Talk:Oil shale economics

Economics

Are the dollar figures noted in this section US dollars, or other; and at what time? This [1] seems to say US$30/bbl in 2005 is the floor for economic production rather than the $40/bbl stated in the article. --69.157.100.206 16:58, 2 October 2005 (UTC)

It probably depends upon details of each study. It doesn't matter much. OPEC does not have to follow market forces and can drop the price at any time so as to drive a price-sensitive competitor out of business. (SEWilco 18:37, 2 October 2005 (UTC))

Not nowadays it can't. The Saudis and other OPEC countries are already producing about as much oil as they can. —wwoods 18:46, 1 November 2005 (UTC)

In what way is the price set by OPEC related to the upper limit of their production rate? Couldn't they cut their production rate to one barrel a day and sell it for $20 if they so desired? (SEWilco 19:22, 1 November 2005 (UTC))

Sure, but then whoever they sold their oil to could turn around and resell it at the market price, which is the price at which overall production and overall consumption are ~equal. By cutting production, OPEC could raise the price of oil. (Which maybe would push the world into a depression, which would lower the demand for oil and hence lower the price...)

—wwoods 21:56, 1 November 2005 (UTC)

Yes, I know how market forces work. However, the point here is that it is not right to be using OPEC-driven market prices as a guide for when a competitor to OPEC becomes competitive. There is a flaw in that logic, as OPEC can choose to undercut the price of a competitor and force the competitor into an unprofitable situation. (SEWilco 22:07, 1 November 2005 (UTC))

With the discovery of the 2 trillion barrel deposit below Colorado, the stakes in the "Shale Oil Recovery" game just went through the roof. Shale oil is now the single biggest fossil fuel resource on earth and the US has possibly as much as 72% of the total. Historically, when prosented with a potentially huge profit, US producers have found a way to exploit the resource. Even with conventional methods, the production of the Colorado reserves would be more profitible than Gold Mining per ton of material. Having followed my Grandfather into the petroleum industry, I feel comfortable in predicting that the shale oil deposits in the Rocky Mountains will yeild in excess of 20 billion dollars (US) per annum by 2010. -VeeRay-

Getting Oil Shale to Relieve Looming Oil Shortage. Under the assumptions a) oil shale can be extracted economically at $30-$40 per barrel; b) US shale reserves about equal to estimated world oil reserves; c) the US government could guarantee a large scale purchase of oil from oil shale at $40/ barrel to be put either into reserve or sold on the market with say a 10 billion per year to support commercial production could we bring stability to the oil maket price? This would effectively cap the long term price of oil at some deliverable level. --WalterSchneiderPittsburgh 13:11, 22 April 2006 (UTC)[[2]]

Could someone please explain to me why this article persists in insisting that it is not economical (it even goes so far as to put economical in bold) to start extracting oil from kerogen, if the higher estimates put the price of extraction at $95 a barrel and we have had CONSISTENT prices much higher than that for oil futures? We were looking at $140 a barrel early this summer and still have $120 a barrel, so this would indicate a great opportunity for profitability? Am I missing something? —Preceding unsigned comment added by 98.204.35.116 (talk) 17:03, 4 August 2008 (UTC)

Using bold was unfortunate unintentional formatting mistake and this is fixed now. If you think there is any other problem related to WP:NPOV, please make your suggestion how to fix it.Beagel (talk) 17:34, 4 August 2008 (UTC)

Biased economics

This section is incredibly biased towards the Oil Tech process and appears to be written by a promoter. No credible comparative economic study I've seen has come to this conclusion--one can only reach a defendable conclusion by using and disclosing a consistent set of economic assumptions. For example, there is no mention of the 1990 NRC report "Fuels to Drive our Future", which tried to compare different oil shale processes with other sources of synthetic fuels using consistent economic assumptions. That is not to say that the Oil Tech process should be dismissed out of hand, but there is no objective basis for making these claims in an encyclopedia.

The Oil Tech process is merely one of hundreds that have been tried, and there is no technical basis for its prominence in a general article on oil shale. It would be far better to present a systematic classification table based on heat source, heat transfer method, above or below ground, and then give multiple examples of the various types.

The same problem is true for the statement that the Oil Tech process would be environmentally safe. Even if it were true, there is no independent study I've seen, and certainly none referenced here, to substantiate that claim. It is certainly true that open-pit mining is cheaper than room and pillar mining and is necessary if aboveground shale oil production is to be a significant player in our energy needs, but is it universally accepted that digging up large fractions of the Uinta and Piceance Basin and returning it as a different material is environmentally safe? This conclusion is somewhere between unsubstantiated and subjective. Akburnham 00:17, 29 October 2006 (UTC)A. K. Burnham

Efficiency

Efficency? Nowhere in the article, energy efficiency is mentioned. How much energy do I have to invest to harvest 1 calory in shale oil? Or one could also ask the question in a diffenerent way: How much is the total CO2 output if I want to get 1 MJ of energy from shale oil compared to conventional oil? If some of the processes need months of electrical (!!) heating before extraction, this sounds ridiculous. The processes might be economically viable because liquid fuels yield extremely high prices these days compared to, let's say, coal or even natural gas but might result in a net reduction of fossile fuel resources. Does anybody have data to answer these crucial questions?

