October 21, 2011
This is the fourth blogpost in the series, “Corn-Fed Cars: On the Road with Ethanol.”
While ethanol is the main subject of our blog series, we want to take a look at other so-called alternative energy sources that have been finding their way into the news lately. Shale gas, oil shales, and tar sands are actually not new—they have been long known, but little exploited. Rising oil prices are making us take another look at them.
Some people are saying this era is the end of “peak easy oil.” While new technologies have lowered costs of production and processing, it is only a matter of time until we are in “peak difficult oil.”
The steady rise in crude oil prices, currently close to $85 a barrel, reflects the new “normal” of hard-to-get oil. It has resulted in increasing extraction of these unconventional petroleum sources, which I’ll outline below. (It’s worth noting, however, that thanks to the recession, oil just dropped below $80; this volatility will be a factor in all alternate liquid fuels.)
Fracking (a contraction of “hydraulic fracturing”) is a commercial technique that has been used for more than 60 years by the oil industry. Originally, it was used to increase the flow of oil from oil wells. (The process involves pumping a fluid into a well at high pressure, sufficient to cause the rock formation to crack. The fracturing fluid extends the crack and lets the oil—or natural gas—out.) Recently, however, fracking is being used to extract natural gas from newer sources such as shale gas, a natural gas that comes from shale rock formations. (Traditionally, “conventional” natural gas has been captured from oil fields as it’s released in the oil drilling process; as the industry foregoes this method, it is looking for unconventional natural gas sources, and shale gas is one of them.) An estimated 90 percent of the new natural gas wells in the U.S. involve fracking of shale deposits, and the technique is being rapidly adopted in other countries. Recent world inventories indicate there is at least as much recoverable shale gas as there is conventional natural gas already inventoried. In response, natural gas prices have dropped close to 50 percent. But extraction creates major environmental problems including ground and surface water pollution.
The most productive shale deposit, the Marcellus shale, is located in the densely populated northeastern U.S., especially in New York and Pennsylvania, where ground and surface water contamination is likely to affect large populations. The Marcellus shale is estimated to contain enough shale gas to heat and light the nation’s homes for more than 20 years.
Oil shale is rock that contains significant amounts of kerogen, from which shale oil can be produced. An unconventional energy source, it is waiting in U.S.-owned land in the Colorado Desert and elsewhere around the world, waiting for development of technologies that will permit its extraction. U.S. oil shale reserves are estimated at 1.5 trillion barrels of oil, which would make the U.S. the world’s largest source of petroleum, over five times as much as Saudi Arabia. The old way of extraction was to remove the shale and heat it to produce asynthetic oil from the kerogen contained in the shale. This process, called retorting, is expensive, and it produces unacceptable levels of toxic shale to be disposed of. A new process is being developed by Shell Oil that involves heating the shale in the ground and recovering the oil. It is not worth going into the technical details now, but the process, once developed, should be competitive with $40/barrel oil.
High energy prices have also made the Canadian tar sands competitive. Tar sands, also known as oil sands, or simply bitumen, are readily upgraded to synthetic crude oil, and they exist in a vast deposit in Alberta, Canada, called the Athabasca tar sands. The only other significant tar sand deposits in the world are in Wyoming, a relatively small deposit, and in Venezuela.
The tar is in a mixture of sand, clay, and water. Mining is done either by surface extraction, heating (with natural gas, made cheaper by fracking), or by pumping hot water into the deposit and melting the tar before extracting. Either way, tar sand extraction is dirty, and it comes at a high energy cost because of the natural gas required. Depending on the extraction method, each barrel of synthetic crude uses two to three barrels of water, and considerable natural gas. Development of tar sand infrastructure also destroys boreal forest. Combine this with disposal of the slurry from mining, and the environmental costs are high. Further, about 20 percent more carbon dioxide is released during this process than during extraction of conventional oil.
Geologists estimate that the sands contain 1.7 trillion barrels of oil, and that about 10 percent of that can be mined at today’s prices. This makes the Canadian tar sands the second largest inventoried petroleum deposit in the world. Only Saudi Arabia has more oil, and most of its oil fields are declining in production.
Perhaps even more controversial than the mining of the tar sands is the proposal to build another pipeline, moving the oil to refineries in the Gulf Coast. The industry is expanding rapidly, to the chagrin of environmental groups—but expansion is limited by transportation of the oil to refineries. To rectify this situation, a 1,700-mile pipeline, the Keystone XL, was proposed in 2008. The pipeline will more than triple the amount of Canadian oil reaching the U.S. by 2019. It runs south from Alberta across the Dakotas and Nebraska, over to St. Louis, and then down to the Gulf Coast refineries. Concerns include the possible contamination of the Ogallala aquifer in Nebraska, major oil spills anywhere along the route, and the expansion of the tar sands as a major petroleum supply. It appears to be supported by the Obama administration.
Overall, the United States gets about 35 percent of its oil from Canada, Mexico, and Venezuela. About 28 percent comes from Saudi Arabia, Nigeria, Iran, and other countries. The remaining 40 percent comes from U.S sources.
AT 25 percent, Canada is far and away our biggest supplier. The tar sands are a large part of the future oil export plans for Canada. This should be good news for the U. S, because we have a large steady supply of oil from a stable, friendly country.
The bottom line is that there are a whole lot of alternate sources of energy out there that have nothing to do biological energy sources. There will be winners and losers in this battle for the pump. And while peak easy oil may be over, peak difficult oil may have a far longer life than many predict.
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