How to Liberate 3X Saudi Arabia's Oil Reserves Without Using Water

...the Uinta Basin is the site of the massive Eocene Green River Shale formation – potentially the largest reservoir of unconventional petroleum in the world. With total reserves estimated at up to 1.3 trillion barrels, and ultimately recoverable reserves of 800 billion barrels or more , this formation holds three times or more the amount of Saudi Arabia’s proven reserves. Unlocking this formation would change the energy outlook of the nation – and of the world – for a century or more.

Today, TomCo has announced that it has awarded contacts toward the development of this resource. _Source

World Oil
Reserves of oil shale kerogens in the western US states is massive -- far larger than the huge proven oil reserves of Saudi Arabia. Now a technology exists which can liberate these vast trapped energy reserves without using water or contaminating groundwater. Using this waterless in situ approach, the scenic appearance of these majestic western drylands will be unaffected, and the environmental quality of the region will be preserved.

Eco-Shale Technology

The EcoShale™ In-Capsule Technology involves heating mined shale in a closed surface impoundment, or capsule. The process relies on conventional mining and construction methods and produces a bottomless oil product that requires no coking. The process produces a shale oil with a much higher concentration of middle distillate than West Texas intermediate crude. Two synthetic shale oil products are produced: (1) prompt oil of approximately 29 API gravity; (2) condensate oil of approximately 39 API gravity. The oil and condensate produced with this process have no fines and have very low acid numbers.

The technology requires no process water, protects groundwater and vegetation, uses low temperatures for heating and allows for rapid site reclamation.

The resultant product is a high quality feedstock with an average 34 API and no fines. The process also results in synthetic natural gas production allowing for energy self-sufficiency. _EcoShale

It is almost impossible for most persons to envision the economic impact of the introduction of these vast energy resources into world energy markets. Far more resources are devoted by the Obama administration to shutting down the liberation of North America's vast energy stores, than to making the production of energy cleaner and more economical.

Mr. Obama's approach has always been one of energy starvation, rather than energy facilitation. That is just one of the several nearly insurmountable obstacles to prosperity which the US economy currently faces, and for which Mr. Obama can take direct credit -- if only he would.

Cross-posted in slightly modified form under a different title to Al Fin Energy blog

Oil Price Volatility: Central Banks and Spooky Investors?

Global oil markets are coming to resemble something out of a D-grade science fiction movie, a monster with a life and will of its own bent on devouring everything in its path. But who created the monster, and who continues to feed the hungry beast?

...the advent of widespread Internet trading platforms radically increased the number of people with access to commodity markets, decreased the amount of time it took for an investment decision to impact the market and expanded the amount of money that could be applied to those markets. In particular, the creation of energy-indexed investment vehicles created additional demand for commodities by people who have no intention of ever taking delivery of the commodity.

...In any other market, the presence of a mass of new players would obviously have a distorting effect, but in the oil market, the inelastic nature of oil demand magnifies the investor presence. Since oil is so essential to modern life — needed for everything from transportation to making plastics, fertilizer or paint — industrial and retail demand for oil is actually fairly stable. The introduction of dynamic actors into a normally static system results in periodic and disproportionate price shifts.

...Over the past six years, the global money supply has roughly doubled. There are any number of reasons to expand money supply, but the most relevant ones of late have been to ensure that there is sufficient credit to stabilize the financial system. However, governments have few means of forcing such monies to go in any particular direction. And since the entire purpose of professional investors is to shuffle money to where it will earn them the highest return, some of the money from an expanded money supply often finds its way into commodity markets.

... In China, for example, such a huge and expanding money supply is keeping the country’s many profitless enterprises solvent, which keeps legions of unemployed from causing social instability or unrest. But it comes at the cost of inflation pressures, which could also cause unrest by consumers due to price increases. (The massive monetary expansion in China is symptomatic of a brewing crisis that STRATFOR expects to burst within the next few years.)

