Tuesday, August 23, 2005

The Common Misconceptions About Peak Oil

I have been reading lots of discussions about Peak Oil on various blogs, especially those kept up by economists (see Freakonomics, or Econobrowser), and I keep reading misinformation that keeps getting propogated throughout the blogosphere. So I’m here to set the record straight! Here is a new series I am starting called

The Common Misconceptions About Peak Oil

First misconception “ Oil Shale Will Save Us”

I worked with a major oil company for 2 years trying to develop a way to commercialize oil shale. Trust me on this, it ain’t going to happen. Most oil companies know this. The few (one??) that don’t are totally deluded.
Oil shale is not oil. Oil shale is rock that has a relatively high concentration of organic carbon compounds in it. Geologists call this a source rock. If you heat this shale to 700 degrees F you will turn this organic carbon (kerogen) into the nastiest, stinkiest, gooiest, pile of oil-like crap that you can imagine. Then if you send it through the gnarliest oil refinery on the planet you can make this shit into transportation fuel. In the mean time you have created all kinds of nasty by products, have polluted the air and groundwater of where ever you have extracted it. You have also created an enormous pile of superheated rock that will take hundreds to thousands of years to cool off.

The biggest deposits of oil shale in the world are in northwestern Colorado. No other deposit anywhere else in the world (China, Jordan, Australia, etc.) even comes close in terms of size and richness. There are approximately 1.3 trillion barrels of POTENTIAL oil in this deposit of oil shale. However, even those in their wildest hallucinations have never proposed that more than about 300 billion of these barrels were POSSIBLY extractable.

Of course 300 billion barrels is a very large number. Assuming $50/bbl, these $300 billion would be worth $15 trillion. Quite an enticement to go after. HOWEVER, - I still haven't seen a good analysis that shows you end up with more energy at the end of the cycle than what you put in. Moreover, it takes about 3-5 barrels of water for about every barrel of oil you get. Last time anyone seriously looked at where all this water would come from was Exxon back in the late 70’s and early ‘80’s. Their solution was to RE-ROUTE THE MISSOURI RIVER to bring water to this very arid area. I am not shitting you.
Lastly, you will be leaving the biggest superfund site you could ever imagine.

Will we eventually extract oil from oil shale – maybe, but it has always been a last resort, and for good reason. In the meantime, DON’T EVEN THINK about investing in this, even if the offer seems really good. You can’t imagine how much money has been poured into trying to commercialize this resource without any success.

Stay tuned for future topics including:

Tar sands will save us
Deep water basins will save us
Alternative energy (as currently understood) will save us
Hydrogen will save us (corollary to the one above)
OPEC will save us
and finally the Holy Grail
The Market will save us

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