What is Digg?218 Comments
- Talphin, on 10/12/2007, -18/+145Well, it would probably mean that our troops would be pulled out the the middle east. :P I'm just sayin!!
- InfidelAl, on 10/12/2007, -5/+94I'm not exactly in the oil business, but isn't that called "supply and demand"? Oil is a WORLD commodity...
- srodolff, on 10/12/2007, -7/+91BTW.......as if this needs to be pointed out.......
There is a BIG difference between the cost of oil and the price you pay for it. - tizz66, on 10/12/2007, -7/+86Oil is most definitely not free market. One acronym: OPEC.
- youngandwise, on 10/12/2007, -2/+51"What would the world be like if all the oil in Saudi Arabia, Iran, Venezuela, Russia, Iraq, Nigeria, and elsewhere was suddenly nearly worthless?"
Peaceful? - asancho, on 10/12/2007, -14/+57Lets not forget what the C stands for in OPEC.
Cartel. - DCMacHead, on 10/12/2007, -8/+49There isn't an oil shortage--it's a refining capacity shortage.
- LetsGoHawks, on 10/12/2007, -7/+46The price of oil is set by the commodities markets. Not by any government or company. There are things that those entities can do that might influence the price, but that is a lot different than actually setting the price.
If this tech pans out and starts producing significant amounts, the price of oil will probably drop because the supply will go up and the "new stuff" will be from a politically stable area. A big reason the price is high now is because of the political situation in Venzuela, Africa and, of course, the middle east. - Mudb0y, on 10/12/2007, -19/+58@Letsgohawks
"The price of oil is set by the commodities markets. Not by any government or company. There are things that those entities can do that might influence the price, but that is a lot different than actually setting the price."
If this were a free market, then companies would be hard pressed to make a profit...Price being equal to the marginal cost. Since Exxon is raking in money by the imperial ***** tons, lets assume that there is something that is pushing the price of gasoline up, other than the costs of producing/refining oil...
Its called collusion, or an oligopoly if you will... Oil prices are demonstrably not no set by "the market". - eatmyshorts, on 10/12/2007, -1/+32@qwickone,
I am in the oil business, btw. You're a little off on your estimates. Some 70% of the world's known oil reserves (i.e. what is in the ground) is in OPEC countries. Actually, OPEC states that the figure is 79%, but that doesn't count tar sands and oil shale. Canada and the US have the biggest supplies of tar sands and oil shale, and, if considered, that figure would probably flip such that 79% of the known oil reserves would be in non-OPEC countries.
Also, if you take a look at this page:
http://www.eia.doe.gov/emeu/cabs/nonopec.html
You will see that, as of 2004, roughly 40% of the world's oil production comes from OPEC countries. You've got to remember that the biggest producer of oil today is Russia (not Saudi Arabia), and that significant production occurs in the US and in the North Sea (The Netherlands, Norway, and the UK). Heck, Russia even *exports* more oil that Saudi Arabia.
OPEC does not control the world oil price. OPEC can barely produce any more oil than they are now. Now, if OPEC decided to cut back on production, things could change (and we would likely see a temporary spike in oil prices above $100/barrel). But, for now, the world oil prices are pretty much dictated by supply and demand, with about a $15-$20 premium per barrel for "risk" (like the risks of pipelines exploding in Nigeria, strikes in Venezuela, hurricanes hitting the Gulf of Mexico, and war breaking out in Iran). Basically, the oil business is pretty much like any other commodity business. Cartels don't work in commodity businesses, except in the short term, since when cartels decide to cut off supply, investment occurs in places outside of the cartel. The lead time on investment in the oil business is somewhere between 5-15 years, depending on the source, location, and infrastructure, so OPEC typically has trouble encouraging its member states to sustain any cuts in supply. That is why the embargoes of '73 and '79 lasted...about 5 years each. - JimV, on 10/12/2007, -1/+27mudb0y
Actually, in a free market the correct price to charge for any product is that which the market will bear. That means you charge as much as you can to maximize your profits. However, you can't charge too much or else you risk less people buying whatever it is your selling.
