Oil shale is a waste of your investment, and an unnecessary resource to harness.
It’s just that simple.
But it doesn’t hurt to examine just how much potential it has for future generations – especially since the U.S. is sitting on the largest stockpile of oil shale in the world.
I’m specifically talking about the Green River Formation of Wyoming, Colorado, and Utah.
Overall, there are three trillion barrels of oil shale in the region – more than the rest of the world combined. According to Research and Markets, between 1.2 trillion to 1.8 trillion barrels are recoverable. This is an excellent number to consider, since just 800 billion barrels is three times larger than reserves in Saudi Arabia.
Because of the shale oil boom, oil shale has taken a backseat to its sister commodity. Oil shale costs more to develop, and there are wider negative implications for the environment. Oil shale is similar to oil – the only difference being that the heating and pressure that took course over millions of years was not enough to fully produce oil.
There are two primary methods of extracting oil shale. One method is in-situ retorting – the process of heating the rocks to a point where the rocks will release kerogen. The heating method sounds simple enough, but the process can last for years.
Surface mining is the simple method of mining rocks and sending them off to a facility for oil shale separation. But the oil shale will need to be processed before being sent off to a refinery, and this is where it can get expensive.
The Green River Formation sounds like a goldmine until you factor in the cost of extracting and the time it takes to convert oil shale into energy.
And developing oil shale now would be a mistake, since too much oil on the market would quell prices, slowing down oil production.
It is also unnecessary, since there is much more excitement and attention on the shale oil scene.
But oil shale is still an area worth exploring and researching.
Oil shale may eventually become part of the energy cycle, but by the time that is possible, you and I will probably be long gone from this world.
Oil Shale Perks
Despite the endless black hole of investing in oil shale, let’s not discount the looming benefits.
In a fictional world of full-swing production, just 30 percent of royalty revenue from the Green River Formation could be enough to pay off the national debt!
This is because much of the Green River is concentrated on federal lands, where its non-tax income stemming from royalties could generate as much as $37.5 trillion – but only if oil prices remain above $100 a barrel, the New American reports. And this figure would likely to come down as more oil shale is extracted.
One of the few drawbacks would be the pressure that communities would face in housing so many incoming workers searching for well-paying oil jobs. This could have negative consequences for the poor, since higher rent and a lack of affordable housing would be inevitable. We have already seen this happening in energy-producing states like Texas and Pennsylvania. But the jobs in the area would lift people out of poverty and would add more wealth to local communities.
There is little doubt of oil shale’s potential benefits to the economy, but the technology and demand is simply not there.
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Oil Shale a No-Go
The bottom line is that oil shale is not a necessary venture at the moment. We’ve got the Bakken and the Eagle Ford with record shale oil production. Other shale oil and gas plays are gaining attention, and major companies are not touching oil shale with a ten-foot pole.
Companies like Oil Tech Inc. are investing early in drilling technology that will make it easier to extract oil shale. But even companies that have long invested in oil shale like Shell (NYSE: RDS-A) have since abandoned oil shale projects. And Chevron (NYSE: CVX) gave up its oil shale aspirations in 2012. Exxon Mobil (NYSE: XOM) is the only major producer of oil shale in the region, but it is losing billions of dollars in the process.
In a perfect world where oil shale technology improved, this commodity would indeed make a positive impact on the national energy economy.
But to bring things back to reality, shale oil stocks is the place to be, and the U.S. is producing record amounts in liquids production – soon to pass Saudi Arabia.
It is nice imagining all the wondrous benefits that oil shale would bring to your wallet and the economy, but this is an area that is best left to the imagination.
For now at least, let the great, great grandchildren decide if oil shale will be part of the American energy fabric.
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