Sunday, March 14, 2010

Drill here, drill now, pay less?

I receive a lot of e-mail forwards about a giant untapped American “oil formation”, usually under the name “Bakken", but there are several others. Every one of these forwards is really a political message: "why don't the Democrats and environmentalists get out of the way and let us drill this?" Some of these forwards claim that the message is true per The only thing here that is true (and verified by snopes or anyone else) is that this formation really does exist. The rest is a pack of lies.

What’s left out in each and every one of these forwards is the easily-verifiable fact that this great domestic “resource” is all but unrecoverable. Some of these forwards claim a new “breakthrough” (never actually described) makes recovering this resource cheap and easy, but that’s just a lie. These forwards were created by Republican political hacks to stir up political unrest, and it is just pure political BS, no two ways about it.

Here’s the actual truth, in 6 points, about “unrecovered domestic oil”:

(1) The Bakken formation has been long known. It is one of several named rock formations contained with a geologic region called the Williston Basin. This region stretches through parts of Wyoming, both Dakotas, Montana, Saskatchewan, and Alberta. Its theoretically-immense resource volume has been long known. The oil folks have been trying unsuccessfully since 1953 to recover useful product from the US portion of it. No significant return has ever been obtained. Not ever! There have been no technological breakthroughs that would enable its economic recovery, and that’s not for lack of trying. This is not and never will be drillable oil, period.

(2) One of the oldest names is the most descriptive: "oil shales". The volume of this “oil resource” is miniscule compared to the volume of the rock in the formation, because shale rock porosity is inherently a tiny percentage. The volume of “oil resource” is actually quite large, simply because this formation is so geographically immense. Shale is a porous rock of virtually zero permeability, precisely because the pores are not interconnected. That is just the nature of shale. Further, the "oil" in these pores is closer to a tar than an actual liquid oil. So, because this tar is virtually solid, down-hole fracturing (supposedly the “technological breakthrough”) does not work! That situation is quite unlike the down-hole fracturing-based recovery of the inherently very mobile gas of the Barnett Shale here in Texas. But, even so, we actually recover only a tiny fraction of that entire gas resource, from only those pores right along the fracturing cracks.

(3) The only known way, after over half a century of concerted effort, to recover significant quantities of "oil" from oil shales is deep strip mining, on a scale that makes mountaintop-removal mining for coal look like potting house plants. Think about digging a hole the size of Lake Superior. And then you have to truck immense volumes of rock out of that hole to be crushed and cooked, in order to recover the very tiny percentage of that volume that is the tar. This is all very capital-, labor-, and energy-intensive. Once you do recover the tar, you have to thermally-crack it (another capital-, labor-, and energy-intensive process) before it will even feed into a conventional distillation tower. Think $4/gallon gasoline was bad? It will be $40-400-4000/gallon gasoline from this stuff, if not even higher.

(4) The northwest end of this zone in Alberta is tar sands, not tar shale. While still not drillable, that is a different “beast”. It's already in production, and its products are a big portion of those we import here in the US. These tar sands must be strip mined, but are much nearer the surface. The tar is washed from the sand by a steam process. But there is a downside: no one knows how to clean up the immense volumes of wastewater from this process, and it is dangerous enough they keep it locked away in ponds behind armed guards. Since the clean-up method is unknown, its cost is not included in the price of the products; therefore these products are artificially under-priced. One of these days, that bill will come due. To date, the fast-growing volume of that untreatable wastewater exceeds the volume of Lake Erie.

(5) The claimed "breakthrough" is down-hole fracturing, a old concept whose actual commercial employment is more recent. It works with inherently-mobile gas. The used fracturing liquid has to be pumped down a suitable disposal well, for it is not safe to release on the surface. (That down-hole disposal of fracturing fluids is the source of all the little earthquakes along the Barnett Shale zone, by the way.) Fracturing doesn't work very well with thick, viscous, but still-liquid oil. It does not work at all with tar, period. The only economic application of down-hole fracturing is gas formations like the Barnett Shale. You have to combine this with steam injection to recover liquid oil, which not very economic, and creates a lot more wastewater to dispose. It does not work at all, steam or no, with tar shales. There simply is no technological “breakthrough” that would make “the Bakken” (or any other of these rock units) “drillable”. It is not likely there ever will be one. This resource is not recoverable at any price we might afford.

