Quite a few rightwing commentators are making waves today about a Government Accountability Office statement which says (PDF) that:
The Green River
Formation””an assemblage of over 1,000 feet of sedimentary rocks that lie beneath parts of Colorado, Utah, and Wyoming””contains the world’s largest deposits of oil shale. USGS estimates that the Green River Formation contains about 3 trillion barrels of oil, and about half of this may be recoverable, depending on available technology and economic conditions. The Rand Corporation, a nonprofit research organization, estimates that 30 to 60 percent of the oil shale in the Green River Formation can be recovered. At the midpoint of this estimate, almost half of the 3 trillion barrels of oil would be recoverable. This is an amount about equal to the entire world’s proven oil reserves.
There reactions are all along the same lines: this shale-oil reserve could “by itself supply domestic oil consumption for more than 200 years”, and “will Obama, in a possible second term, block the development of the resources that can assure America’s economic supremacy for generations?”
Typically simplistic. If only it were that easy.
Few, if any, of those conservative oil-boosters are reading further into the GAO’s report. two pages later, it mentions that there are two ways to get the oil out of the shale.
The first involves massive strip-mining to get the rock out, then heating it to 650 degrees plus to release the oil. That method has three major commercial problems: it can never get at the bulk of the reserves, which are buried under thousands of feet of non-oily rock, the cost of the power (and water to make that power) to heat the rock makes the oil it produces very expensive, and there are no roads suitable to get the equipment needed for large-scale mining into the area in days when Republicans will veto any government road-building infrastructure plans as a kneejerk reflex. These all add up to a trickle of oil at very high prices, not the economic-powerhouse gluttony rightwingers think these shale reserves represent. It also has non-commercial problems: the strip mining of vast areas of what is currently nature preserve, massive regional air and water pollution and of course the runaway effect dumping so much carbon (from burning all that oil) into the earth’s atmosphere would have on global warming that is already expected to be catastrophic. As might be expected, if the purely commercial problems aren’t going to get much of a look-in from these ideologues then environmental ones haven’t got a chance.
The second method involves drilling holes, then lowering very powerful heaters to free the oil from its shale matrix in situ and pumping the oil out. In theory, this opens up even deep-buried reserves but as the reports states, the biggest commercial problem there is that there is no proven commercially-viable way of doing this. Everything done so far has been “pilot”, “experimental”, “small scale”. best estimates say commercial technology for this method of extraction are 10-20 years away. Even then, it will mean expensive oil for the same reason strip-mining does: the cost of power needed to heat and the cost of ever-scarcer water both for power-generation and in this case for fracking. The same non-commercial problems still apply, and you can add likely massive contamination of ground water reserves that are essential for urban areas and agriculture across several states.
All of this adds up to why shale oil isn’t a pipe-dream solution to our energy woes and doesn’t mean Americans can fuel gas-guzzling SUVs for a dollar a gallon for a century to come. There’s a reason oil experts differentiate between theoretical reserves and commercially exploitable reserves. Shale oil is expensive oil and even on a purely robber-baron capitalist ethic isn’t worth squat unless other oil is just as expensive.
Luckily for the shale-oil lobby (and unluckily for Republican oil demagogues), while we may not have seen “peak oil” yet we have already passed a more telling tipping point: that of “peak cheap oil.
The International Monetary Fund (IMF) has been warned by its internal research team that there could be a permanent doubling of oil prices in the coming decade with profound implications for global trade.
“This is uncharted territory for the world economy, which has never experienced such prices for more than a few months,” the report warns.
The new IMF “working paper” come as the value of crude on world markets remains at the historically high level of $113 a barrel and just after the International Energy Agency reported that consumption would accelerate for the rest of this year in line with a wider economic recovery.
Undertaken amid mounting concerns about “peak oil”, the IMF study does not presume that there is a constraint on how much oil can be taken out of the ground. It prefers to believe that extraction rates will depend on the price that will be able to be charged for the final product.
“While our model is not as pessimistic as the pure geological view that typically holds that binding resource constraints will lead world oil production on to an inexorable downward trend in the very near future, our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade,” argues the report, entitled The Future of Oil: Geology v Technology.
At $200+ a barrel the globalized economy is unviable. It adds more in fuel for shipping costs for cheap goods from abroad than it would cost to just produce those goods more expensively and locally. That means manufacturing comes back “onshore” but it means far higher prices all round. America may by then have a goodly stream of indigenous shale-oil on tap but won’t be able to afford to buy oil and ship it from abroad. America’s mighty military won’t be able to afford enough gas for its tanks and planes to adventure abroad even if it spends the whole GDP. It means the collapse of the economic and foreign policy dreams of neoliberals and neocons alike. It means everything about the world we’ve lived in since 1945 has to be rethought because none of the basic premises hold true anymore.
Sorry, but any triumphalism about America’s energy supremacy in the century to come would be vastly, incredibly, misplaced.