So it makes perfect sense that the oil industry makes "***** tons" of money, because as much as people bitch about gas prices, they're still buying gas.
Plus the demand for oil causes the prices to go up. If you have multitudes of people competitively "bidding" for your oil because they all want it, you naturally can charge more than if less people wanted your oil. - Chompy, on 10/12/2007, -6/+32Your post seemed valid until you started spamming your blog.
- Nougat, on 10/12/2007, -0/+24@srodolff (#6109360)
Especially taking into account that "you" don't buy crude oil. You buy refined petroleum products. - fivestarsoul, on 10/12/2007, -4/+28Organization of the Petroleum Exporting Countries, or NAMBLA
- NICU, on 10/12/2007, -4/+28If the US was the largest supplier and refiner of oil, the rest of the world will make the switch to electric cars a lot faster.
- noripcord7, on 10/12/2007, -1/+23I was under the impression that the Athabasca region in Canada had the world's largest shale oil supply. Still, it's better than any of the countries listed above.
- TroubleInMind, on 10/12/2007, -1/+22But the price you pay for it is related to the price per barrel on the commodity exchanges.
- dcmjzero, on 10/12/2007, -0/+18@mudb0y: "...imperial ***** tons..."
I dugg you up just for this. That is my new favorite unit of mass. - warriorscot, on 10/12/2007, -0/+14Here in Scotland shale was the primary source of petroleum for a long time back before they had developed drilling back then shale was THE WAY to get oil, its very destructive to the environment and leaves massive shale bings(hills) that nothing will grow on and are a very distinctive orange very unsightly. They are only now starting to recover some of them.
Engineering wise it seems like it would be difficult to do not every patent results in a feasible technology also no mention of yields, shale was abandoned for many reasons not just the cost of extracting it from the ground and recovery it will never yield the same amount of fuel as an oil field and conventional drilling and of course the oil itself isn't the same and plants would need reworked to process it.
Its also quite sensationalist not giving much in the way of details other than the mysterious patent for extraction without retortion. - JimV, on 10/12/2007, -0/+13"Several thoughts: #1, if this were such a breaking story, wouldn't it also be plastered all over CNN, NBC, USA Today....."
No, because it's not FUD. Or Imus.
"#2 , The article states this can be produced at under $40/barell, but if the market can get $60, this shale-oil will still go for $60. Uor pump prices will not go down, at least not very much.
If the supply increases more quickly than the demand for oil, then the prices will drop. There will be more oil on the market leading to less competition amongst buyers. - MaynardsTool, on 10/12/2007, -4/+16You're right, and wrong. There IS a refining shortage. The solution to this is simple: build more refineries. They are not an exhaustible resource. You're wrong in saying that there isn't an oil shortage. There are two oil shortages, one that's here now, and one that will be here in the future. The one that is here now is the one that is engineered (or could be) by OPEC. Remember in the 1970s when OPEC was formed and decided to cut oil production by 20%? Remember what it did the economy? That's an oil shortage. The second oil shortage is the one that is coming. Peak oil is a reality, the only question is when we will see it. This method (if proven viable) would not end peak oil, merely stave it off for a long time. Bottom line, there WILL be an oil shortage, and this can help stave it off.
- asancho, on 10/12/2007, -3/+15News at 11: "Saddam tried to purchase Uranium Yellow Cake from the Athabasca region of Canada", claims Vice-President Cheney..
- reav3r, on 10/12/2007, -3/+14Just FYI, extracting @ $30 a barrel is hugely expensive. Its around $10 a barrel for the tar sands in Alberta (which is still huge), less the $1 for the middle east, and around $5 to $7 for the rest of north america
- thcobbs, on 10/12/2007, -4/+15@mudb0y
Actually, many companies HAVE tried to build new refineries in the USA.
The problem is environmental activists and governmental regulations. There is at least one company I know about that tried for a DECADE to build one, but never cleared the red tape and gave up. - inactive, on 10/12/2007, -1/+12Source only means something some of the time. I can't stand the Weekly Standard any more than I can stand the Nation (the liberal equivalent), but both have valid stories every now and then.
