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Energy Crisis? Not necessarily ...
Posted by: McQ on Sunday, April 13, 2008

The USGS released the following on April 10th:
North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation.

[...]

Technically recoverable oil resources are those producible using currently available technology and industry practices. USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources.

[...]

The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest "continuous" oil accumulation ever assessed by the USGS. A "continuous" oil accumulation means that the oil resource is dispersed throughout a geologic formation rather than existing as discrete, localized occurrences. The next largest "continuous" oil accumulation in the U.S. is in the Austin Chalk of Texas and Louisiana, with an undiscovered estimate of 1.0 billions of barrels of technically recoverable oil.
The Obama Campaign really doesn't care:
“Since the gas lines of the ’70s,” he says, “Democrats and Republicans have talked about energy independence ... but nothing’s changed. Except now Exxon’s making $40 billion a year and we’re paying $3.50 for gas.

“I’m Barack Obama. I don’t take money from oil companies or Washington lobbyists and I won’t let them block change anymore. They’ll pay a penalty on windfall profits. We’ll invest in alternative energy and create jobs and free ourselves from foreign oil. ...”
Technically recoverable means that using current technology, oil can be recovered from the type of geological formation in which the oil and gas are found.

Technically recoverable doesn't mean such a thing is then financially worth the effort. And that may be especially true if Mr. Obama were to win the presidency and then implement his windfall profits tax.

This discovery would go a long way toward lessening the energy crisis, if oil companies are left alone to make the billions of dollars in investments the exploitation of such resources will cost them. But make it financially unattractive and an 'energy crisis' becomes a self-fulfilling prophesy. As I see it, that's precisely where Mr. Obama is headed with his populist "windfall profits" tax.
 
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Comments
I mentioned this one the day it came out, and said as much about how if the Democrats ever got hold of it, we’d never see drop one of it.Been getting rather a lot of hit traffic on it too, from Google. Apparently, there’s a great deal of interest in it.
Technically recoverable doesn’t mean such a thing is then fiscally worth the effort
True. And the extraction costs back in the 50’s when this field was found, was considered far too high, given the price on a barrel of oil at the time. Given what we’re getting now, however, it seems a profitable venture.

But again, and in agreement, it comes down to what the Democrats will do. They’ve blocked offshore drilling and drilling in ALaska, under the guise of environmental concerns. No such concerns, however exist in the areas over this oil field. So if they block it again, will their real purpose finally be exposed, I wonder?



 
Written By: Bithead
URL: http://bitsblog.florack.us
Well, that’s big news.

It should be the big story everywhere.

Why isn’t it?

 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
"It should be the big story everywhere.

Why isn’t it?"

Hmmmm. Because Leftists like Obaman and his billionaire buddies in SF don’t expect to be the ones "freezing in the dark" when energy prices get too high for "the typical whiter person"? Well, what do those Bible- ’n’ gun-totin’- cousin-marrying, racist, homophobic cretins think they deserve, anyway? They *should* freeze in the dark if they’re too ignorant to vote to make their betters their masters.
 
Written By: JorgXMcKie
URL: http://
Why bother to tax those profits?

Obama will simply Nationalize the Oil Companies...
 
Written By: Scott Jacobs
URL: http://
Me:
Well, that’s big news.

It should be the big story everywhere.

Why isn’t it?
It sounded like a bigger reserve than it is.

The U.S. imports about 14 million barrels of oil a day.

At 3.65 billion barrels (splitting the difference between the high and low estimates), the Bakken formation would cover about a tenth of that for roughly seven years (if my quick calculation is correct — I didn’t double-check my work). Nothing to sneeze at, but I was initially dazzled by the numbers.

