History and Use of Petroleum American Shale Oil, LLC 110 East 3 Street

History and Use of Petroleum
American Shale Oil, LLC
110 East 3rd Street
Rifle, CO 81650
www.amso.net
[email protected]
May 2011
1
Oil is our primary transportation fuel
2
Our Nation depends on imported crude oil
‰
Transportation requires liquid fuels
ƒ It will take decades to replace a significant
fraction with electricity, natural gas, or
non-corn biofuels
‰
We import more than half our
petroleum product needs
ƒ Colorado produces only 1/3 of its needs
‰
Cushing OK Future Contract Price: $/bbl
In 2008, imported oil cost ~$400B
160
ƒ ~50% of the US trade deficit
ƒ 3% of the US GDP
‰
120
World events have pushed crude oil
prices above the 2008 average price
of $95/bbl
80
40
0
1996 1998 2000 2002 2004 2006 2008 2010 2012
3
80
8
60
6
40
4
20
0
1960
2
1970
1980 1990
Year
2000
0.10
0.20
0.08
0.16
0.06
0.12
0.04
0.08
1.2% decrease/yr
0.02
0.00
1960
0
2010
0.04
1970
1980
1990
Year
4
2000
0.00
2010
Stagflation, fraction
10
Energy, Fraction of Personal Spending
100
Unemployment rate, %
Crude oil Price, 2010 dollars
Energy costs affect our standard of living
Petroleum and War (1)
‰
Oil catalyzed the Japanese attack on Pearl Harbor
ƒ In the 1930’s, Japan depended upon Shell and Standard Oil for oil, and
there were tensions with the US over Japanese expansion
ƒ In 1940, the US cut the export of iron and steel to Japan and debated
cutting off oil
ƒ In 1941, the US froze Japanese assets to restrict the purchase of oil,
which caused great concern for Japanese military operations
ƒ Moving the Pacific fleet to Hawaii caused Japanese concern about
access to East Indies oil
ƒ The attack on Pearl Harbor was only one of several attacks in the
Pacific aimed at conquering and controlling Borneo and Sumatra.
Source: The Prize, Daniel Yergin, 1992
5
Petroleum and War (2)
‰
Germany lost WWII in part because of lack of oil
ƒ Germany has little native crude oil but had a significant, albeit
expensive, coal liquefaction effort
ƒ Blitzkrieg was conceived in part to minimize fuel requirements
ƒ Capturing oil supplies was a major consideration in Hitler’s strategy
against Russia.
ƒ The Russians used diesel, which when captured, did not help
Germany’s forces, which ran on gasoline.
ƒ British destruction of fuel supplies helped defeat Rommel in North
Africa
ƒ In 1944, the US Air Force targeted the synthetic fuel industry and oil
supplies, so the Luftwaffe had only 10% of needed fuel
ƒ Capturing fuel in Belgium was a major objective of the Battle of the
bulge, and when it failed the German tanks ran out of fuel
6
Petroleum and War (3)
‰
Middle East oil supplies are often entangled with war
ƒ OPEC instigated an oil embargo to the US in 1973 in response to US
support of Israel in the Yom Kippur war
ƒ The Iranian revolution in 1979 and subsequent Iran-Iraq war caused a
shortage of oil and sharp increase in price
• In 1980, President Carter issued the Carter Doctrine, which declared that
any interference with US oil interests in the Persian gulf would be
considered an attach on the vital interests of the US
ƒ Iraq invaded Kuwait in 1990 due to dire economic straits from the war
with Iran, aggravated by alleged production quota violations and slantdrilling across the border into Iraq’s Rumaila field
• Would the US have liberated Kuwait if it were not for oil?
ƒ Although the initially stated reason for the second Gulf War was
fighting terrorism and WMD, then later human rights and democracy,
ensuring oil supplies probably played some role
7
Petroleum is formed by burial of organic-rich
rocks to depths of at least a mile
8
Relationship among various petroleum forms
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Oil shale is an immature petroleum source rock that didn’t get
buried deep enough to generate oil
Tar sands are the remnant of an oil reservoir that lost the light ends
by water washing and bacterial action
Gilsonite (Utah) is a bitumen expelled from a rich source rock at
very low maturity
Shale gas is residual gas in a mature petroleum source rock that did
not get expelled to a conventional reservoir (e.g., Marcellus)
Tight oil, sometime misnamed shale oil, is oil reservoired in the
partially mature source rock or a neighboring tight rock (e.g.,
Bakken)
Deep gas is gas formed from kerogen and oil cracking at depths
greater the normal stability level of oil
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Petroleum seeps are ubiquitous
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Most oil and gas generated over history has seeped to the
surface—reservoir half-life of about 30 million years
The La Brea Tar Pits preserved many prehistoric animals
Bitumen was used in prehistoric times as a binder and
waterproofing agent
Bitumen was part of the Egyptian mummification process
Natural gas seeps were used for heating and lighting BC
Roads were paved with bitumen in 8th century Baghdad
Early explorers mapped and used the Pitch Lake in Trinidad, the
Athabasca tar sands, the oil springs of Pennsylvania, tar geysers
in California
Gilsonite mining started in 1888 and is used in lacquers, inks,
drilling muds, and paving and roofing materials
10
Numerous petroleum seeps occur in
Southeast Asia and the Middle East
From Hunt, Petroleum Geochemistry
and Geology, 2nd Edition, 1995.
From MacGregor, Marine and
Petroleum Geology, 1993.
