Monday, 14 July 2008
Solving Our Energy Dependency Problem: Oil Shale
« Lunsford Makes Me Laugh | Main | Happy Cost Of Government Day! »Oil shale is a sedimentary rock which contains a significant amount of solid organic material. This substance is known as Kerogen. What does this have to do with our energy problem? Well it turns out that is possible to convert Kerogen into oil shale which is similar to crude oil. In short it can be used as a replacement for crude oil.
That is interesting and all, but how can that help us reach energy independence? Because the USA has an enormous reserve of oil shale. How big is it? Let's compare it to the known crude oil reserves in the world.
As you can see, our shale reserves dwarf the total oil reserves of the world's current crude oil leaders. It seems we could within 10 years reach energy independence if we only tapped our own natural resources!
If it is so great why hasn't it been used already? Because it is more expensive to process. Research has shown that initial cost of shale oil will be around $70 to $95 a barrel with costs declining once operations are in place to $30 to $50 a barrel.
So shale oil is only feasible when a barrel of oil is in the $70 - $90 a barrel range. Hmmm, crude oil is currently priced at $140 a barrel. Even when the oil bubble bursts oil prices will only fall into the $80 a barrel range, the cost of shale will roughly be the same cost as crude. And over time it will assuredly be cheaper. I think it is time America started investing in shale oil now. It can provide the U.S. with 100% of it's oil needs for some time into the future. Such an announcement would put pressure on the current oil market forcing down prices now. Plus it would buy us the time we need to find and develop alternative energy sources that are economically feasible and not oil dependent.