But for the commodity markets, including oil, the impact is clear: Prices will steadily rise — and on occasion dramatically fall — so long as the world’s monetary authorities keep expanding the money supply. _Forbes (STRATFOR)

Adapted from an earlier posting at Al Fin Energy

Unless one is a student of complexity, autopoiesis, and emergent phenomena, the seemingly disconnected movements of modern markets would be completely incomprehensible. But even under the best circumstances, the energy market monster is somewhat unpredictable in terms of timing the repeated rises and crashes.

Caution is recommended whether one is lulled into going long or scared into taking a short position. Oil is not gold, and should not be treated as a safe repository of value. Even gold and silver are subject to price swings, due to market psychology, geopolitical instability, and politically corrupt policies.

Try to be ready to take advantage of the inevitable erratic swings as they happen. For long term planning, make allowances for the likely volatility in energy and commodity prices -- as well likely erratic movement and possible collapse of selected currency values.

Brian Wang has more insight into some of the inadvertent effects of a weak dollar policy for the US

Turbulent Oil Prices Ride Storms of Stupidity

“Very little of the recent price rise has really been down to the improving supply-demand balance,” said Matt Parry, senior oil consultant at KBC Process Technology Ltd. Instead, most of the recent rise is due “to a combination of the anticipated renewal in quantitative easing and the general increase in investor appetite for risk.”

In fact, investors could discover that they’ve bitten off more than they can chew when it comes to increasing their risk.

“Any market that shows a strong divergence from its fundamentals … is vulnerable to a sharp sell-off,” said Darin Newsom, senior analyst at Telvent DTN. _Marketwatch

Puts: Oil vs Gold
T. Boone Pickens is predicting $95 a barrel oil prices in one year. Other investors and investment houses are predicting that oil will shoot well above $100 a barrel in 2011, perhaps much higher. Given the turbulence in commodity pricing, predicting prices a year in advance is not much easier than predictions for 10 or 20 years in advance. But present circumstances can give us a few ideas what to expect.

Uncertainty is rampant in modern markets. The world's reserve currency is being treated like toilet paper by its own government and central bank. The Eurozone is being shaken to its foundations by demographic change and debt. The ability of China and India to pull the world out of its economic doldrums without help from North America or Europe is being belatedly recognised as having been overstated.

What I am saying is that large investors are hard put to find a safe haven. Just as in late 2007 and early 2008, these investors are running to commodities for a false sense of security. Gold has a fairly good record historically as a storage of value of last resort, but oil is something of a johnny-come-lately in that regard. Investors were killed in 2008, and they will be killed again, betting on oil.

“Commodities seem to spend more time moving with little regard to underlying fundamentals,” said Newsom. “Money flows from market to market, often driven by action in the dollar.”

Weakness in the dollar against its foreign currency rivals, money flow in financial markets, and worries over further quantitative easing have all been strong influences in gold’s climb to record levels, but they’ve been key factors for oil as well...

...“The extreme liquidity in financial markets recently has caused some commodities (like gold and oil) to inflate far more than fundamentals would support,” said Michael Lynch, president of Strategic Energy & Economic Research.

“Expectations of the [second round of quantitative easing] and then the reality were the major factor behind oil’s rise since September, with secondary support from slight strength in fundamentals,” he said.

...“It is clear that the dollar is being deflated by the Federal Reserve printing more money,” said Perry Management’s Perry. So “currency is being invested more in commodities, such as gold and oil.”

Crude oil has had a strong negative correlation with the U.S. dollar index, Newsom points out, and at times, “acts as an investment hedge against inflation.”

That sounds very similar to gold, though oil has “not completely supplanted gold as a safe-haven market yet,” he said.

...Whatever the case, oil trading similar to a currency is worth watching, as the global currency wars “look to be a key issue moving forward, and the cash-rich economies (such as China) need somewhere to put their faith, and likely commodities (particularly gold, but also oil), seem like sensible options,” said KBC’s Parry. _Marketwatch

It is easier to find new oil than it is to find new gold. Recent oil price increases are helping to spur large new oil finds on the North American mainland. And although the ill conceived Obama moratorium continues to stymie new oil development in the Gulf of Mexico, massive new oil deposits are waiting to be found there -- and become ever more affordable as the price of oil tends to rise.