Don't dismiss something as ***** JUST because of where it's published. - stevejobbs, on 10/12/2007, -12/+22this is bad news for us alaskans who work in the Oil Industry :(
oh wait it's still cheaper the way we do it. way cheaper. nice to know we have something to fall back on.
once you consider all the overhead involved in the extraction it comes out to costing less than $1 per barrel to extract. - FuzzyBunny, on 10/12/2007, -1/+11I'm a petroleum engineer and I can tell you shale oil is kind of a running joke. The report is correct in that there is a massive amount of shale oil in the US Rocky Mountains, approximately equal to 60% of current world oil reserves. However, this oil is extremely hard to extract from the ground. Most general estimates put the cost of extraction at around $100 a barrel. Back in the 70's there were several companies that attempted to make shale oil viable and they pretty much all failed. I know that some companies were looking at getting back into it when prices were around $80 a barrel. I even worked on a project for Shell related to shale oil when I was in college. However, I am extremely skeptical of this reports promise of $30 a barrel.
- inactive, on 10/12/2007, -2/+11http://www.cbc.ca/canada/story/2006/01/11/canadian-oil060111.html
- d00ley, on 10/12/2007, -0/+9"It was filed in 2002...so not much progress 5 years later?"
In 2002, the price for a barrel of oil was about $20, up from $10 in 1999. Noting that this technology costs about $30-$40 a barrel, it has only been feasible to even consider this technology since about 2004. - VicousT, on 10/12/2007, -5/+13as I point my finger to the east: "Ha Ha."
- asancho, on 10/12/2007, -14/+22*sigh*
remember the days when you could post on digg without using /sarcasm to indicate you were kidding... - MaynardsTool, on 10/12/2007, -2/+10I think it would be more like Africa. Still at war, only now without the infusion of petrodollars it would be at war in much more hellish conditions. Oh, and just like Africa, no one would care.
- slickwilly007, on 10/12/2007, -0/+7"The theory is that we're running out of oil, the big powers are keeping it quiet"
How is that a "theory"? Oil is a non-renewable resource. It's not like the earth is gonna be making new oil any time soon. It only takes a few million years. And the world doesn't seem to be going lightly on the stuff. - geekchic, on 10/12/2007, -1/+8"There isn't an oil shortage--it's a refining capacity shortage."
Oil rich Iran has to import 40% of its refined petrol needs, as they cant refine enough themselves. - eatmyshorts, on 10/12/2007, -1/+8They aren't British (or, at least, they haven't been for many, many decades). They are Dutch. Hence the name, "Royal Dutch Shell". Their headquarters are in Den Hague.
- geekchic, on 10/12/2007, -0/+7Absolutly, the cost of extracting oil in the Mid-East is around US$4 per barrel. The rest of the price is the cost of refining it and then the actions of the commodities market.
Extracting shale oil at $30 per barrel is still considerably more expensive than Saudi Oil at cost prices - but is considerably cheaper than current shale oil extraction costs.
If oil reaches $100 a barrel, then shale oil profit margins make it viable as a source - but not until then.Why not at $32 per barrel as that is still a $2 profit? That ignores the vast capital costs involved - which also has to be paid for. That is why the profit margin needs to be quite high to fund these huge upfront costs.
The world has an awful lot of oil available - the question is: are we willing to pay the cost that some it would cost to extract. - Gerz1219, on 10/12/2007, -0/+7From the article:
"Amazingly, this method... becomes profitable with oil just north of $30 a barrel (which we've already blown past)"
$30 a barrel is not the extraction and refinement cost, it's the price at which this oil could be profitably sold. - Caruthers, on 10/12/2007, -3/+9I would be interested to know what the recovery percentages are estimated to be. Current oil extraction techniques only allow for an at-most recovery of 50% (of an oil well). On top of that, the amount of energy required to heat and cool is only going to add to the cost. I think $30 per barrel is an extremely optimistic estimate. With the infrastructure and energy requirements, I would be amazed if this technology would be economically feasible for $30 a barrel.
