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By Robert Rapier on Dec 10, 2012 with 1 response

Hofmeister: US Could Tap into 1.6 Trillion Barrels of Oil Resource

I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil and currently the head of Citizens for Affordable Energy, a non-profit group whose aim is to promote sound U.S. energy security solutions for the nation. Previous interviews with Mr. Hofmeister were:

A Difficult Decade Ahead For Oil Prices and Supplies

An Energy Plan for America

Surging Demand and Flat Production Equals High Oil Prices

Hofmeister: Treat Climate Change as a Waste Management Problem

In the current and final installment, he discusses the technical feasibility of producing oil from kerogen.

Shale Oil and Oil Shale

Although the oil coming from the Bakken Shale Formation in North Dakota and the Eagle Ford Shale in Texas is commonly referred to as shale oil, it is properly called “tight oil.” The term shale oil has been used historically to refer to oil that is produced from kerogen, but “shale oil” is often improperly used synonymously with the oil produced from tight oil formations.

To keep the distinctions clear, I provided the following definitions in Setting the Record Straight on U.S. Oil Reserves:

Oil shale — sedimentary rock that contains solid hydrocarbons called kerogen (e.g., Green River Formation)

Shale oil — the oil that can be obtained by cooking kerogen

Tight oil — liquid hydrocarbons that are obtained by hydraulic fracturing of shale formations (e.g., Bakken Formation and Eagle Ford Formation)

Oil resource — the total amount of oil in place, most of which can’t be recovered

Oil reserve — the amount of oil that can be recovered economically with existing technology.

The U.S. has an enormous resource base of kerogen, which can be converted into oil. The resource base is estimated to be 1.6 trillion barrels of oil equivalent in the ground – more oil than has been burned by the world since we began to burn oil. Kerogen looks like a rock, and has to be heated to finish “cooking” it. It can be thought of as Mother Nature’s unfinished oil. But commercial production remains elusive because the energy inputs are so high. People have been predicting commercialization for over 100 years.

I have long been skeptical about the commercialization of oil from kerogen, but Shell has been attempting to develop a process for commercialization. The surge in shale oil production shows that new technologies can convert formerly uneconomical oil resources into oil reserves, so it isn’t out of the realm of possibility that this could also be the case with kerogen. Therefore, I posed the question to Mr. Hofmeister of whether commercial feasibility of oil from kerogen would be viable in the near future.

His response was that it depends on the types of energy inputs and the process employed. He suggested that the economic route would be in situ heating of the kerogen using either electricity from a nuclear power plant, or from “coal, augmented with wind and solar.”

Mr. Hofmeister further stated that two potential obstacles are political opposition to permitting such a process, and whether enough water is available in the very arid locations where the major shale resources are located. On the water issue, he felt that the in situ heating process developed by Shell would minimize the water requirement. But the political opposition would likely be fierce. Shale oil production would touch upon many environmental issues, the most important of which to many environmentalists would be the significant potential for greenhouse gas emissions from exploiting this enormous resource. Further, there would be significant opposition to using either coal or nuclear power as the heating source for processing the kerogen.

In summary, the obstacles look too formidable at this time to believe that the enormous kerogen resource base in the U.S. will soon be exploited. Thus, at least for the present, I believe the 1.6 trillion barrel resource base will maintain a reserve value of zero barrels.

Link to Original Article: Hofmeister: US Could Tap into 1.6 Trillion Barrels of Oil Resource

By Robert Rapier

  1. By Benjamin Cole on December 12, 2012 at 12:19 am

    At a certain price, even cooking kerogen probably makes sense. The question is, will oil ever become so expensive?

    There seems to be a ceiling on oil prices, somewhere around $100 a barrel, at least for now.  Higher than that, and substitution, conservation, and new supplies seem to come on stream. So, can you make kerogen oil for less than that?

    Nor is using less crude oil a sign of lowering living standards. Europe and Japan have been using less and less oil now for 30 years. The economic problems they have are not related to oil, but rather monetary and fiscal policies. Despite the terrible recession, per capita incomes in Europe and Japan have been rising over the decades, even as crude oil consumption fell. 

    Side note: Scarcity? Of what and for how long?

    Here in Thailand, farmers in recent years have grown huge amounts of cassava, a tuber made into ethanol, primarily for China.  China and liquid fuel: Bottomless market, right?

    Wrong. Vietnam and Cambodia got into the game, backed by Korean money, and now ethanol is going down in price. Gluts.

    If liquid fuels sold to China becomes glutted, tell me what will not become glutted. 




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