oil
reserves. CEO Mark Papa believes U.S. oil production will grow by 1 million
barrels per day in less than five years, thanks in part to the Eagle Ford
discovery.
EOG isn't the only
company reaping the benefits of the Eagle Ford. As Cactus pointed out,
ConocoPhillips (COP) and Petrohawk (HK) also have strong positions in this
emerging discovery.
I expect companies
like $5 billion Petrohawk will benefit more than major ones like $90 billion
ConocoPhillips. But the volume of oil production that will come online will
generate nice cash flows for the big boys, too.
Source: S&A Resource Report, By Matt Badiali, editor, Wednesday, November 17, 2010
Comments:
Henry Ford developed
mass production of automobiles from 1908 to 1914. Taking the price of the Model
T from $825 to $575. That created a
boom for automobiles and oil that fueled our 20th century. In the 1970s we started to off-shore our
manufacturing and began to decline economically. In the 1980s the personal computer reignited
our economy and that boom lasted into the 1990s. Our economy was stable until we off-shored
our electronics manufacturing starting in 2000.
Wages suffered in the “Information Age” and most jobs were minimum wage
retail or labor. To our dismay, the
federal government refused to allow oil and gas drilling.
Since the 2008
mortgage scam Meltdown we’ve languished with high unemployment and
stagnation. We increased legal
immigration to over 1 million a year starting in the 1990s and increased it as
unemployment rose. With the Federal Reserve money printing, we are sure to
experience inflation.
The first hope of a break
came with the development of fracking natural gas. This technology has been adapted for oil
shale drilling and our oil companies have discovered trillions of barrels of
oil and gas we didn’t think existed until a few years ago.
Our economy will be
robust in areas where work is done to extract, transport and deliver this
energy. As domestic supplies increase,
domestic prices for oil and gas will decrease.
As we set up infrastructure to export natural gas and gasoline, our
balance of payments deficit will sink.
The economies in the
oil shale States like Texas, Colorado, Utah and Montana have recovered because
companies are active in these States.
The rest of the country continues to limp along.
If Georgia can win a
license to build a natural gas export terminal in Savannah, Georgia will
recover.
Norb Leahy, Dunwoody
GA Tea Party Leader
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