But, bring that online with ANWR and some off-shore fields and pretty soon, you’re talking some oil.
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
Undiscovered but technically recoverable? That means, it’s POSSIBLE that there COULD BE oil in North Dakota and Montana. Also, this is oil shale, not liquid oil. It takes a lot of time and money to develop the massive mining operations to recover oil shale, this is nothing that will help any time soon, even if work were to start right away, which is unlikely. So at best this is a long term possibility.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
Oh, and for context, Canada’s estimated shale reserves are 173 billion barrels, are in excess of the 3 billion estimated in the story for Montana and North Dakota. And again, this would take a lot of time and money to recover. Even Canada, which has been developing these fields for years, spending massive amounts of money, isn’t able to produce enough to offset growing demand.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
Undiscovered but technically recoverable? That means, it’s POSSIBLE that there COULD BE oil in North Dakota and Montana.
Always nice if one reads the WHOLE article before going off half-cocked:
At the time of the assessment, a limited number of wells have produced oil from three of the assessments units in Central Basin-Poplar Dome, Eastern Expulsion Threshold, and Northwest Expulsion Threshold.

The Elm Coulee oil field in Montana, discovered in 2000, has produced about 65 million barrels of the 105 million barrels of oil recovered from the Bakken Formation.
 
Written By: McQ
URL: http://www.QandO.net
Again, compare the three billion estimated there with the 173 billion in Canada. It’s a drop in the bucket.

Also, it appears from the story that most of it is oil shale:

"It is clear that the Bakken formation contains a significant amount of oil - the question is how much of that oil is recoverable using today’s technology?" said Senator Byron Dorgan, of North Dakota. "To get an answer to this important question, I requested that the U.S. Geological Survey complete this study, which will provide an up-to-date estimate on the amount of technically recoverable oil resources in the Bakken Shale formation."
Oil shale recovery is very expensive and cannot be brought on line in the near future (we’re talking at best decades), and the recovery process is a lot slower than with wells. Sure, 3 billion is good, and Canada’s 173 billion even better (and that’s been well publicized). But it’s nothing really out of the ordinary or unexpected. It certainly is irrelevant for the short term problems we face.

Finally, five countries have oil reserves of about 100 billion barrels. Venezuela has 80 billion. The US has 21 billion, which is estimated to last 12 years. If the US is up to 24 billion (adding three billion more), that might add a year or two. It’s not a major change. Even if Alaska has the 9 or 10 billion the most optimistic forecasts state, it still wouldn’t add a lot.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
There seems to be some confusion between "oil shale" and a shale formation which produces oil; they are two completely different things. The Bakken Formation is, as we speak, producing oil from oil wells; it is NOT an "oil shale" operation. Oil shale is a rock that has to be physically broken down and processed in surface plants, to extract the oil in it. In contrast, oil- producing rock formations, whether sandstone or shale, produce the oil in them through well bores, and the formation rock never sees the light of day. The US actually has enough oil shale in Colorado and elsewhere to equal billions of barrels of oil, but the actual production costs are currently astronomical and the environmental results are considered prohibitive. The Bakken Formation is developable now due to technological advancements in horizontal drilling and fracturing techniques which were simply not available when the formation was first encountered; it is in fact now being produced by those specific methods. E&P processes like these don’t come cheap, and with oil at lower cost drilling to the Bakken probably wasn’t economic. I haven’t looked at E&P costs in a long time, but I suspect at $50+/barrel it is now.
 
Written By: Megaera
URL: http://
OK, I stand corrected that it is not shale, I misunderstood the article.

It still at best increases our oil reserves from 21 billion barrels to 24 billion barrels (and I believe we could potentially increase that to 34 billion if we really explored Alaska). That’s still not a substantial difference in the grand scheme of things in terms of total world oil reserves. If we have shale in Colorado is it not counted the way Canada’s is counted because of the higher costs of extracting it? Canada is now second to Saudi Arabia in total proven oil reserves (though some doubt the numbers given by many OPEC countries, who may have inflated their reserves in order to increase production in the eighties).
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
I’m not sure, but it seems like you’re mixing apples/oranges in Canada/Colorado shale questions. First, the stuff that has everyone’s attention in Canada is not shale, it’s tar sands: shallow, "almost" surface stuff, that can be practically scraped up and processed, then pipelined just like regular oil, mostly because it IS regular oil, just thick & nasty. They have HUGE deposits of these sands, enough to keep both of us going for centuries. Literally. But it comes at a cost. The reason everyone loves Saudi crude is it’s the benchmark for minimal processing: it’s about as pure right out of the ground as it comes. The stuff from Canada by comparison looks like, well, tar. It has to be extensively processed, and it’s low on the light end, high on the heavy end, as you might expect. So, oil had to come up in price before it was worth while to develop those reserves.

