![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small}
spentshaler's journalLog in Create a LiveJournal Account Learn more
| You are viewing spentshaler's journal Log in Create a LiveJournal Account Learn more | Explore LJ: Life Entertainment Music Culture News & Politics Technology |
|
|||||||
 |
|
|
|||||
|
spentshaler's Journal  United States Senate Washington, D.C. Subject: Shale Oil Hearing Dear Senator Domenici: Thank you for scheduling a hearing on oil shale in Grand Junction. Your foresight and determination are greatly appreciated. I would like to enter this statement in your hearing records. The campaign to reduce our dependence on unstable foreign oil supplies leading to an oil free economy should include shale oil development along with encouragement of conservation and development of renewable resources. The use of the extensive shale oil energy supply will be an important component of the process to get us through the coming transition from non-renewable hydrocarbons to other resources. . However, we must not repeat the mistake of prior energy crises and assume that shale oil is ready for commercial development. Despite all the attempts to develop a shale oil industry in the US over the past 100 years, the fact remains that no proven method exists for efficiently removing the oil from the rock. There are a number of candidate processes possible, but none has demonstrated a practical capability to produce oil. For this reason, it is imperative that the next step in shale oil development be a demonstration and test phase. It is possible that the BLM RD&D leasing program may serve this purpose, but I am unconvinced because it seems to be essentially a duplication of the failed 1970-80 prototype leasing program. Another possibility is a government center to provide the proper conditions for test activities. There have been previous efforts in this direction in the past, e.g., the Bureau of Mines and Colorado School of Mines work at Anvil Points. Also, a thorough analysis of the merits of government and industry partnerships is available in the report DOE/EIS-0068 dated September 1980. Other proposals include a "Proof-of Concept" facility at the federal Cb site by Occidental Oil Shale in 1990 as discussed by Russell George of the Colorado Department of Natural Resources at your recent hearings on shale oil. Additionally, Federal legislation was passed in 1992. See US Code: Title 42, Section 13412. An attractive alternative was outlined 30 years ago. Little has changed in the past 3 decades. June 1976 "Robert McClements, Jr., president of Sunoco Energy Development Co., a subsidiary of Sun Co., Inc., said his firm advocated a jointly-funded government-industry program to support oil-shale efforts through the stage of technology development. Mr. McClements expressed concern about several things: First, technology, which has been demonstrated only at the pilot plant or semi-works level; thus the scale-up to commercial-size units carries with it a high technological risk. Second, the operational risk involved with a commercial oil-shale facility. For a large-scale plant to successfully maintain design production levels, it has to be on-stream-working as a unit-a high percentage of the time. Another operations concern relates to labor. Oil-shale plants will be built in areas where there is presently no reservoir of people to operate and maintain them. Third, the environmental aspects. Since we don't know what the final environmental regulations will be for oil-shale plants, we simply don't have a good grasp on how to design a plant. Fourth, the highly uncertain public policy climate that exists today and which restrict the operation of market forces. Fifth, timing. Enormously long lead times are involved in synfuels facilities and when you are talking about an expenditure of $1 billion (as assumed in 1976) per plant, the orderly, coordinated timing of capital investment is essential. But that's impossible with the present uncertainties. Sixth, economics. Even under the most optimistic assumptions for capital investment and operating performance, the required selling price for synthetic oil may still exceed the market price for conventional oil. A loan-guarantee program does not deal with the basic difficulty. That is, the size of the investment required, coupled with existing policy, technical and financial uncertainties, effectively forecloses the initiation of commercial oil-shale undertakings. An alternative approach can be a program that will assure the demonstration of a wide range of existing infant technologies on a broad scale. Such a program should provide for the construction of a number of modest-sized operating modules. But, since each module would cost about $100-$200 million (in 1976 $)-on which no return can be expected-this program could not be initiated solely by private industry. The most realistic approach could be to pattern it on a joint government-industry demonstration plant concept. Such a program could be initiated by a clearly identified governmental sponsor, which would solicit specific proposals from