New oil supplies tend to help hold oil prices down -- as does demand destruction caused by higher oil prices. Demand destruction can be due to depressed economic activity, or due to energy consumers finding substitute sources of energy and practising energy conservation. The underestimation of potential demand destruction by energy forecasters is one of the more ludicrous aspects of the current investment atmosphere.

Here at Al Fin, we are less concerned about short-term fluctuations in price than we are concerned with current US government policies of energy starvation, which create political peak oil conditions -- with accompanying higher energy costs, depressed markets, and demand destruction. Such concerns are also rising to the top of the list of concerns of the American voter.

Reporting in the journal Nature, scientists from Royal Holloway, University of London and the Institut de Ciencies del Mar (Spanish Research Council) have revealed a new model that explains how continents thin as well as helping to more accurately predict the location of hydrocarbons such as oil and gas. _SD

via New Energy and Fuel
A new model of continental thinning, faulting, and re-forming, promises to provide new ways to locate vast new petroleum reserves. Scientists at institutions in the UK and Spain hopes to provide petroleum prospectors with new conceptual tools for determining the most likely areas to find the billions of years worth of hidden hydrocarbons.

The new model is based on high-resolution images of the tectonic structure of the crust at such margins. These images are obtained using elaborate seismic methods, which give a picture of the crust below the oceans, showing where faults and sediments are.

The new model has important implications for the formation of hydrocarbon resources, plus it offer a new view of the style of faulting during continental thinning, sediment deposition and potentially for the opening of oceanic gateways and oceanic circulation. _BrianWestenhaus

The geologic sciences are still quite young, sharpening their teeth on ideas that take into account the antiquity of the planet, the incessant nature of geologic processes, and of microbial and photosynthetic organisms which have thrust their way into the midst of epochal geologic upheaval.

Older geologic theories focused upon easily accessible sediments from relatively recent geologic regions -- areas laid down millions or dozens of millions of years ago as opposed to the billions of years that photosynthesis has been converting CO2 to organic carbon. Exceptions to conventional theory have popped up from time to time, but have been largely ignored as anomalous.

As large international companies get shut out of the richest oil reserves of OPEC nations and corrupt, unreliable nations such as Russia, they are forced to look for oil wherever it may be found. Continental shelves off large rivers such as the Mississippi and the Amazon are likely places for grabbing oil dozens of millions of years old. But to find the truly old oil and hydrocarbon, some new ideas will be necessary -- and will require testing. All of that takes time, which the big international oil companies are running out of, caught between political peak oil (Obama, Boxer, Salazar, etc.) and sovereign oil companies that nationalise the valuable assets and work of multi-nationals at the least opportunity.

Why the Age of Oil Is Just Beginning & Why It May Soon End

Petroleum is thought to have originated mainly from the remains of sediments of photosynthetic organisms which sedimented from ancient seas, and were heated and compressed by geological processes. Assuming that to be true, it is interesting to note that photosynthetic organisms originated almost 3.5 billion years ago. From the chart above, one can note that the Oxygen concentration of Earth's atmosphere rose markedly at about the same time as the origin of cyanobacteria (2.8 gya), eukaryotes (2 gya), and algae (1 gya), respectively.

The higher the oxygen level the higher the rate of sedimentation of photosynthetic organisms, presumably. Note that such sedimentation began to occur nearly 3 gya. Also note that the vast majority of petroleum which humans have begun to tap into, originated roughly 100 mya or more recently. I think you will agree with me that the Proterozoic Era (2.5 gya to about 540 gya) is likely to have been extremely prolific in the sense of laying down organic carbon in sediments.

Now, observe the Tethys Sea in the image (see Tethys Ocean). The Tethys Sea (Ocean) opened about 250 mya and closed about 10 mya. Most of the modern world's known oil and gas reserves lie in the sediments which once underlay the Tethys water masses. Much of this oil and gas is of fairly recent origin, geologically speaking, although some dates back to the early Triassic (250 to 200 mya). It only takes a hundred thousand years or so to make petroleum by natural means, depending upon local geology.

