A (Temporary) Victory for Energy Independence
By Isaac MacMillen
America's long-sought dream of energy independence may be finally at hand. But only if the incoming administration will allow it. And the outlook isn't brilliant.
The shales of the Green River Formation, found in Colorado, Utah, and Wyoming, are believed to hold around 800 billion barrels of recoverable oil—enough to supply a century of export-free oil use. (For comparison, Saudi Arabia has 200 million barrels of oil reserves en toto.)
Oil shale is rock that contains oil—and subsequently releases it, when heated. For years, companies have found it difficult to extract oil from oil shales. The technology was either too expensive, or non-existent.
But recent advances in technology hold great promise for both increased efficiency during extraction and minimized environmental impact from the process. Shell has already tested models of an extraction method called “in-situ retorting,” which relies on heating the oil underground and removing it there—thereby eliminating the use of mining and ground-level operations, preserving the natural landscape.
Unfortunately, this was all blocked by a moratorium in Congress—in much the same way as offshore drilling. But after a determined campaign by conservative Republicans, the Democratic majority finally caved and agreed to not reauthorize the moratorium.
Then on November 17th, 2008, President Bush issued detailed rules for exploring the oil shales of the great American West. While many of the details—such as companies acquiring leases—we expected to take years to sort out, some believe that Mr. Bush's last-minute rules will be difficult for Mr. Obama to overturn. For example, if the incoming administration attempts to change the rules, lawsuits ad infinitum could erupt from private companies.
Even so, “difficult” may be overly-optimistic. If his party's plans come to fruition, Mr. Obama will doubtless do whatever he can to oppose increased oil production in the US. And with a heavily-Democratic Congress behind him, the only way Obama will not rescind Mr. Bush's new and old orders is if such a move is made politically unfeasible—which is possible only if the public and conservative leaders stay vigilant, keeping an eagle-eye on the issue of energy independence.
In short, President-elect Obama may yet keep the rules in place—but only if the price not to do so is one he simply doesn't care to pay.
And even then, Americans must beware. The threat may not come in the form of a straight-forward moratorium; given the energy independence victory conservatives won on October 1st. The envirolobby—and their liberal allies in Congress—may opt to support increased regulations and restrictions—until the oil companies are so tied up in red tape that they are unable to justify drilling. The end result: A de facto moratorium having the same impact, but none of the overt language.
The oil is available. RAND Corporation produced a treatment on shale oil, in which they demonstrate the vast resources available and the benefits to drilling for it.
Present U.S. demand for petroleum products is about 20 million barrels per day. If oil shale could be used to meet a quarter of that demand, 800 billion barrels of recoverable resources would last for more than 400 years.
Like offshore drilling, shale oil extraction will be a long-term process, but could well have an immediate effect, further driving down the cost of oil. In the long-term, the price-per-barrel of Shell's extraction method may end up being less expensive than oil produced by traditional drilling, with RAND estimates as low as $25/barrel.
It would take a number of years to reach the point where extraction can begin—and even more time until it reaches the market. But the benefits of US-produced oil are well worth the wait, and their effects on the future market would far precede production downward.
Hopefully, the Obama campaign was listening to the American people this year who—as if with a single voice—were begging for increased energy production. America needs its own energy resources to be at its disposal, allowing market forces to determine when and where we drill—not big government bureaucrats.
Otherwise, the long-sought dream of oil independence, now on the verge of coming true, may turn back into an endless nightmare.
Isaac MacMillen is a contributing editor of ALG News Bureau.