- jonathansoeder, on 10/12/2007, -2/+8What about the concept of Energy Returned on Energy Invested? EROI? How many barrels of oil worth of energy does it take to run this process and get a barrel's worth of energy out? If it is as inefficient as these sources of energy have been in the past, then my guess is they're blowing smoke.
- thcobbs, on 10/12/2007, -0/+6@geekchick
The thing that you might be missing.... is the strategic value of being able to extract oil "relatively" easily and the major source being the USA. If nothing else, I'd expect the US Government to buy the rights to the patent and truly create a Strategic Petroleum Reserve that can ACTUALLY sustain the US for years on end.
It would be a huge boon for the economy, a huge boon for our stability, and a huge blow to middle east despots that want to use Oil as a weapon.
@gwickone
yes, you are missing some. Petrol = Gas/Diesel, Petroleum = Crude oil. The technique actually creates "light-sweet crude" oil. - Neiby, on 10/12/2007, -0/+6This could be huge for my home town. It's already in an oil-rich environment and there's a whole lot of shale in the area. If things work out right, it could mean another oil boom in the area. They're already having one right now, but I don't think it will last more than a handful of years.
- Gigs, on 10/12/2007, -2/+7U.S. Patent No. 7156176 appears to be what the article is refereing to. It's 694 pages long, which seems to be the longest ever that the article refers to. It was filed in 2002...so not much progress 5 years later?
- thcobbs, on 10/12/2007, -0/+5Something tells me the Actuaries that Shell employs probably took that into account in their calculations.
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If an oil company doesn't take a BASIC concept like EROI into account, they go broke fast. People talk about all the money oil companies make, but the average profit margin is in the 10% range. It's just that their 10% is in the billions. - DaveF, on 10/12/2007, -0/+5Anyone read how they plan on doing it? Sounds pretty crazy. They want to heat the stuff up in the ground to 700deg and hold it there for three years.
From some blog linked in that article:
"To produce 100,000 barrels a day would require raising the temperature of 700,000,000,000 pounds of shale by 700 degrees F. How much power would be needed? A gigabunch—in rough numbers, about $500,000,000 per year. The least expensive source for electricity is a coal-fired power plant. How much coal, how many power plants? To produce 100,000 barrels per day, the RAND Corporation recently estimated that Shell will need to construct the largest power plant in Colorado history, large enough to serve a city of 500,000. This power plant, costing about $3 billion, would consume five million tons of coal each year, producing ten million tons of greenhouse gases, some of which would still be in the atmosphere a century from now." - robbiedo, on 10/12/2007, -2/+7Behold the power of the market. Adam Smith gives an invisible hand clap.
- aldenhg, on 10/12/2007, -0/+5"What would the world be like if all the oil in Saudi Arabia, Iran, Venezuela, Russia, Iraq, Nigeria, and elsewhere was suddenly nearly worthless?"
We would leave Iraq so fast people would think there was a sand storm. - thcobbs, on 10/12/2007, -0/+5Dude... are you dissin' the Mr. Fusion?
- inactive, on 10/12/2007, -2/+7Price will stay the same. Profits will just go up.
- SteelChicken, on 10/12/2007, -1/+5most of that shale is in Colorado where I live, and most people here are not keen on the idea of strip mining our state for oil companies.
- insanechemist, on 10/12/2007, -0/+4 "In situ thermal processing of an oil shale formation using a pattern of heat sources" is the patent title I think. The link to the actual patent is:
http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PG01&s1=20060213657&OS=20060213657&RS=20060213657
Abstract:
A oil shale formation may be treated using an in situ thermal process. A mixture of hydrocarbons, H.sub.2, and/or other formation fluids may be produced from the formation. Heat may be applied to the formation to raise a temperature of a portion of the formation to a pyrolysis temperature. Heat sources may be used to heat the formation. The heat sources may be positioned within the formation in a selected pattern. -
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