Now, I know you are saying to your computers, "But Al, if we are only beginning to tap a very small fraction of all the oil that has been deposited, where is all the rest of the oil?"

To which I reply, "Where do you think it is? Floating beyond the orbit of Pluto?" No, seriously, a lot of things can happen to oil deposits over time. Some can seep into oceans and be eaten by microbes. Some can be turned into various types of gas, and escape or be adsorbed by minerals. But most of it is likely to have been buried in the constant geologic upheaval of the planet's layers of rock.

The Japanese and Chinese have recently begun finding significant deposits of oil and gas within volcanic rock. Oil geologists are beginning to look beneath undersea volcanic deposits for submerged oil fields of great potential. The Russians have been finding significant petroleum beneath deep igneous and metamorphic layers for many years. The history of oil formation goes back over ten times farther than almost all of the oil humans have retrieved or located so far -- although drops of bitumen has been found in rocks dated between 2.6 and 3.2 gya.

Australian expert in petroleum geology, Associate Professor Colin Ward of the University of New South Wales, says it's not surprising that algae and other simple life forms existed during this early stage of the Earth's history.

What is significant, is that there are now signs they were producing oil.

"He's found good evidence that the processes that generate oil were active in a very early history," he says.

Rasmussen's discovery may have implications for exploration, Ward says.

"It focuses attention back on very old rocks as a possible places to look for more oil and gases," he says. _Source

So why do I say that the age of oil may be ending soon? Because while it takes 100,000 years (plus or minus) to make petroleum by natural processes, it only takes a matter of weeks -- from start of algae crop to harvesting and processing -- using modern methods. Yes, modern oil made this way is very expensive, but that is because we have just begun learning to create it. Within 20 years, Al Fin energy experts assure me that microbial fuels and energy will be fully price-competitive with petroleum, and rapidly scaling to match production within 30 years.

You may hear a lot of talk about "peak oil" in certain circles. The most likely kinds of peak oil you will see are "political peak oil" from bad energy policy or political conflict, and "peak demand" -- when consumers choose other forms of energy and fuel than petroleum. Peak demand can also occur from economic, or other forms of collapse, which we hope does not occur.

The beginning of oil, the end of oil. Mayhaps both.

More 9Nov10: Whether crude oil survives or is decomposed to wet and / or dry natural gas probably depends more upon the catalytic environment in the reservoir than the temperature. The presence of mineral catalysts changes the decomposition picture significantly. We may discover that much of the sub-seafloor methane clathrate resource is a result of this type of natural catalysis of crude oil to natural gas, which migrates upward to a cooler, moister environment and is captured in clathrate. Of course, abiotic gas might well do the same thing in some formations.

Oil is Riding Higher on Weakening Dollar and Phantom Demand

Oil has once again broken into the $80 + a barrel territory -- which is exactly where it needs to be in order to drive new oil exploration, discovery, and production. But how much higher can oil go before demand destruction begins hacking away at an already weakened global economy? Some pundits are predicting that oil will move to over $100 a barrel by January, others claim that oil will rapidly move to $150 a barrel or higher.

Most of these claims are based upon anticipated growth in global demand for oil. This demand is expected to be greatest in emerging countries such as China, India, the middle east, etc. But these pundits also expect to see a recovery in oil demand in North America, Europe, and other more developed nations. Is their expectation justified? If not, their oil predictions rest on very shaky ground.

Let's look at China:

All that spending is creating destabilizing gluts, particularly in production capacity. Mr. Roubini singles out the car industry as an example. This year, car sales jumped from eight to 12 million vehicles, a 50% increase. But production capacity went from 10 million to 20 million vehicles. "China now has 100 separate car makers," he says. "The U.S. has only three."..."You know, I go to China six or seven times a year, and you have brand-new airports three-quarters empty," he says. "Highways to nowhere all over the country." _NourielRoubini_inWSJ_via_BI

Not only are China's stimulus $billions going to build unused or under-used infrastructure, but the quality of the construction is quite poor. These buildings, bridges, roadways and railways will be in need of serious maintenance -- even replacement -- within the next decade or two, at the most.