private companies for a variety of joint efforts. Government financing would then carry the projects through the stage of demonstrated technology. Thus, if a module(s) successfully demonstrates a technology, and if economic conditions permit, the government's interest could be acquired by the program's industry partner under previously agreed-upon terms." Irrespective of the outcome of the debate on the real status of 'peaking' oil, shale oil process testing must happen. I have no doubts of our ability to make the transition. Our country has proven time and again that we can meet enormous challenges and succeed. Please let me know if you would like any of the above referenced materials or if I may be of assistance to you. Sincerely, Robert A. Loucks The BLM held a hearing in Grand Junction this past week to inform the public about their Oil Shale Research Development and Demonstration leasing program. You all know that five 160 acres parcels are being considered for Colorado. All five are proposed to test in-situ processes similar to the on-going Shell project. Indeed, 3 of the 5 are being bid by Shell, with another to EGL and the last to Chevron. The meeting was primarily a spentshalers reunion. I saw some folks I had worked with over 20 years ago and not seen since. In my opinion, this was a case of preaching to the choir. I hope the real public is aware that large investments are being proposed for the next few years to prove the viability of in-situ shale oil production. The BLM has a program designed to protect the public's interests. It would be good if informed input were received at the early stages of the project. The program is a good one and meets my hopes for a careful, well-planned staged development of this most important transistion domestic hydrocarbon resource. A little over a week ago, my grand daughter, Amy, noticed that one of my eyes was acting strange. The next morning, it became apparent that I couldn't close one eye and my smile and laugh were all on one side of my face. We feared the worst, that I was experiencing a stroke, and I was soon in the emergency ward of St. Mary's Hospital getting maximum attention. It turned out that my problem is a much easier-to-fix problem called Bells Palsy. The muscles on the right side of my face are not working because Cranial Nerve #7 is damaged. Viruses are the usual suspect for the nerve damage, but after lots of thought, the doctor believes that my case was brought on by a severe ear bacterial infection which I had experienced the prior week while working in Mississippi. The prognosis for complete recovery is excellent. It is generally a matter of 2 to 6 months and all is back to normal. As part of the ER investigation, I was given perhaps the best physical I've ever had. The doctor suggested that, based on the results of all those tests, I was in pretty good shape for a 70 year old and hopefully I would be looking at the 2 month recovery time. I hope so. There is no pain or real problem with my current situation. My right eye doesn't blink, so I have to keep lubricating it with drops. I even wear a patch at night - largely so I can growl "arrgh" at my grand kids. The right side of my mouth doesn't properly function, so that I have retrogressed 60 plus years to drooling. I have been continuing tutoring at a local high school and the kids and staff have been wonderful tolerating my unusual appearance and actions. There is definitely a bright side to this episode. At one time, I was surrounded in the emergency room by 8 or 9 loving family members (plus very tolerant ER staff). I am indeed a truly fortunate person to have such a wonderful, caring family. A final note: I have long been reluctant to seek medical attention. The staff at our hospital was tremendous, keeping us all focused and calm, to the extent that the young doctor and I were cracking corny jokes at each other. I am very appreciative of this exemplary professional, yet personal service. Here is your opportunity to find out just what is being planned by Shell, Chevron, EGL Resources, and ExxonMobil on the proposed BLM R&D leases. Starting tomorrow, March 28, there will be hearings at four Colorado locations as follows: March 28, Rangely High School in Rangely March 30, Fairfield Center in Meeker April 4, Garfield County Fairgrounds Event Hall in Rifle April 6, DoubleTree Hotel in Grand Junction All meetings are scheduled from 4 to 7 p.m. This is an excellent opportunity to learn more specifics about the so-far undefined plans and show support for the careful, prudent development of this most valuable resource. We need to wean ourselves from the cycle of supporting potential terrorists with our fuel purchases. There was an excellent letter in the Monday, February 13, 2006 Daily Sentinel. I hope that Mr. Lashley doesn't mind that I reproduce it here. Editor: The Feb. 2 editorial mentioned some things our president said in his “exhortation ... of domestic energy independence.” I agree with the suggestion that it amounted to “sound and fury, signifying nothing’” or, at very best, very little. Certainly there was no