The fuel challenge: Living on borrowed time

More drilling and less oil

By Chris Gilpin, CommodityOnline

Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year – with a glaring lack of results.

While more investment dollars have been flowing into oil exploration, less oil has been flowing out of the ground. The zones being accessed by developmental wells are third-tier producers, so the new drilling has failed to offset the depletion of America’s aging oil fields.

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Oil shale, despite all the hype, won’t be the magic bullet. Currently, U.S. oil shale is producing only a few thousand barrels a year from test projects, and ramping up from there faces enormous economic and environmental hurdles. It’s difficult to see how the Green River formation can be turned into the next Texas without putting a huge strain on the Colorado River, a major lifeline of water supply to America’s southwestern states.

The Argonne National Laboratory estimates that 1 million barrels per day of new oil production from oil shale would consume up to 300,000 acre-feet of water per year. It would also require 1.2 gigawatts of electricity, the equivalent of 10 new power plants, plus five new coal mines to feed them. Eventually, high oil prices will drive the development of oil shale forward, but it will take decades, not years, to figure out the logistics of drawing oil from stone on an economical, mass production scale.

(More here.)