Like Jim Chanos, Hugh Hendry is bearish on China.

But actually shorting China has never been a straightforward proposition. For one thing, due to the bubbly nature of the market, you can get your clock-cleaned really fast, even if you're correct in the medium term. So you have to make related bets. In the case of Chanos, he appears to be shorting commodity/infrastructure players that serve China.

Mr Hendry has constructed a portfolio that targets Japanese corporate credits as some of the instruments likely to be worst affected. The fund has taken short positions through credit default swaps, whose prices reflect the solvency position of issuers, against 20-30 single-name corporate bonds, the majority of which are Japanese.

“Being short China is difficult,” Mr Hendry said. “I could go to China and short equities, but that’s too volatile and I have unlimited loss. I could short commodities like copper, but that would be unlimited loss too, so I don’t like it. I could look for ways to be short Australia or Brazil, but there’s not enough optionality there. Japan is the most exposed economy industrially.”

_FT_via_BI

What about the US' near-term recovery prospects? It looks as if house prices in the US still have further to drop. Goldman looks for US manufacturing to contract significantly over the next several months. And a number of economic indexes appear to indicate that the US is in the early stages of another drop into recession. And there are some indications that confidence in the recovery is beginning to droop.

Repeated $trillion dollar stimuluses can artificially paint a picture of recovery -- but not indefinitely. Eventually investors will refuse to lend to such a profligate spender -- particularly a big spender that suppresses its own private sector as harshly as Obama is doing.

Does Obama really need all those investors? Sure, Obama can always imitate Robert Mugabe of Zimbabwe, and operate the printing presses until he runs out of green ink. But turning the US into another Zimbabwe will have its drawbacks as well.

Perhaps the pundits who are predicting $150, $200, and $250 a barrel oil in the near future, have access to information that is denied everyone else. But anyone who did not learn a lesson from the disastrous demand destruction that accompanied the 2008 speculative runup to almost $150 a barrel is likely to repeat his mistakes -- and lose big -- yet one more time.

In the opinions of Al Fin financial analysts and investment bankers, the global economy (and the US economy) is in worse condition to deal with massive demand destruction from artificially inflated energy prices, than it was in 2008. Certainly the exponential rise in debt being experienced by most US states and the US federal government, will have dire consequences sooner or later. There is no telling exactly what will trigger those consequences.

Peak oil doomers always expect the price of oil to go up. "This time," they think, "this time is the big one. This time oil will go up, up, and up, and never come back down. This will prove that I was right all along." Of course, they have been saying this since the mid-1800s, and will likely be saying the same thing in the 2030s and beyond. But that is just stubborn human nature.

Smarter people need to look deeper beneath surface phenomenon and make their plans accordingly. If you know what you are doing, you might be able to ride along with the big speculative investors as they make money on oil going up . . . . and coming back down.

Obama's Policy of Energy Starvation Hurts US, Benefits Canada

While Obama's inept moratorium on oil drilling along the US Gulf Coast heaps misery upon millions of Americans, Alberta's economy is being rejuvenated by the shift of resources northward to the oil sands. If Obama's political agenda prevents oil companies from investing in the United States, they will naturally turn to the vast hydrocarbon resources of other nations such as Canada -- while Mexico, Cuba, Russia, China, and Brasil move to take advantage of deep sea oil resources that the US government eschews.

In a research note this week, investment bank Peters & Co. said as much as $30 billion will be spent from 2011 to 2015 on mining and in situ oilsands projects to boost production by almost one million barrels per day.

"Most new sizable projects are controlled by majors with less financing risk and lower costs of capital than juniors of previous cycles," wrote research analyst Todd Garman.