realistic solution. I’d like to suggest some common-sense possibilities that I’ve not heard mentioned by anyone yet. First, while we continue to hear experts talk only of several improbable possible solutions — improve engine efficiency, more windmills, bigger solar panels, etc. — we hear nothing of a more promising, possible approach, which is systems for better use of the fuels we have available now. Second, stop wasting money trying to get Big Oil to develop anything that will push it out of the energy catbird’s seat. Withhold tax credits to Big Oil to put universities under contract to develop techniques to extract fuel from oil shale and sand. Third, brainstorm the problem as widely as possible regarding three basic questions: Will it work in the real world? If not, is it fixable in the real world? And, if it works, will it solve the problem? Fourth, use a limited embargo against oil costing over, say, $25 a barrel. We are told that the world oil price is driven by China’s growing demand in the world oil market. We are about 40 percent of that market. That’s a lot of potential leverage. Fifth, instead of convoluted rhetoric pretending to explain the price gouging, audit the complete well-to-pump process of producing fuel and publish real cost-per-unit-volume of fuel available at the pump. Sixth, as Gary Harmon pointed out in the same issue, fuel is a necessity to our society, not a luxury. So, in ’08, pray for a candidate in either party with the wisdom of Ike and the will Harry Truman. RAY LASHLEY Grand Junction My good wife knows that what you read is what you need to know at the moment. This principle was proven again. I am reading The Dawn of Life by J.H. Rush, Hanover House, NY, 1957, a book "For all those who thought the hard question a better companion than the easy answer, and the road better than the inn." The quest for energy It is important to recognize the nature of the limitation that was imposed upon the development of life by the dwindling of its food supply. The situation was quite comparable to man’s quest today for new sources of energy. Our industrial civilization has been powered almost exclusively by a stock-pile of fuel — coal and oil — that has accumulated during long ages. Like the carbon compounds that awaited the development of life, these fuels will be exhausted in a relatively short time. They are serving the infancy of technological society, just as the accumulated nutrients of primitive times served the precarious emergence of life itself. Lately, we have begun to depend increasingly upon the day-to-day flow of energy from the sun—through the medium of water power—just as life had to depend increasingly upon the current rate of synthesis of fresh energy-yielding substances by inorganic processes that also depended on the sun. At this point, the analogy breaks down. Man has discovered an un-imagined new stockpile of atomic energy, which quite possibly may out-last man himself. If atomic energy were not available, however, we would even now be exerting ourselves to find ways to harness the radiant energy of the sun directly for our purposes, instead of depending upon intermediate natural processes for its conversion. That is exactly what our most primitive ancestors did in a similar crisis. They invented photosynthesis, which is what this chapter is mostly about. Like man today, the primitive forms of life were engaged in a quest for both energy and raw materials. But, as we today are so clearly aware, these are not independent needs. With little available energy, man had to find specialized raw materials in nature — plant and animal fibers, deposits of metals, animal skins and tissues — that met his needs with little adaptation. Today, with an abundance of industrial energy, we can literally make almost anything from anything else. We can make nitrates from the atmosphere, cloth from coal and air and water, metals from refractory ores. To a large degree, energy and raw materials are equivalent. The experience of organic improvisation has been similar. Given sources of energy, living systems develop increasingly complex enzyme-actuated systems for transforming a wide variety of of unlikely raw materials into living tissues. The crux of the problem, then, is energy. I guess, that despite our inability to keep up with a Sputnik crisis, we were smart back when I was in college. Ken Silverstein, Editor-in-Chief EnergyBiz Insider February 10, 2006 Peak Oil: Real or Not? When oil giant Chevron runs ads asking if people ought to be concerned that the world consumes two barrels of oil for every one that is discovered, it evokes passions. The so-called Peak Oil movement warns that producers will have extracted more than half of the available oil within the next 10-15 years. Other experts say such views are hyperbolic, saying that any peak would occur a few decades from now. By any measure, oil is a finite source. As such, production will eventually peak and then begin to decline. Lots of smart folks disagree on when that time frame will be. The prudent response should then be to prepare for that reality. How so? Find