Thursday, November 15, 2012

Trillions of Barrels of Oil Discovered

Green River Formation in Utah & Colorado

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.
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.
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

 

No comments:

Post a Comment