(6) It is an observed fact that without exception all finds of drillable oil made in recent decades have been of decreasing size and decreasing frequency. This includes the reserves off California, the reserves in the Arctic National Wildlife Refuge, the new find in the deepwater Gulf, and the new find in the Atlantic off Brazil. Further, there has been little, if any, indication of oil off our Atlantic coast (some exploration actually has already been done there).

You might as well face the truth: we will not be able to "drill our way" out of this. “Drill, baby, drill” and “drill here, drill now, pay less” make convenient and catchy political slogans, but they have no truth at all, as is common in politics.

Cellulosic ethanol (which is ethanol-not-from-food) has already hit the streets at $2.00/gallon. Brazilian sugar cane ethanol is near $1.00/gallon, if you junk the import tariff. The trick now is to build industry capacity. Not very far behind is diesel and jet fuel from algae, and even a synthetic biomass gasoline. I think these renewables (that we can never run out of!!!) hold a lot more promise than some fool's errand trying to dig thinly-spread tar out of immense volumes of deep, hard rock.

Many of the countries who own much of the world’s remaining oil are the sponsors of the very groups we Americans are fighting. Oil and terrorism are their only exports. These terrorism operations cost a lot of oil revenues to run. Why not actually win this war by denying the enemy our oil dollars? Use something else!

Update 1-3-15:

The recent explosion of US “fracking” technology (hydraulic fracturing plus horizontal-turn drilling) has modified the picture of oil prices versus recessions.  Unexpectedly,  the US has become a leading producer of crude oils for the world market.  Plus,  there has been an associated massive production increase and price drop in natural gas.

OPEC has chosen to take the income “hit” and not cut back their production in response.  Their reasoning is twofold:  (1) fear of loss of market share,  and (2) hope that low oil prices will curtail US “fracking” recoveries.  We will see how that plays-out.

Oil prices are now such (at around $55/barrel) that US regular gasoline prices are nearing $2.00/gal for the first time in a very long time.  This is very close to the price one would expect for a truly competitive commodity,  based on 1958 gasoline prices in the US,  and the inflation factor since then. 

It is no coincidence that the exceedingly-weak US “Great Recession” recovery has suddenly picked up steam.  The timing of the acceleration in our economic recovery versus the precipitous drop in oil prices is quite damning.  There can be no doubt that higher-than-competitive-commodity oil prices damage economies.  Oil prices are a superposition of the competitive commodity price,  overlain by an erratic increase from speculation,  and further overlain quite often by punitive price levels when OPEC is politically unhappy with the west.  That’s been the history. 

This economic improvement we are experiencing will persist as long as oil,  gas,  and fuel prices remain low.  (Government policies have almost nothing to do with this,  from either party.)  How long that improvement continues depends in part upon US “fracking” and in part upon OPEC.  Continued US “fracking” in the short term may depend upon adequate prices.  In the long term,  we need some solutions to some rather intractable problems to continue our big-time “fracking” activities. 

The long-term problems with “fracking” have to do with (1) contamination of groundwater with combustible natural gas,  (2) induced earthquake activity,  (3) lack of suitable freshwater supply to support the demand for “fracking”,  and (4) safety problems with the transport of the volatile crude that “fracking” inherently produces. 

Groundwater Contamination

Groundwater contamination is geology-dependent.  In Texas,  the rock layers lie relatively flat,  and are relatively undistorted and unfractured.  This is because the rocks are largely old sea bottom that was never subjected to mountain-building.  We Texans haven’t seen any significant contamination of ground water by methane freed from shale.  The exceptions trace to improperly-built wells whose casings leak.

This isn’t true in the shales being tapped in the Appalachians,  or in the shales being tapped in the eastern Rockies.  There the freed gas has multiple paths to reach the surface besides the well,  no matter how well-built it might have been.  Those paths are the vast multitudes of fractures in the highly-contorted rocks that subject to mountain-building in eons past.  That mountain-building may have ceased long ago,  but those cracks last forever. 

This is why there are persistent reports of kitchen water taps bursting into flames or exploding,  from those very same regions of the country.   It’s very unwise to “frack” for gas in that kind of geology.

Induced Earthquake Activity

This does not seem to trace to the original “fracking” activity.  Instead it traces rather reliably to massive injections of “fracking” wastewater down disposal wells.  Wherever the injection quantities are large in a given well,  the frequent earthquakes cluster in that same region.  Most are pretty weak,  under Richter magnitude 3,  some have approached magnitude 4. 

