the elusive bonanza...oil price canadian tar sandscanadian tar sands ethanol ctl gtl 1975 1990 2005

The Elusive Bonanza

Yankee Ingenuity Will Capture the Prize

Chasing aChasing a Mirage

Decades of Quiet, Punctuated by O tb k f H l d HOutbreaks of Hoopla and Hype

“An oil shale industry could be initiatedAn oil shale industry could be initiated by 2011 with initial production of 200,000 b/pd with an aggressive goal of 2 millionb/pd, with an aggressive goal of 2 million b/pd by 2020. Ultimate capacity could reach 10 million b/pd ”reach 10 million b/pd…

--2004 report funded by the U.S. D t t f EDepartment of Energy

‘Colorado Oil Shale Follies’: Long play starring dreamers, hucksters, gullible reporters, deludeddreamers, hucksters, gullible reporters, deluded federal officials, local boosters, stock swindlers, dedicated engineers and one Black Sunday

Oil Price

Canadian tar sandsCanadian tar sands

ethanol

CTLGTLGTL

1975 1990 2005

1/10,000th of global energyglobal energy, much less than animalthan animal manure

Is God Brazilian?

Sub-salt at Tupi

Single well costs $100 million; development will take decades

Petroleum QualityU

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ROCK QUALITY(permeability in md)

Prudhoe Bay: 15 billion barrels

Shell already has rights y gto $1 trillion of shale…

GONEGONE

Petroleum QualityU

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UNCONVENTIONAL

ROCK QUALITY(permeability in md)

Petroleum QualityU

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70000North Dakota Oil Production

60000

40000

50000

30000

N th D k t h d d

kb

10000

20000 North Dakota has produced more oil in the last 15 years than the global oil shale industry has in the

0

10000 global oil shale industry has in the last 150 years

1994 1996 1998 2000 2002 2004 2006 2008

Kerogen Is Not Petroleum, Tons Are Not Barrels

ULI

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UID

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Immature Source RockImmature Source Rock

accumulationof organics

and clay

burial -organic

black shale

deeper burial -kerogen

oil generation& migration

and clay black shale

Wishing Can’t Make it So

“In reality so-called ‘oilIn reality, so-called oil shale’ is a low-grade, high-ash, hydrogen-i h li l”rich, sapropelic coal”

--Utah Geology ProfUtah Geology Prof

Cap’n Crunch contains 3 times more energy per pound than oil shale

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Energy Return Will be Very Low

100,000 b/d operation would be the , plargest single user of electricity on Earth

‘Carbon Budget’ must be divided between nations generations and fuels

BAU ( 6°C+)

nations, generations, and fuels

(~3°C)(~2°C)

Path for 50% chance of avoiding ∆Tavg >2°C (gold) is much more demanding than path for 50% chance of avoiding >3°C (green).

The Ultimate IQ testIQ test

Other energy gyalternatives make muchmake much more sense

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U S OIL PRODUCTION 1900 TO 2050U.S. OIL PRODUCTION 1900 TO 2050

PEAK 1970

2001DOWN

2001 THE OIL “OFF

GONE: 65% OF U.S. OIL HAS BEEN USED

RAMP”

BEEN USED. IT’S HISTORY.

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Steady State ScenarioOPEC t 35 illi b/dOPEC stays ~35 million b/d

100 100World peaks at 86 million b/d in 2011

80

90

100

80

90

100actual forecast

50

60

70

on b

/d

50

60

70

OPEC

OPEC

30

40

50

mill

io

30

40

50OPEC

FSUFSU

0

10

20

0

10

20

Non-OPEC - FSU Non-OPEC - FSU01930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

0

We have already begun an energy transitionenergy transition

U.S. using 2 million b/d less oil today than 5 years ago

Remaining OilConventional: 1000 Bb

Tar Sands: 500 billion

Bitumen: 500 billion

Oil Shale: 1000 billion

Coal Liquids: 5000 billion

• Dostoevsky in Crime and Punishment:Dostoevsky in Crime and Punishment: • “Do you think I care if they talk nonsense?

Hogwash! I am a man, therefore I talkHogwash! I am a man, therefore I talk nonsense. Nobody ever got a single truth without talking nonsense fourteen times gfirst. Maybe even a hundred and fourteen. That’s all right in its own way. We don’t

k h t t lkevenknow how to talk nonsense intelligently, though!”

Range of heating values for regional coals (maximum minimum and average BTU/lb)(maximum, minimum and average BTU/lb)

16,000

10 000

12,000

14,000

11,85112,697

6,000

8,000

10,000

8,220

2,000

0

4,000

OIL SHALE0

Powder RiverBasin coal

Eastern bituminous

average (mean) heat content (BTU/lb)

Colorado Coal Active Mines

Sources: Colorado Geological Survey, Colorado Coal Quality Data (Information Series 58); USGS, CoalQualDatabase; USGS Professional Paper 1625-A.

Energy Content of Fuels

crude oil

natural gas

cattle manure

coal

crude oil

municipal trash

firewood

cattle manure

baked potatoes

oil shale

municipal trash

0 10 20 30 40 50

baked potatoes

Million BTU/ton

Time

deformation, oil migration & accumulation in a ‘trap’

Time

The Petroleum “Kitchen”

‘Oil window’

‘Gas window’Gas window

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• Do we have the time capital carbon andDo we have the time, capital, carbon, and water to pursue this marginal energy resource? Don’t we have better choices?resource? Don t we have better choices? things to do?

• Is oil shale an idea whose time has• Is oil shale an idea whose time has passed, whose time will never come, whose time never was whose time haswhose time never was, whose time has come, or whose time has passed?

RESOURCE QUALITY AND UNCONVENTIONALS

50

60

40

LITY

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OIL FROMMATURESOURCE

30

UID

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ravi SOURCE

ROCKS

10

20FLU (A

EXTRA-HEAVY

0

10OIL SHALE OIL/BITUMEN

0.01 0.1 1 10 100 1000 10000ROCK QUALITY

(permeability in md)