new ways to diminish the reliance on oil by using greener alternatives as well as employ new technologies to get at non-traditional oils. They are those found in ultra deep waters and in oil sands, as well as coal-to-liquids and natural gas-to-liquids. As developing countries get their legs, the demand for oil will undoubtedly rise. In 2005, global oil consumption rose by 3.5 percent, or 2.8 million barrels a day, according to the U.S. Energy Information Administration. Right now, the agency says that 84 million barrels of oil are consumed each day but it expects that number to rise by 103 million by 2015. China is a wildcard, which may see its oil consumption jump as a percentage of the world's oil supply from 8 percent today to 21 percent in five years. What's it all mean in practical terms? Nations are clearly addicted to oil. As supplies dwindle and as demand rises, prices go up. Countries will be competing for a short supply of oil. For the United States that's a big problem: It has 2 percent of the world's reserves, consumes 25 percent of its oil and imports two-thirds of the oil it uses. That's why all experts say that the matter of oil production must be addressed. Events such as Hurricane Katrina or a political or military battle in key Middle Eastern nations exacerbate the situation. Oil prices have been as high as $71 a barrel and in the United States consumers were paying as much as $3 a gallon for gasoline. The U.S. Department of Energy predicts the peak will occur in 2037. But, in a report on the subject, it says that nearly all of the largest oil fields have been discovered and that production is past its peak in some areas. As such, the cost to find new discoveries is getting expensive. Alan Greenspan, the recently departed Fed Chairman, adds that new technologies will come to the fore that would likely mitigate some of the effects of peak oil. But, those developments will necessitate government assistance, he says. "Even if we don't run out of oil, the federal government admits it may become phenomenally expensive," says the energy department's report. "Will the world ever physically run out of crude oil? No, but only because it will eventually become very expensive in the absence of lower-cost alternatives." Common Ground Since the 19th Century, people have said the world's oil supplies are nearing peak. But it was not until the 1940s and 1950s that this school of thought began to garner a following. Shell Oil geologist King Hubbert said oil production follows a "bell curve." That means the oil flows slowly before it begins to gather steam and then eventually decline. At a congressional hearing held on the subject in December, Rep. Roscoe Bartlett, a Democrat from Washington, D.C., said oil production is falling in 33 of the world's 48 largest oil-producing countries. Within six more years, five more countries will peak, adds Kjell Alekett, president of the Association for the Study of Peak Oil and Gas, in Sweden. While countries such as Saudi Arabia, Iraq and Kuwait will have the potential to produce more oil than before, the physicist argues that it will be exceptionally difficult to offset the declines. Of note: Saudi Arabia allows no independent studies of its reserves, which makes it impossible to know exactly what its potential is. "There is coming the time, sometime in the next decade, during which our global ability to produce conventional oil on a daily basis will hit a peak," says James Halloran, Wall Street analyst for National City Bank in Cleveland. "It will probably not be directly recognizable at the time, owing to ongoing improvements driven by technology, economic factors, and a gradual improvement of production of unconventional oils and other sources of energy." The "rollover" at the peak to lower levels of production is likely to be gradual and not a sharp point capable of being broadcast at the time. But it will occur, just as surely as production has declined in the United States and in the North Sea, says Halloran. The phenomenon will occur throughout the world, as countries will be unable to beat back dwindling available supplies and increasing demand, now at six percent annually. "Those who think a peak in production will not occur in relatively short time, just because it has not happened before this, are in absolute denial." Current Models But Robert Esser, director of global oil and gas resources for Boston-based Cambridge Energy Research Associates, says that the world is not running out of oil anytime soon, if ever. Rather than envisioning a "peak," he says that there will be an "undulating plateau" in two to four decades. The current model to determine "peak oil" is flawed, he adds, and fails to incorporate technological, economic and regulatory evolutions. He disputes the thinking that says global production will peak in the coming years, noting that his firm's analysis shows a substantial build-up of liquid capacity in the same time frame. An increasing share of oil supplies will come from non-traditional sources that include oil sands and from ultra-deep water. Indeed, he projects that