pstarr wrote:Let me be clear to you newbies and lurkers about Shale oil. Various in situ technologies (conversion of heavy shale oil into liquid underground) such toe-to-heel-air-injection (THAI) and steam-assisted-gravity-drainage (SAG-D) have been tried and failed at many price points over the last 100 years. These gimmicks are not and never will be energy or dollar profitable.
nuff said?
Let us be clear for newbies and lurkers then. SAG-D was invented in the 80's, so it certainly hasn't been tried and failed over 100 years. It has been proven economically viable to the point where the Alberta Energy and Utilities Board was able to document the conversion of their tar sands from a resource into a reserve. The ability of the SAG-D process to be both economically and energy profitable relies more on decreasing costs related to improvements in horizontal drilling technology, as these types of wells are the primary capital investment to make this type of technique work.
The THAI process is much newer than SAG-D, certainly isn't a 100 year old process either, is a practical success at least in Alberta but could be considered still experimental, and certainly its profitability isn't known yet and can't be discounted in the future without a crystal ball.
It should be noted that Estonia, Germany, Israel, and China generate electricity with shale oil powerplants, so claims of "tried and failed" would be more accurately represented as "tried and still running fine".
The Colony oil project terminated by Exxon in 1982 was also easily profitable under some of the conditions feared after the peak in global oil production in 1979. In 1982 dollars the capital investment was perhaps $5 billion dollars, for a flowrate of perhaps 16 or 17 million barrels a year. The resulting revenue stream, discounted at an industry standard of 10%, with 10% of gross revenue as operating costs, based on a gross $55/bbl oil price, would have been required to meet this minimum profitability level for a breakeven on the capital investment in one (10 years) decades time. By 1982 it was becoming obvious that the hysteria of "running out of oil" could not offset an obviously deteriorating oil price environment and the project was terminated.
Obviously inaccurate positions of detractors aside, there is a basic fact of shale oil production which does not change: Shale oil production isn't really oil and gas production, its more like mining. As such, until the abundance of conventional oil, unconventional flowing oil, and stranded natural gas (both conventional and unconventional) can be reduced enough to cause a price point balance with shale oil, it will stay right where it has been since President Taft created the Naval Petroleum and Oil Shale Reserve. In 1912. In part because of fears of the USGS which in 1909 had proclaimed that there was only oil left in the US for another 26 years. Those crazy optimists!