Shell reported the EROEI of their In-situ Conversion Process to be 3:1 or even 3.5:1.Beagel 19:09, 14 June 2007 (UTC)

Information about the EROEI of oil shale is added.Beagel 08:09, 24 June 2007 (UTC)

Shell's 2005 statements must now be viewed with suspicion, given that Shell backed out of a larger project to demonstrate their technology.Jdkag (talk) 20:30, 18 April 2012 (UTC)

By my understanding this is not exactly "backing out". Despite of this, I agree that we should be cautious about all EROEI figures. They vary very largely depending technology and the oil shale deposit properties as also counting methodology. Probably it is the best described by Adam Brandt. Beagel (talk) 20:45, 18 April 2012 (UTC)

Canada

Anom user added an information that Canada re-started production in 2003-4. I reverted this as no available sources confirm this. However, if there is current commercial production of oil shale in Canada, please provide information where and by whom it was re-started.Beagel 18:27, 14 November 2007 (UTC)

restructure?

I'd like to take this article to GA status. Having read it several times, and the associated literature, I think it needs to be restructured. The economics are driven, of course, by costs. These costs include capital (a surprisingly small share), environmental ( the cost of cleaning up after one's self), energy input (highly correlated to "break even oil prices"), and water. Acquisition of the mineral resources themselves is minimal. Did I mention water, and the difference between "marginal water costs" and costs of water on the scale to make a commercial impact?

Given above issues, ex-situ processing doesn't seem to work. Am I mistaken? In situ holds "promise" but the promise is a function of the parameters laid above. I think a comparison to coal liquefaction can serve as an economic "backstop"?

I don't want to turn this into a "peaknik" article which states everything is hopeless so lets just "power down". That shouldn't be the point of the restructuring --Work permit (talk) 06:15, 25 August 2008 (UTC)

I agree with restructuring. There is one more thing which may be called high market entering cost. Oil shale differs in different regions and that means that technology working with one type of oil shale needs adjustments to be tune work with other type of oil shale. And this process is time consuming (takes usually years) and costly. That means that in the first stage you have to invest a lot of money for long period before getting any revenue. As about water, some new technologies are claimed to be water-free technologies, however they are still far away from commercial use.

I disagree that ex-situ processing doesn't work. As of today, all four technologies in commercial use are above ground retorting or ex-situ technologies. In the United States both kind of technologies are under development and both have some promising (also economically) technologies. What technology will work in exact location will deeply (but not only) depend of exact economic conditions and type of oil shale deposit. Beagel (talk) 06:57, 25 August 2008 (UTC)

Beagel (talk) 06:57, 25 August 2008 (UTC)

Work permit, I appreciate your initiative. I more than support your boldness, since any contentious changes can be discussed here after the fact. I look forward to seeing this article improve :) -FrankTobia (talk) 13:14, 25 August 2008 (UTC)

Having read alot, I think the best way forward for now is to incrementally add sections. I added a sections on water usage. I think carbon emmisions would be next, then expand the eroi. After that a section on yields, social/political/permitting "costs". Finally a section which breaks down capital and operating costs. The more I read, the more I suspect "water/carbon/enviornmental" issues are secondary, the real question is capital/eroi costs. What do people think?--Work permit (talk) 03:45, 30 August 2008 (UTC)

Work permit, I think we should put together a framework or structure that keeps sections from being hap-hazardly added. This will do two things 1) organize what we have into a logical structure and 2) limit the NPOV exposure.

• Macro economics - about the industry
  • Competitive level of oil price
  • Subsidies
  • External costs - costs to health and the environment and quantifiable but not built into the cost of the shale oil.
• Micro economics - open pit method
  • Capital costs
    • Plant costs - The bare plant cost, usually identified as EPC (engineering-procurement-construction) cost
    • Additional costs - land, administration and associated buildings, site works, project management, licences, roads, power lines, costs to dismantle the site and return it back to nature, etc.
  • Finance costs - can you get the loans?
  • Operational costs
    • Water usage
    • Energy usage
    • Labor
    • Maintenance
    • etc.
• Micro economics - in situ method
  • Capital costs
    • Plant costs
    • Additional costs
  • Finance costs
  • Operational costs
    • Water usage
    • Energy usage
    • Labor
    • Maintenance
    • etc.

I hope this framework lets you see what is missing. Kgrr (talk) 15:50, 9 October 2008 (UTC)

Impact of environmental concerns on economics of oil shale?