world oil production capacity has the potential to rise from 84 million barrels per day now to as much as 108 million barrels by 2015. "The major risks to this outlook are not below ground, but above ground (and come) in such forms as political turbulence, abrupt changes in contract terms and controversy over fiscal terms," Esser said in congressional testimony. While the various positions can't decide when oil production will peak and begin a steady decline, they can agree that such a peak oil period is inevitable. The potential repercussions of that would be economically devastating. The common ground therefore appears to be the development of a multi-pronged strategy that reduces dependence on petroleum through new technologies and government support along with the innovations that will allow developers to search for supplies in more efficient and productive ways. This e-mail newsletter may be redistributed provided it is kept in its entirety. Controversy continues over the need for and timing of a shale oil industry. Recent hearings emphasize questions which exist about the impacts of shale oil production on our area and the nation. At the same time it is predicted that the United States will experience a growth of 70 million people by 2025. We need an assured energy supply to allow all of our citizens to continue to benefit from the advantages of living in our creative and vibrant society. Alternative energy sources are necessary and will eventually be developed. Nuclear energy to provide affordable electric power will be justified. In the meantime the need for fuel for transportation and petrochemical feedstocks will continue and likely grow. Our current situation of depending on volatile foreign sources for oil will become even more political and unstable. We need to determine once and for all the viability of a shale oil industry. Will the world energy price provide sufficient funds to build and operate a profitable business? How much water will it really require to produce a given quantity of oil, including that water necessary for accessing and processing the rock as well as that required for construction and operations people to live? Can water and air be released from a production site within required compositional limits? What about the impacts on air and wildlife from transportation of raw materials, products, and people to and from the production sites? There are other problematic areas. Thirty years ago, a program identical to the current BLM leasing plans was implemented to answer these questions with no success. Far too many variables were introduced during early development to allow quantification of answers. Based on past history and the continued existence of unanswered questions, an intermediate step is required before leasing of public lands: a joint industry/government facility designed to prove the economic and political viability of oil recovery processes. This "proof-of concept" facility would allow for government financing through the stage of technology demonstration. Auditable proof of success of technology and economics would allow for industry to acquire the government's interest under previously agreed upon terms. Descriptions of similar ventures are available. This past week was especially interesting for me. Three members of VKG, the oil shale venture in Estonia visited Colorado to check the status of US shale oil development. I was privileged to be able to squire them around the area. The accomplishments of Estonia are remarkable. They have been producing energy products from oil shale for 80 years. The first "oil factory" as they call them was started in 1924. They recently started up their fifth factory and the total oil output is now in the range of 5000 barrels per day. In addition to oil, the facility produces fuel gas, coke and significantly, petrochemical feed stocks. Their overall success has them planning for further expansion. VKG has been instrumental in establishing a successful "Responsible Care" initiative in Estonia. This is a voluntary group of producers, importers and sellers of chemical products committed to operate in ways above what is legally required. It is most gratifying to me to see a venture making money successfully producing oil from shale rock. There seems to be no good reason why that can't happen in the US as well. Here is my written testimony to the BLM regarding the scope of the pending Programmatic EIS. The purpose of the Public Scoping Process for the Oil Shale and Tar Sands Programmatic EIS is to determine relevant issues that will influence the scope of the environmental analysis and the alternatives. I recommend that an alternative to construct and operate a proof test facility be included. The reason for this recommendation is fundamental. No proven process to efficiently remove oil from Green River Shale exists. Current law seems ambiguous on the subject of shale oil development. Section 369(c) of the 2005 Energy Act calls for a research and development leasing program whereas the subsequent paragraphs outline the process for developing a Programmatic EIS for commercial