Oil Shale - an economic alternative?

[Tysonboss1]

True.

More simply put, the more expensive oil gets, the more expensive it will be to get anything - including shale oil - out of the ground.

800 Billion Barrels of shale reserves doesn't seem so amazing when you have to burn a barrel of oil in the process of getting 1 barrel to market, and at top speed you can only get 5M barrels / day in 30years time, I think conventional oil reserves would have declined by a much greater rate than 5M barrels / day by then.

Longterm we just have to burn less oil, through a combination of more efficent vechicles, switching to different energy sources and increasing renewable sources.

Longterm I think we need to switch the bulk of road transport away from oil and save the Oil (both conventional and alternative oil supplies) for the aviation and petrochemical industries.

 

[nioka]

800 Billion Barrels of shale reserves doesn't seem so amazing when you have to burn a barrel of oil in the process of getting 1 barrel to market, and at top speed you can only get 5M barrels / day in 30years time, I think conventional oil reserves would have declined by a much greater rate than 5M barrels / day by then.

Longterm we just have to burn less oil, through a combination of more efficent vechicles, switching to different energy sources and increasing renewable sources.

Longterm I think we need to switch the bulk of road transport away from oil and save the Oil (both conventional and alternative oil supplies) for the aviation and petrochemical industries.

With new technology I would expect the efficiency of extracting oil from shale ( particularly the type of oil shale here in Aus) to improve to a point where it is economically sound and enviromentally acceptable. This could happen in the short term. I'm holding some shale oil shares because of that belief.

Travel by air will be priced up to make more fuel efficient means of transport more attractive. It would be better all round for fast trains, electrically powered to travel between many centres. Sydney to Canberra as an example. Many of the products produced by the petrochemical industries can be produced from renewable resources.

 

[Tysonboss1]

It would be better all round for fast trains, electrically powered to travel between many centres. .

Sydney - LA on a train,... HA HA.

Can we launch satelites by train yet,

I think it's best to focus on getting the daily commute powered by the grid and alternatives to crude such as gas than hoping that people will swap aviation for surface transport some time in the future.

 

[nioka]

Sydney - LA on a train,... HA HA.

Sydney to Canberra not HA HA. By the time you get to Mascot then wait to check in, get to Canberra then wait for baggage you could have been there by a fast train.

Sydney to Melb. If air fares get increased and there is an alternative train at a reasonable price it will mean more train travel and less air travel.

I find it more convenient myself to travel overnight by train than to fly and need overnight accomodation at a motel. I actually prefer to sleep overnight in a train than in a hotel or motel. Improved train service would take a lot away from the fuel guzzling, high polluting, overrated airlines. Not everyone is in a gut busting hurry. Not everyone is going to LA.

Of course if the airlines are the choice then the Aussie shale oil is the best way to be sure there will be enough aviation fuel. It is the right type of oil shale for that purpose.

 

[rederob]

With new technology I would expect the efficiency of extracting oil from shale ( particularly the type of oil shale here in Aus) to improve to a point where it is economically sound and enviromentally acceptable. This could happen in the short term. I'm holding some shale oil shares because of that belief.

Given that we don't have a commercial shale oil facility anywhere in the world today, and the scientists have worked on this matter for decades, the chance of anything soon is pie in the sky.

On the "environmental" front, shale oil extraction looks more dodgy by the year: The amount of water required, let alone production plant toxicity issues, immediately puts such projects in Australia on shaky ground.

On train travel I agree: But electrify the rail systems and run them all on a "rewnewables" grid.

 

[Salamander]

Ive been reading (Googleing) a bit tonight and the "Stuart Oil Shale Project"
that fell over in 2004 was sposed to be profitable with oil at over $30 a barrel :dunno:

It may have been profitable but there were so many ongoing technical problems that it just didn't stack up.

Apparently it was more than $130m over-budget when it shut down & had never even broken even, let alone been profitable, despite receiving a Government subsidy of nearly $55 for ever barrel it produced!

 

[Salamander]

I listened to an interview with someone from QER who are selling the plant. They are a private company that bought the plant after it was closed down. I gathered that the reason for the sale of that plant is that they are looking at newer technology which will be much more effecient and more enviromentally friendly.

With new technology I would expect the efficiency of extracting oil from shale ( particularly the type of oil shale here in Aus) to improve to a point where it is economically sound and enviromentally acceptable.