Colorado and Wyoming shale oil? Estimates several years ago said couple hundred years worth at present usage rates, so many billions of barrels-worth. And no, shale oil is NOT counted in the country’s oil reserves because it isn’t petroleum oil, strictly speaking; it’s a kerogen.


 
Written By: Megaera
URL: http://
Thanks Megaera, I wasn’t clear on the distinction between shale and sands, though I knew Canada’s was right there easy to get at. The two subject I’ve been trying to learn most about the past decade are oil and Islam, your info is helpful.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
The two subject I’ve been trying to learn most about the past decade are oil and Islam, your info is helpful.
Now if we could only get you to stop making pronouncements, until your admitted deficiency in understanding of these subjects is cured.

 
Written By: Bithead
URL: http://bitsblog.florack.us
or any of the other countless subjects about which he is clueless...
 
Written By: Scott Jacobs
URL: http://
Sure — but, remember: they’re all the same (excepting kerogenic oil shale, of course, which is a completely other breed of cat). Oil and gas are produced from sandstone, or limestone, or shales — any kind of rock that has enough pore space between its components for oil molecules to collect, enough permeability for the molecules to move if pushed, and a pressure mechanism to accomplish that pushing. It’s. All. Rock. There aren’t any nice big puddles of liquid oil down 10,000 feet, just permeable bands of rock separated by impermeable bands of other rock, like granite. You drill down through the granite and other stuff to locate permeable strata. California actually has lotta tar sands just like Canada’s (heard of La Brea tarpits?) — but they tend to be a lot deeper, so you can’t surface-mine them, and you can’t produce tar up a well-bore. They tried lotsa stuff, nothing worked; far as I know they’re classed as non-recoverable, and therefore not reserves. 10-30 years from now some genius will come up with a Plan, and BINGO: Instant reserves addition.
 
Written By: Megaera
URL: http://
"Technically recoverable" at what price? I mean, there’s a whole lot of oil that could be recovered if investors had a reasonable assurance of getting, e.g., $200 a barrel. But at that price, we’d be moving away from oil pretty quickly, so who would invest in long-term oil recovery?

"Technically recoverable" at $200/b is barely distinguishable from "no oil there." Huzzah and all that, but as long as Saudi Arabia is the low-cost oil producer, then the solution to oil-related problems is to find a post-petroleum energy source, not merely to expand global oil supplies by the smallest of percentages.
 
Written By: Jon Henke
URL: http://QandO.net
A fair question, Jon.

First, the amounts at issue: The DE is now estimating by my reading 271 to 500 billion barrels of resource in place. Whe the field was originally discovered and named in 1953, it was estimated at ~$70bbl to recover the stuff at the time. Of course te technology is now better than it was in ’53, but an order of scale, and so is the current price per barrel. And apparently someone thinks this thing is going to go; Reports I’ve seen are suggetive of a land-office buseinss around the place... 250MUSD worth of land sales in Montana alone.

As to cost per bbl; The best estimate I’m seeing is production costs of around $30-40/bbl. Now, yes, butt that up against a bbl in Iraq going for around half a buck to produce prior to the Iran/Iraq war, and you’ve got a rather large difference. But I suspect that such oil reserves even existing, will have a large effect on the speculative market... and it’s thta speculative market that makes up most of the difference between the current costs of production in Iraq and the $112/bbl price we’re currently seeing on the open market. The surcharges and international taxes and so on would vanish, as well as most of the speculation.





 
Written By: Bithead
URL: http://bitsblog.florack.us
An interesting strategy via Instapundit:
Complaints about the drilling bans in ANWR and offshore are a staple of right-wing talk radio. But I remember Malcolm S. Forbes, back in the 1970s, saying that we should drill as little domestic oil as possible. Pump the Arabs’ oil as long as it lasts, then — when oil has become really scarce and valuable — we’ll be the only ones with any left!
Has anyone asked Obama what his thoughts on nuclear energy are?
 
Written By: Keith_Indy
URL: http://asecondhandconjecture.com

 
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