The Oil Rush
How high-tech prospectors are trying to squeeze fuel--and fat profits--out of the earth while transforming the petroleum market
As with oil sands, enormous amounts of energy would be needed for both the heating and freezing processes. Rand estimates that a single 100,000-barrel-a-day operation would require a dedicated 1.2-gigawatt electricity generating station--a size that would be comparable to one of the nation's largest power plants, like the New Hampshire nuclear giant, Seabrook, which serves 900,000 customers.
Tapped out? Electricity use is a challenge, O'Connor admits, but Shell estimates that its process would produce 3.5 units of energy for every one it uses. That balance isn't great compared with that of conventional oil reclamation efforts (estimated at 20 to 1 today and perhaps 100 to 1 in the 1930s). But O'Connor says the new ratio makes sense because the easiest fuels to recover on the planet have already been tapped: "We're all looking at technologies that are going to be more expensive and resources that are going to be more difficult to access and recover."
Randy Udall, director of the nonprofit Community Office for Resource Efficiency in Aspen, Colo., calls Shell's experiment "fascinating," but he adds, "I've been wondering whether it is an act of inspiration or an act of desperation." The new attention to oil shale underscores how poor other global exploration possibilities are, Udall says. "Thermodynamically, there is an insanity to what they're proposing," he says. "Now, it still may [make economic sense] if oil prices are high enough."
The economics have policymakers' rapt attention. Because the federal government owns 80 percent of the oil shale land in the tri-state area, Congress last year ordered the Bureau of Land Management to accelerate leasing for research and development. Shell is in the running for three of seven 160-acre leases the BLM is considering for approval by this summer. If follow-up experiments succeed, they could be converted to a commercial plot of 9 square miles. The BLM also is conducting an environmental assessment and weighing how much of a royalty break to give early developers.
The Coal Play
Another unconventional fuel may be closer at hand--again, with federal government help. John Rich Jr., whose family name is synonymous with the coal business in eastern Pennsylvania, aims to break ground this summer on the nation's first commercial plant for turning coal into diesel fuel. First, the coal would be turned into a gas by exposure to oxygen and steam at up to 2,500 degrees Fahrenheit. Then, through a 1920s chemical process known as Fischer-Tropsch synthesis, the gas would be reduced into a paraffin wax. It could then be refined into diesel fuel, kerosene, or other synthetic petroleum products. The method is so expensive that in the decades since its discovery it has been used only by countries that had no choice, such as Nazi Germany and apartheid South Africa.
Now, the United States is prepared to turn to the technology. The U.S. Energy Information Administration estimates that Fischer-Tropsch would become economically viable with oil selling at $45 per barrel and above, and it projects that high oil prices will spur development of 800,000 barrels a day of liquid fuel from coal by 2030. That would represent nearly 10 percent of current U.S. oil production.
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