I would fully expect QER to say that the technology they are planning to use is much more efficient & more environmentally friendly than SPP's technology.

However, there seems to be very little information available about QER's technology, so it's impossible to judge whether it will be better than SPP's or not.

One of the major problems with oil shale is that the characteristics of the oil shale itself (eg its high carbon content which means high CO2 emissions) means there will be pretty major environmental impacts irrespective of the technology used. So I doubt whether there is such a thing as an environmentally acceptable oil shale plant/industry.

 

[Salamander]

Agreed...Renewables are the future...the distant future, along with hover cars and travel
to mars etc....

And the likelihood of renewables remaining in the distant future is high if we continue pumping millions/billions of dollars into fossil fuels, especially if we're opening up major new resources like oil shale.

Nearly $400m was spent on the Stuart Project, which as I said above never broke even despite a Government subsidy of $55 for every barrel of oil it produced.

QER say their proposed oil shale mine & plant near Proserpine on the edge of the Whitsundays (!) would cost $14b.

Investing the money that has been/is proposed to be spent on oil shale on renewables instead would significantly increase the amount of renewable energy installed in Australia & help bring down the cost of renewables, as well as reducing greenhouse emissions. Where those renewables are small-scale building-integrated technologies, they would also reduce people's energy bills.

It's our choice as a society which future we choose & while I'm not pretending that it's either easy or simple, it is possible for us to choose another future than an oil shale one.

 

[Salamander]

A Shale oil industry will be developed, according to this guy (Dr. Harold J. Vinegar) and his
employer Royal Dutch Shell

Shell's process requires a 1000ft layer of shale to be continually heated to 650-750 ° F for a period of around 3 years while a freezewall is maintained around it to prevent groundwater intrusion.

Having apparently originally said the energy return was 6:1, Shell now say it is 3.5:1, although this is based on using power from a gas combined cycle power station. The energy return declines to 2:1 if the power is from a coal-fired power station, which is more economic in the areas around Shell's deposits.

However, there is some scepticism about these figures, for example they are believed not to include the energy cost of the freezewall, & it is thought the real energy return may only be 1:1 or possibly even less.

Water's an issue as well - water resources are apparently already stretched in that part of the US & Shell reportedly say their process takes 3.5-4 barrels of water for every barrel of shale oil produced.

The RAND report mentioned earlier by someone else estimates that Shell would require a 1.2 GW power plant (which is apparently large enough to meet the needs of a city of 500,000 in the US) to produce 100,000 barrels of shale oil per day. A coal-fired power station of this size would apparently cost US$3b & Shell's annual electricity bill would reportedly be US$500m!

Needless to say there are greenhouse implications, with independent analysis apparently showing that lifecycle greenhouse emissions from shale oil using Shell's process are 21-47% than conventional oil, which are already too high if we are going to reduce greenhouse emissions by the 60%+ that the CSIRO & most other scientists say is needed.

 

[Smurf1976]

The RAND report mentioned earlier by someone else estimates that Shell would require a 1.2 GW power plant (which is apparently large enough to meet the needs of a city of 500,000 in the US) to produce 100,000 barrels of shale oil per day.

Assuming that 1.2 GW is a constant 24/7/365 load (typically is constant for heavy industrial processes) it's about 5% of all the electricity presently used in Australia. So we'd need in the order of 40% more electricity to meet Australia's present oil consumption this way.

In energy terms, we'd need to burn about 42,000 barrels of oil per day to generate the electricity to run the process to extract 100,000 barrels. So we're directly burning 42% of what is extracted, not including energy use other than fuel in the power station (trucks, direct fuel use, energy to build the infrastructure). So overall it's a case of extract 2 barrels, sell 1 and burn the other to run the process.

 

[Smurf1976]

800 Billion Barrels of shale reserves doesn't seem so amazing when you have to burn a barrel of oil in the process of getting 1 barrel to market, and at top speed you can only get 5M barrels / day in 30years time, I think conventional oil reserves would have declined by a much greater rate than 5M barrels / day by then.

Longterm we just have to burn less oil, through a combination of more efficent vechicles, switching to different energy sources and increasing renewable sources.

Longterm I think we need to switch the bulk of road transport away from oil and save the Oil (both conventional and alternative oil supplies) for the aviation and petrochemical industries.