There is nothing in our experience to suggest that magnitude 4 is the maximum we will see.  No one can rule out large quakes.   The risk is with us as long as there are massive amounts of “fracking” wastewater to dispose of,  in these wells.  As long as we never re-use “frack” water,  we will have this massive disposal problem,  and it will induce earthquakes. 

Lack of Freshwater Supply to Support “Fracking”

It takes immense amounts of fresh water to “frack” a single well.  None of this is ever re-used,  nor it is technologically-possible to decontaminate water used in that way.  The additives vary from company to company,  but all use either sand or glass beads,  and usually a little diesel fuel.  Used “frack” water comes back at near 10 times the salinity of sea water,  and is contaminated by heavy metals,  and by radioactive minerals,  in addition to the additives.  Only the sand or glass beads get left behind:  they hold the newly-fractured cracks in the rocks open,  so that natural gas and volatile crudes can percolate out. 

The problem is lack of enough freshwater supplies.  In most areas of interest,  there is not enough fresh water available to support both people and “fracking”,  especially with the drought in recent years.  This assessment completely excludes the demand increases due to population growth.  That’s even worse.

This problem will persist as long as fresh water is used for “fracking”,  and will be much,  much worse as long as “frack” water is not reused.  The solution is to start with sea water,  not fresh water,  and then to re-use it.  This will require some R&D to develop a new additive package that works in salty water to carry sand or glass beads,  even in brines 10 times more salty than sea water. 

Nobody wants to pay for that R&D. 

Transport Safety with Volatile “Frack” Crudes

What “fracking” frees best from shales is natural gas,  which is inherently very mobile.  Some shales (by no means all of them) contain condensed-phase hydrocarbons volatile enough to percolate out after hydraulic fracturing,  albeit more slowly than natural gas.  Typically,  these resemble a light,  runny winter diesel fuel,  or even a kerosene,  in physical properties.  More commonly,  shale contains very immobile condensed hydrocarbons resembling tar.  These cannot be recovered by “fracking” at all. 

The shales in south Texas,  and some of the shales and adjacent dolomites in the Wyoming region actually do yield light,  volatile crudes.  The problem is what to transport them in.  There are not enough pipelines to do that job.  Pipelines are safer than rail transport,  all the spills and fires notwithstanding. 

The problem is that we are transporting these relatively-volatile materials in rail tank cars intended for normal (heavy) crude oils,  specifically DOT 111 tank cars.  Normal crudes are relatively-nonvolatile and rather hard to ignite in accidents.  DOT 111 cars puncture or leak frequently in derail accidents,  but this isn’t that serious a problem as long as the contents are non-volatile.  These shale-“frack” light crude materials resemble nothing so much as No. 1 winter diesel,  which is illegal to ship in DOT 111 cars,  precisely since it is too volatile. 

The problem is that no one wants to pay for expanding the fleet of tougher-rated tank cars.  So,  many outfits routinely mis-classify “frack” light crudes as non-volatile crudes,  in order to “legally” use the abundant but inadequate DOT-111 cars.  We’ve already seen the result of this kind of bottom line-only thinking,  in a series of rather serious rail fire-and-explosion disasters,  the most deadly (so far) in Lac Megantic,  Quebec. 

Volatile shale-“fracked” crudes simply should not be shipped in vulnerable DOT 111 cars,  period.  It is demonstrably too dangerous. 


“Fracking” shales for natural gas and light crudes has had a very beneficial effect on the US economy and its export-import picture.  We should continue this activity as a reliable bridge to things in the near future that are even better. 

But,  we must address the four problem areas I just outlined.  And I also just told you what the solutions are.  The problem is,  as always,  who pays.   What is the value of a human life?  What is the value of a livable environment?  It’s not an either-or decision,  it’s striking the appropriate balance!

1 comment:

  1. Although the actual recovery from the Bakken and other similar formations may not reach the level of hyperbole we see in these chain emails, one important fact is clear: Alternatives help keep the energy futures market stable. When the government attempts to decree winners and losers (e.g. by taking drilling or mining off the table, or threatening such) we see the extreme pricing shocks driven from speculation. The speculation is signaling the foolishness of the government regulation. Let these reserves be proven or disproved. Energy industry workers will be gainfully employed and the economy will benefit from the necessary creative destruction as the market sorts out winners and losers...