Since there is some public controversy of the environmental impacts of oil shale exploitation and a number of people and environmental groups oppose it, I am wondering if there are any economic considerations on the side of the oil companies. Has there been an economic impact resulting from protests? If so, it might need to be included in this article. Splette :) ^{How's my driving?} 02:54, 27 August 2008 (UTC) I am wondering if there are

I've been researching that issue. Protests can change have an enourmous cost, mostly by creating delays (compare the costs of Shoreham Nuclear Power Plantvs it's sister plant Millstone Nuclear Power Plant. Here's a sample of enviornmental costs:

The environmental legislation passed during the late 1960’s and early 1970’s, along with the provision of substantial enforcement power to the Environmental Protection Agency, altered the context in which large-scale industrial development may now take place. Without question, this legislation, which has been paralleled by similar State laws, has been and will continue to be very costly to industry. It is not possible, however, to accurately ascertain what the actual costs of meeting these standards are, because the costs are both direct and indirect. Most estimates usually include only the former cost category. Cost estimates for meeting some of the standards are discussed in detail in chapter 8.

In 1978, the RAND Corp. estimated that the direct costs of pollution control technologies for oil shale developers ranged between 6.5 and 15 percent of total capital costs. These were primarily for eliminating hydrocarbons, particulate, and hydrogen sulfide from the retorting process, and for dust control and spent shale disposal. By assuming a zero value for environmental costs in 1971, RAND goes on to estimate that between 8 and 20 percent of the increases in estimated capital costs or $65 million to $165 million between 1971 and 1978 were caused by environmental factors. These estimates do not include the possible indirect environmental costs that might occur because of: necessary siting changes, alterations of mining plans, disruption of construction schedules, less efficient facility operation, and costs of potential litigation. Each of the above can have enormous impacts on plant economics; delays occurring late in the construction stage are particularly costly. A 6-month delay in the middle of construction could add more than $100 million to costs. An Assessment of Oil Shale Technologies June 1980

This looks suitable for inclusion in the article, no? Splette :) ^{How's my driving?} 03:21, 27 August 2008 (UTC)

There's ALOT of information out there. I'm still absorbing it, and trying to come up with a framework that works. One problem is the articles come from different dates. the above article is from 1980. Do please keep making suggestions, it's helping alot.--Work permit (talk) 04:24, 27 August 2008 (UTC)

All of this is part of external costs (see above).Kgrr (talk) 15:54, 9 October 2008 (UTC)

Water Usage

Added a section on water usage. Would like to keep this section focused on economics. Cost 2.5m bbls/day capacity range between $1.8 bn-$4.2 bn is $1.97-$4.60 bbl-year, or at a 15% roi implies $0.30-$0.60/bbl. Even if the water costs is tripled, it's not really significant. Of course prices would rise is shale were produced, which may mean some cotton farms in arizona get priced out of business :)--Work permit (talk) 03:51, 30 August 2008 (UTC)

The amount of water used probably depends on the method used to extract the oil from the shale.Kgrr (talk) 15:56, 9 October 2008 (UTC)

Nighthawk Plc & Running Foxes

Anom user added Nighthawk Plc & Running Foxes to the list of current projects. However, there is no reliable sources confirming this claim. It seems that this is one of the cases when company uses "oil shale" not for the kerogen-containing sedimentary rock, but for shale which contains liquid petroleum. Although it may be classified as unconventional oil, it is still in form a liquid oil and not in form of kerogen in the solid rock as in case of oil shale. We have quite similar confusion also with shale gas which may refer to gas in shales (todays common understanding of the term) and oil shale gas (most of the scientific-technical literature refers to it also as "shale gas"). As this article is about the economics of oil shale in its traditional meaning, I reverted this edit to avoid confusion. Also, this list includes confirmed projects at least at the test stage. There is no such information about Nighthawk Plc & Running Foxes. Beagel (talk) 17:58, 29 December 2010 (UTC)

Outdated tag

Anon user added outdated tag to the 'Break-even price of crude oil' section with reasoning "Parts of this article (those related to The technologies to reduce costs of shale mining have progressed significantly since 2005, the date of this section's future breakeven cost-projections.) are outdated." While I agree that the article may be outdated, I disagree with this reasoning as it seems to confuse oil shale and producing oil from the oil-bearing shales which are very different things. While there is indeed a significant progress on technologies producing tight oil (also referred as shale oil) from the oil-bearing shales, there is no such progress related to producing oil from oil shale. Therefore, I will remove the tag now. Beagel (talk) 14:20, 25 February 2016 (UTC)

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Mitigating Factor

The production of oil from shale will not happen no matter the price of a barrel of crude if the current political climate is geared towards moving away from the use of fossil fuels and more towards electric vehicles, solar, wind and hydroelectric sources of energy. 2607:FB91:8E83:7AD:E1F5:4C8F:6BA0:4164 (talk) 19:04, 3 October 2023 (UTC)