Now that crude oil is flirting with $70/barrle, are these other sources of oil economical to extract? I heard a report on the canadian “Tar Sands” project-apparently, this project is profitable at current crude oil prices. But when will we see the oil shales being extracted? supposedly, billions of barrels of oil are locked up in oil shales-is the cost of extraction still too high? Suppose the US were to cease military operations in Iraq, and put most of that $5 billion/week into setting up a oil shale project. Suppose then, that we could produce domestic oil 9from the shales) at $75/barrel. We could then cancel all conrracts will Aramco, the NNOC, INOC, etc., and go it alone. What effect would this have on world oil prices-would crude oil sink like a stoone? or is there now sufficient demand from China, india, etc. to keep prices up?
Think about it: no oli imports, no money for muslim fundamentalists/terrorists, no need to station troops in ME…pass it on!
China and India are likely to surpass us in the demand for oil. But from what I have read, Canada has enough to supply them. And I suspect they’d go for Canada, too. Nobody wants to deal with those assholes running the Middle East if they don’t have to.
Several companies, PanCanadian, Shell and Chevron/Texaco for example, have been building the relatively expensive infrastructure needed to process these dirty sands and have been producing from these Canadian deposits for a number of years now. Recent price spikes have given them encouragement to expand those facilities and I believe we can expect a resulting increase in production in the not too distant future. If I remember correctly, the total amount of oil in place in the Alberta sands is second only to that of the Saudis. However, it is dependant on high prices because of the very nature of the laborous effort and this further insures recovery will be relatively slow. Much of the effort involves almost strip mining the pay to get to the oil, a much more labor intensive process than just drilling a hole. The recovery cost of M.E. oil is minuscule compared to that of these oil sands and this requires us to keep good relations with M.E. producers from if nothing else an economic perspective. Furthermore, these (Shell, etc) are foreign and/or private companies and the U.S. Government probably isn’t going to transfer 5,000,000,000 a week, or for that matter any amount, from the military to finance this effort.
I seem to recall reading somewhere that the break even point on oil in the Alberta oil sands is around US$30/bbl. I don’t have a cite handy, though. There are several companies initiating huge projects up there, with capital investment in the (many) billions. They’ll never produce the numbers of barrels/day the Saudis can, not to mention that the heavy oil produced can’t be refined by the same refineries equipped for light sweet crude.
One downside, however, is that a lot of these extraction methods are energy-intensive. Sure, most electricity comes from coal and nuclear, but to a certain extent, energy is energy.