The Guardian: Are record oil prices leading to exploitation of oil shales?: Thursday August 11, 2005
Not yet. Oil companies work the easiest and cheapest fields first and high prices encourage them to drill where it is usually only marginally profitable. Because oilfields are seldom fully exploited before companies move on, the price increases are expected to prolong the life of some fields, bring forward the opening of new ones and encourage companies to reopen others - if the present record prices are maintained.
Even companies making billions of dollars in profits a year are not yet committing themselves to exploiting the world's vast quantities of "unconventional" oils - especially the hydrocarbon deposits found up to 200ft deep in oil shales and sands. Australia, Canada and especially Utah, western Colorado and Wyoming in the US between them are thought to have several trillion barrels of recoverable oil trapped in these rocks. The US is believed to have more than 60% of the world's resource.
However, the environmental damage and energy needed to mine and then extract the oil from shales is immense. The industry, led by Occidental and Amoco, remembers that it invested billions of dollars in unconventional oils after prices soared in the 1970s then got badly burned when the price crashed in the 1980s.
The present oil "spike" could be different, however, because of a combination of the world's changing geopolitics and the heavy new demand for oil by China and other developing countries. Post 9/11, the US wants to reduce dependency on foreign oil - which now stands at more than 50% - and its new energy bill should make it easier, among other things, for companies to get at shales and sands.
"US companies are looking more seriously now [at oil shales and sands]," says a spokesman for Shell. The company, which is getting 150,000 barrels a day from oil sands in Canada, says it is profitable to exploit these even at $20 a barrel and is hoping to get the costs down considerably. Meanwhile, it is researching oil from shales but says that it has "some way to go". In other words, don't expect any big decisions on oil shales before 2010.
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