"Based on our assessment of currently planned oilsands mining and in situ projects, including phase expansions, we forecast total potential production additions of about 900,000 bpd, with mining and in situ production of 300,000 bpd and 600,000 bpd, respectively."

..."Specifically, we anticipate that ConocoPhillips' Surmont, Husky's Sunrise, Imperial's Kearl, MEG's Christina Lake and Suncor's Firebag 4 projects provide potential oilsands construction growth opportunities for Flint, with these projects expected to be awarded by 2010 year-end," Garman wrote.

He said the biggest risk for development is related to oil prices -- the projects are projected to break even at between $55 and $65 US per barrel. _CalgaryHerald

As long as oil is priced in terms of the weak Obama Dollar, the price of oil is likely to be above $55 per barrel.

As peak oil drifts ever further into the distance, the more relevant and proximal causes of energy shortages derive from "political peak oil", and the disastrous decisions being made daily by incompetent clowns in public office.

Cross-posted to Al Fin Energy

Oil From Ancient Seas: Where Ahoy?

Oil was formed in warm, ancient seas, from microscopic organisms which thrived in a high CO2 environment. The first photosynthetic micro-organisms evolved around 3.5 billion years ago, which provides a great deal of time for hydrocarbon formation through the eons. Modern oil companies are scooping up the most recently formed crude oil, from deposits formed just a few dozens or hundreds of millions of years ago -- from the ancient sea-beds and former sea-beds which were easy to locate. But where will we find the multi-billion year ancient seabeds -- the really big oil fields? It will require a great deal of patience, detective work, and advanced technological tools -- some of which have not been invented yet.

If you want to go prospecting in history for likely locations of super-giant oil deposits, look for the ancient sea-beds. The Wikipedia reconstruction of Earth's tectonic history should give you a rough idea of where the ancient seas may have been. The YouTube video below provides another look at the dynamic ballet of continents and plates. Pay careful attention, insert a bit of creative extrapolation and interpolation, and draw your own conclusions.

If you look down below at the Wikipedia clock representation of Earth's time scale -- far back into the pink -- you will see where photosynthesis begins, around 3.5 billion years ago. Then travel clockwise all the way through the pink and yellow to get to the blue and green, where the seabed locations of modern oil formation opened up to provide ideal environments for oil formation. What happened to all of the oil from the roughly 3 billion years between the start of photosynthesis and the generation of modern oil, originating from all of those wildly reproducing photosynthetic microbes?

If you watch the undulations of the tectonic plates, and the constantly opening and closing of sea basins over the 600 million years pictured in the YouTube video, you can see that the perfect windows for oil formation were constantly opening and closing. No sooner would a perfect warm sea open up for oil production, than the tectonic plates would shift and cover it up.

All the while massive vulcanisation was taking place within and around the sedimentary basins where rich oil deposits from past ancient seas were sitting in the boiling heat deep underground. What happened to all of those billions of years of deposits?

Some must have escaped as gas or volatile hydrocarbon, migrating to upper layers of the crust, or into the atmosphere. Some of the oil would have likewise found its way to upper layers of crust, trapped by impermeable layers -- or escaping as seeps to be metabolised by oil-munching microbes.

But some of it -- perhaps a huge part of it -- is still trapped beneath volcanic rock, beneath moving tectonic plates, beneath billions of years of sediment. Waiting for clever boys and girls to track it down.

More: Recent study of a massive rotational shift of the super-continent Gondwana approx. 525 mya

Growing awareness of rich variety of life beneath the seafloor

Deep open ocean most unexplored part of planet

It should be clear that since 70% of Earth is covered by ocean, most of the planet's treasure trove of petroleum and other fossil fuels is likely to lie beneath the seas. Both polar regions are relatively unexplored in terms of mineral wealth, but the same is true for the open oceans. Although it does not take a genius to suppose that large deposits of oil may lie in the Gulf of Mexico or under the ancient Tethys Sea, it may take a great deal of clever detective work to find earlier versions of these nutrient-fed warm water shallow seas -- and where the sediments may have migrated over the past hundreds of millions of years.