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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (34888)	6/27/2005 9:21:14 PM
From: J_Locke	Read Replies (1) \| Respond to of 110194

As a practical matter, it's not realistic to expect oil shale or synfuel from coal to become alternatives to crude any time soon. In the first place cost of production is very high. The recent shale project in Australia produced at about $120 a barrel; and although that was just a test run there's no reason to believe that they could have come anywhere near their $12-15 target if they had gone to larger scale production. They abandoned the project. Second, oil shale and coal are very carbon inefficient at a time when there's obviously great concern over global warming. Although the "oil" that's produced from shale is supposedly more carbon efficient than crude, it takes huge amounts of energy (and water) to transform the shale into liquid form. And even respectable Global Warming sceptics like MIT's Richard Lindzen think that increased use of coal (the least carbon efficient fossil fuel) would be courting disaster. Third, U.S. corporations have become almost comically risk averse. Oil companies are much more interested in stock buybacks (which support the stock option gravy train) than in risky schemes like large scale shale production. To support investment in shale projects, the U.S. Gov would probably have to guarantee a floor price for the resulting production, and that price would probably have to be greater than $60 a barrel. The U.S. is the Saudi Arabia of oil shale (Ukraine is #2 in reserves), but those reserves won't be developed until a crisis arrives.

To: mishedlo who wrote (34888)	6/27/2005 10:16:58 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

current shale production in the US is i believe negligible or nonexistent. i have no idea whether it will be different in the future, but i think it would not be easy to produce a lot. as for Canadian "coal tar sands", i have not heard that term, but maybe that is just my ignorance. if you mean tar sands, or the more politically correct oil sands, production is about 1 million bpd and expected to double by the end of the decade, to 2 million bpd. to put those figures in perspective, existing conventional fields have a decline rate of about 4% a year. that means the incremental production gain of 1 million bpd thanks to oil sands production expansion by 2010 will only make up for about one-sixteenth of the supply loss from conventional fields over the next five years. and that's assuming there is zero growth in crude demand over the next five years. so, the oil sands are not going to save us from high oil prices.