leasing, with a timetable established for commercial development. I assume that the present hearings are for the commercial PEIS and do not address the R&D leasing that has already begun. Because no proven technology exists, considerable confusion is present about how to proceed with the logical development of the valuable oil shale reserve. This confusion provides ample justification for the public and elected officials to question the validity of the overall effort. This feeling is amplified by the experience in the 1980's when industry moved ahead ambitiously on the basis that recovery technology would follow, a logical assumption based on the record of US ability to overcome technical obstacles when motivated by profits. It was clearly shown that available technology was insufficient to effectively and profitably separate the oil from the rock. We are in danger of repeating ourselves and committing huge funds to unproven ventures. This problem is complicated by the fact that the bulk of the oil shale is owned by governments, so that private research and development is difficult. Because of these complications, a specific step is indicated that will prove the viability of any available technology approaches to producing shale oil. The proof must include venture profitability based on production costs versus sales price. Additionally, environmental parameters including evaluation of net water consumption versus availability must be approved before financial commitments are made. Finally, accurate determinations of the impact of any development on the local areas must be agreed upon again before financial commitment. Audits of technical and financial results by academia or some reasonably impartial body should be part of the proof testing. The facility should include: mine (surface or underground) to supply shale of specific grades to a crushing/preparation facility; utilities (steam, gas, boiler feed water, cooling water and electricity); laboratory/maintenance/office facilities; storage facilities and effluent handling facilities. Sufficient space must be allowed to build appropriately sized retorting facilities (say up to 10,000 barrels per day). Combined upgrading facilities might be useful. There are existing models which can be used for guidance. Possibly the most applicable situation occurred in the past decades in Alberta where the provincial government directly invested in R&D in several oil sands recovery technologies. Another good possibility was outlined in 1976 by the president of Sunoco: "a program to provide for the construction of modest-sized operating modules. But, since each module would cost about $100-$200 million (in 1976 $-likely twice that amount today) - on which no return can be expected- this program could not be initiated solely by private industry. The most realistic approach could be to pattern it on a joint government-industry demonstration plant concept. Such a program could be initiated by a clearly identified government sponsor, which would solicit specific proposals from private companies for a variety of joint efforts. Government financing would then carry the projects through the stage of demonstrated technology. This, if a module(s) successfully demonstrates a technology, and if economic conditions permit, the government's interest could be acquired by the program's industry partner under previously agreed-upon terms." Also, there is an excellent analysis of various industry government combinations in a previous Programmatic EIS developed for the Naval Oil Shale Reserves (DOE/EIS-0068 - 1980). That PEIS compared shale oil production development to a) Enhanced Oil Recovery, b) Outer Continental Shelf Production, c) Tar Sands (subsequently dropped from the analysis because of "insufficient data"), d) Coal Liquefaction, and e) Biomass/Alcohol. As an aside, these data appear generally appropriate today and may facilitate the preparation of the current endeavor. The PEIS Development Options analyzed for shale oil production were: a) Commercial leasing of public lands, b) Joint government - industry ventures including a variation with "separate ownership of the mining and processing portions by the government and the private entity respectively with the complete project constructed and operated on a cooperative, phased schedule, basis," c) Government owned-Contractor operated venture and d) Quasi-utility venture. Other possibilities include a "Proof of Concept" facility as discussed by Russell George of the Colorado Department of Natural Resources at recent Senate committee hearings. And, Federal legislation was passed in 1993 which provided for shale oil research facilities. See US Code: Title 42, Section 13412. Last, there have been previous government efforts in this direction in the past by the US Bureau of Mines and Colorado School of Mines at Anvil Points. Surely, out of all these data and experiences, the BLM could formulate an appropriate test center to properly develop the critical technology development step necessary for acceptable shale oil production. Robert A. Loucks |
|||||||
|
|
|
|||||