http://www.lifeaftertheoilcrash.net/Index.html"Can't We Just Look Harder for the Stuff?
What About the Oil Sands up in Canada
& Oil Shale over in the American West?"
Global oil discovery peaked in 1962 and has declined to virtually nothing in the past few years. We now consume 6 barrels of oil for every barrel we find.
According to an October 2004 New York Times article entitled "Top Oil Groups Fail to Recoup Exploration Costs:"
. . . the top-10 oil groups spent about $8bn combined on exploration
last year, but this only led to commercial discoveries with a net present
value of slightly less than $4bn. The previous two years show similar,
though less dramatic, shortfalls.
In other words, new oil discoveries are so few and far in between that looking for them is a monetary loser. Consequently, many major oil companies now find themselves unable to replace their rapidly depleting reserves. As a result, the energy analysts at John C Herold Inc. - the firm that that foretold Enron's demise - recently confirmed industry rumors that we are on the verge of an unprecedented crisis.
The good news is that we have a massive amount of untapped "non conventional" oil located in the oil sands up in Canada.
The bad news is that, unlike conventional sources of oil, oil derived from these oil sands is extremely financially and energetically intensive to extract. Whereas conventional oil has enjoyed a rate of "energy return on energy invested" - "EROEI" for short - of about 30 to 1, the oil sands rate of return hovers around 1.5 to 1.
This means that we would have to spend 15 times as much money to generate the same amount of oil from the oil sands as we do from conventional sources of oil.
Where to find such a huge amount of capital is largely a moot point because, even with massive improvements in extraction technology, the oil sands in Canada are projected to only produce a paltry 2.2 million barrels per day by 2015, not accounting for any unexpected production decreases or cost overuns, both of which have been endemic to many of the oil sands projects.
Even if the projects produce as hoped, 2.2 million barrels per day isn't that much oil considering we currently need 83.5 million barrels per day, are projected to need 120 million barrels per day by 2020, and will be losing over 1 million barrels per day of production per year, every year, once we hit the backside of the global oil production curve.
The huge reserves of oil shale in the American west suffer from similar problems. Although high oil prices have prompted the US government to take another look at oil shale, it is not the savior many people are hoping for. As geologist Dr. Walter Youngquist points out:
The average citizen . . . is led to believe that the United States really
has no oil supply problem when oil shales hold "recoverable oil" equal to
"more than 64 percent of the world's total proven crude oil reserves."
Presumably the United States could tap into this great oil reserve at any
time. This is not true at all. All attempts to get this "oil" out of shale
have failed economically. Furthermore, the "oil" (and, it is not oil as is
crude oil, but this is not stated) may be recoverable but the net energy
recovered may not equal the energy used to recover it. If oil is
"recovered" but at a net energy loss, the operation is a failure.
This means any attempt to replace conventional oil with oil shale will actually make our situation worse as the project will consume more energy than it will produce, regardless of how high the price goes.