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Oil seeps are common in offshore US oil
provinces
‰
Hundreds of seeps in the Gulf
of Mexico leak 1-5 million
barrels of oil/yr
ƒ Macondo blowout leaked ~5×106
barrels in 2010
ƒ Ixtoc blowout leaked ~4×106
barrels in 1979
‰
Numerous seeps occur offshore
ƒ Beaches near Santa Barbara have
wipe dispensers to clean your feet
ƒ Natural gas is collected via steel
pyramids (350×106 cf of gas/yr)
ƒ The Coal Point seep leaks
~50,000 bbl/yr
ƒ The Unocal blowout spilled
~90,000 bbl in 1969
12
Gilsonite exists in vertical cracks oriented
according to regional tectonic stresses
Vernal
Rangley
Grand
Junction
13
Petroleum seeps take various forms
McKittrick tar seep near Bakersfield, CA
Petroleum seep at Rozel Pt, UT, on the
mud flats of the Great Salt Lake
Petroleum seep near Korňa, Sovokia
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Petroleum seeps drove early exploration
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Production of kerosene from
petroleum seeps in the mid-19th
century catalyzed usage
The first “rock oil” mine was
build in eastern Europe in 1952
First commercial oil well was
drilled in Poland in 1853
First North American well
drilled at Oil Springs, Ontario,
in 1858
First US oil well at Oil Creek,
Pennsylvania, in 1859
Drake’s
well, 1959
Col.
Drake
15
Historical price of crude oil (annual avg)
Oil shale
predicted to
become a
major source
Oil shale
predicted to
become a
major source
Source: 2010 BP Statistical Review of World Energy
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Oil shale
makes
another
run
We are using oil faster than we are discovering it
From http://planetforlife.com/oilcrisis/oilsituation.html
However, this plot is misleading, because it does not include reserve growth
17
But most of the reserve additions are in the
Middle East–the US has declined
Proved Reserves (Billions of Bbls)
10000
World
OECD (N. America, Europe, Australia&NZ)
United States
1000
100
10
1980
1985
1990
1995
2000
2005
Source: 2010 BP Statistical Review of World Energy
18
2010
Maintaining production means continuously
bringing reserves on line
Source: TOTAL 2010 Results and Outlook
19
The predicted year for peak oil production
varies with source, but it will eventually peak
20
Oil production has already peaked in the US
Prudhoe Bay
(not incl Fed Gulf)
Note!
21
The Bakken and deep offshore Gulf of Mexico
have reversed US oil production declines
Oil production, 1000 bbls/day
10000
Total US
Federal Gulf of Mexico
Alaska
Texas
North Dakota
8000
Source: USDOE EIA
6000
4000
Katrina
Ike
2000
0
1980
1985
1990
1995
22
2000
2005
2010
Shifts in primary energy sources happen
over several decades
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Similarly, any substantial contribution of wind, solar,
non-corn biofuels, and oil shale will be 2030 and beyond
23
Running fleet vehicle fuel efficiency lags new
vehicle efficiency by about 10 years
35
Truck MPG
30
Car MPG
25
CAFE standard
Fleet average
New sales
25
20
15
20
CAFE standard
Fleet average
New sales
10
15
1975
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1985
1995
1975
2005
1985
1995
2005
The half-life of automobiles is about 8 yrs—longer for trucks
Between 1980 and 2005, truck share increased from 20% to 50%, which partially negated the
increases in cars and trucks individually
During this period, individual vehicle weight increased by 15% and performance increased
significantly, which means that engines did become more efficient even if MPG did not increase
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Ethanol has increased rapidly but is still only
5% of consumption—corn can’t get us there
Source: USDOE EIA
Millions of barrels per day
10
8
6
4
2
US crude oil production
Net crude oil imports
NG C5+ condensate
NG plant liquids
Ethanol
0
1944
1955
1966
1977
25
1988
1999
2010
Energy production uses water
‰
More water per kWh is evaporated from hydroelectric
facilities than from thermoelectric plants (NREL, 2003)
ƒ 1.8 L/kWh for thermoelectric (cooling towers)
ƒ 68 L/kWh for hydroelectric (evaporation from reservoirs)
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Petroleum is the least water-intensive source of energy
Source: R. Service, Science 326, 517-518 (2009)
Oil shale retorting was assumed to consume 3 bbl
of water per bbl of shale oil, which is three times
our current estimate
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DOE’s most recent projection (2011) indicates
only modest change in energy sources by 2035
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Colorado is a net exporter of energy BTUs
but a net importer of liquid fuels and energy $
‰
2008 liquids production totaled 189,000 bbl/day
ƒ Crude oil = 66,000 bbl/day
ƒ Condensate = 19,000 bbl/day
ƒ Natural gas liquids = 104,000 bbl/day (but propane is only 6% of consumption)
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2008 liquids consumption totaled 228,000 bbl/day (2.2× refinery
capacity)
ƒ Gasoline = 132,000 bbl/day
ƒ Aviation fuel = 32,000 bbl/day
ƒ Diesel, fuel oil, and kerosene = 54,000 bbl/day
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2007 natural gas production exceeded consumption
ƒ 2007 processed natural gas = 1,204 BCF/yr
ƒ 2007 natural gas consumed = 505 BCF/yr
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85,000 bbl/day of oil ≈ 190 BCF/yr of gas in energy content
$1.5B/yr shortfall for liquids and $0.9B export for gas
Produced 32 million and consumed 20 million tons of coal, for a
next export value of $0.4B
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