Totally agreed.

800 billion barrels but burn half to run the process. So 400 billion barrels - roughly what the world uses in 13 years but it will take at least 50 years to get it out of the ground. At best it's a help any maybe profitable but a long term solution to the oil problem it is not.

 

[Smurf1976]

Investing the money that has been/is proposed to be spent on oil shale on renewables instead would significantly increase the amount of renewable energy installed in Australia & help bring down the cost of renewables, as well as reducing greenhouse emissions. Where those renewables are small-scale building-integrated technologies, they would also reduce people's energy bills.

Agreed with what you're saying - renewables etc.

But if you want to kill the renewables industry then there's one sure fire way to do it. Small scale, decentralised generation. A nice sounding idea that guarantees a safe future for fossil fuels because it simply can not achieve economy of scale to power the major users. And if we're only going to run houses, which aren't the major energy users, then we're stuck with rising fossil fuel consumption.

If you look at countries (and one Australian state) that actually have a large portion of renewable energy then there is one consistent feature. They had large scale development to the point that, in general, it became not simply a source of power but a dominant political, social and economic force above all others.

Tasmania is a local example (about 45% of total energy is renewable). New Zealand, Canada and parts of South America are other examples.

If we want to go predominantly renewable in Australia then think geothermal for baseload, solar thermal and wind to supplement it and pumped storage to balance the system to make it all work. A very serious threat to coal.

 

[So_Cynical]

Anyone heard of Rentech?...they make Synthetic Fuels.

"The Rentech Process is a patented and proprietary technology that converts synthesis gas from carbon-bearing resources into hydrocarbons that can be processed and upgraded into ultra clean synthetic jet and diesel fuels."

http://www.rentechinc.com/

I cant help but think that the lowset cost "carbon-bearing resources" on earth would be Shale oil.

Rentech Successfully Produces Ultra Clean Synthetic Fuels at Colorado Facility.
http://www.rentechinc.com/pdfs/FINAL++PDU+First+Production+Press+Release+8.7.08.pdf

 

[Salamander]

Agreed with what you're saying - renewables etc.

But if you want to kill the renewables industry then there's one sure fire way to do it. Small scale, decentralised generation. A nice sounding idea that guarantees a safe future for fossil fuels because it simply can not achieve economy of scale to power the major users. And if we're only going to run houses, which aren't the major energy users, then we're stuck with rising fossil fuel consumption.

If you look at countries (and one Australian state) that actually have a large portion of renewable energy then there is one consistent feature. They had large scale development to the point that, in general, it became not simply a source of power but a dominant political, social and economic force above all others.

Tasmania is a local example (about 45% of total energy is renewable). New Zealand, Canada and parts of South America are other examples.

If we want to go predominantly renewable in Australia then think geothermal for baseload, solar thermal and wind to supplement it and pumped storage to balance the system to make it all work. A very serious threat to coal.

Agree that large-scale renewables are required - I think it's a question of utilising both large-scale & small-scale building-integrated renewables as appropriate

 

[sam76]

Bligh puts environment above $14bn project
August 24, 2008 02:18pm

QUEENSLAND premier Anna Bligh today killed off a controversial $14 billion shale oil project in north Queensland.

Ms Bligh cited the need to put the environment first as she quashed plans to start bulk sampling and exploration of the McFarlane deposit, 15km south of Proserpine.

The decision sparked a war of words between the mining lobby and Greenpeace, who campaigned against the development.

Ms Bligh said she would not allow the environment to be put at risk while the technology for extraction of the resource was still not proven.

"Our environment must come first,'' the Premier said.

"That's why we are putting a 20-year moratorium on all mining activities, bulk sampling and exploration over the McFarlane deposit in the Whitsunday region.''

Conservationists feared the project could affect tourism in the Whitsundays region, pollute the Great Barrier Reef and Goorganga wetlands, pose risks to health and disrupt local farming operations.

On Friday local state MP, Member for Whitsunday Jan Jarratt, publicly opposed the development.
Mining would not have occurred for several years, if approved.

Shale oil is extracted from sedimentary rocks that contain solid combustible organic matter called kerogen. Under a heating process, the kerogen can be decomposed to release hydrocarbons that can be captured to produce synthetic crude oil and combustible gas.

Ms Bligh said the government would devote the next two years to researching whether shale oil deposits can be used in an environmentally acceptable way.

In the meantime no new shale oil mines will be permitted anywhere in the state.

Queensland has approximately 90 per cent of Australia's known shale oil reserves and the vast bulk are located between Bundaberg and Proserpine.

Shale oil is mined using open cut technology with high energy and water needs as well as potentially significant impacts on local habitats and ecosystems through emissions and waste water, the state government said.

There is an existing lease to mine shale oil in Gladstone in central Queensland. Those rights would remain in effect, said Mines and Energy Minister Geoff Wilson.

The Premier said the decision was effective immediately and would be legislated in the coming months.

Queensland Resources Council Chief Executive, Michael Roche, said the decision would further erode Queensland's standing as a destination for exploration investment following the 2007 prohibition on the mining and export of uranium.

"The government's oft-promoted support for the industries generating Queensland's wealth seems to have become hostage to the guerrilla tactics of fringe groups like Greenpeace,'' Mr Roche said.

"What next Greenpeace resource sector target will have the Queensland government folding under a tiny bit of pressure?''

Greenpeace welcomed the decision.

"This proposal should never have been given serious consideration,'' Greenpeace climate campaigner John Hepburn said.


"Ms Bligh has made the right decision to prevent any new shale oil projects from taking place in the state, but it is an easy decision - the next step is to announce a stop the expansion of the coal industry in Queensland,'' Mr Hepburn said.

"Queensland Energy Resource's proposal came at a time when the world's scientists are warning that we have as little as 10 years to radically reduce greenhouse pollution if we are to have any chance of avoiding catastrophic climate change.''

"I don't envy Ms Bligh, given the economic power of the Greenhouse Mafia, but sometime soon she is going to have to make the tough decision to put the future of the state ahead of the vested interests of the coal lobby.''

http://www.news.com.au/story/0,23599,24232873-421,00.html

 

[nioka]

Greenvale Mining have respopnded to the moratorium on oil shale mining. They have now been advised by the mines dept that exploration and R&D cen go ahead. The companies evaluation of commercially and enviromentally friendly technologies will continue unabated.

"The company is convinced that Global Resources technology will meet government requirements. It does not need water.Global won the inventor of the year by time magazine in 2007.

Their deposits are 60 km from the coast in one instance and in central Qld with the Alpha deposit.

If the objectives of commercial and enviromental acceptance can be met Queensland could eventually become a major producer of non conventional oil to help meet national and international demand."

With GRV and ESMCA shares affected by the news that oil shale mining in Qld would not be allowed, this news may breathe new hope and value for those of us still holding.

 

[Salamander]

The companies evaluation of commercially and enviromentally friendly technologies will continue unabated.

As I said above one of the major problems with oil shale is that the characteristics of the oil shale itself (eg its high carbon content which means high CO2 emissions) means there will be pretty major environmental impacts irrespective of the technology used. So I doubt whether there is such a thing as an environmentally acceptable oil shale plant/industry.

 

[UBIQUITOUS]

Time to revive this thread I think. Condog has put some excellent links on the AUT thread. US Oil shale plays have been going gangbusters over the past 6 months

AUT, SSN, SEA, TXN, AZZ spring to mind.

I hold most of these but am more weighted to SEA now due to having more net acreage than the others, the lowest market cap and also being in Bakken and Niobrara.

Any stocks I've missed?

 

[grants]

OBL?

 

[UBIQUITOUS]

OBL?

Thanks, I briefly looked at OBL but they are too speculative for my liking. With no revenue and speculative prospects, all I can see is capital raising after capital raising.

OBL's market cap is sub $20m. I'd much rather take SSN, or SEA which has a market cap of about $90m, have about $25m in cash and 140k acres in some of the best land around such as the Bakken and Niobrara.

Would I'd rather buy a company producing 1000 bopd and has acreage in places such as the Bakken where 99 out of 100 wells hit commercially viable amounts of oil, or would I take a speculative long term punt on OBL?

Another factor is the charts and broker coverage. SEA has 2 broker valuations of 48c and 52c. The current price is 39.5c.

Then there is SSN, which has just sold some land for $80m in cash and a market cap of $130m, with land in the same area as SEA.

Cash is king. It opens up opportunities. If a company does not have cash, it can be long time before the stock starts moving.