Arnold Kling  

Oil Shale

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James Hamilton expresses doubts about oil shale.

The fact that large quantities of heat are required to obtain a usable fuel from the rock means that this is a far less efficient source of energy than conventional oil. Shell claims it can produce 3.5 units of energy for every unit input, though one wonders whether the energy content of all the inputs is taken into account in such figures. The lower this ratio, the more the cost of producing oil from shale would rise as energy prices go up. Another implication of the high energy needs for processing is that significantly more greenhouse gases are released per barrel of usable fuel produced. Concerns about greenhouse emissions appear to have been the basis on which Greenpeace succeeded in closing down the Australian demonstration plant.

It would be interesting to try to draw up a timeline for various alternative energy sources. What strikes me about shale oil, and also to some extent about new nuclear power, is that by the time they can be brought on stream, solar power or some other alternative may be superior. But at least with nuclear power, we know that the process does not use up more fossil fuel energy than it replaces.

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COMMENTS (23 to date)
Scott Ferguson writes:

I wonder if solar energy can be used to extract oil from oil shale.

Randy writes:

How about using nuclear energy to extract shale oil? Most of the stuff is located out in the middle of nowhere, so the nimby effect might not be so bad. Or for that matter, wind. Wyoming has shale oil, more wind than any place I've ever been, and less than one million inhabitants (if you don't count the cows).

Ivan Kirigin writes:

Solar energy should only be "used" in the most efficient storage mechanism. Both fly-wheels and hydrogen seem like good choices.

Part of the point of oil-shale and oil-sands is that the infrastructure is already in place throughout the world to use that form of energy. While we transition to an alternative, it isn't just the source but the distribution that matters.

To prove the point: how far is the nearest hydrogen fueling station from you home or work? It's probably in California, regardless of where you work in America :-P

There is an idea of EROEI "energy returned on energy invested". It's popular among environmentalists. EROEI for today's cheap oil is around 30. For oil shale it is ~1.5. For some sources of ethanol, it's less than 1. Wind is the current best alternative.

A big point with respect to solar is that the construction mechanisms and raw materials, in part, require petroleum products. This means that solar becomes more expensive as oil becomes more expensive. This could be a losing battle unless efficiency is increased. A good site is SolarBuzz. You’ll note prices for solar panels have stopped dropping. This is clearly complicated, with a number of possible reasons.

IMHO, all subsidies and tax breaks for anything related to energy should be diverted to research for high efficiency solar and fusion. All gas taxes too.

Randy writes:


And what is the EROEI for nuclear? I imagine it must be very high (even after subtracting the bureaucratic energy required). If EROEI for nuclear is somewhere in the 30s to 50s - minus the 1.5 for extraction of shale oil - you get a net EROEI for shale oil equal to or better than today's cheap oil.

Bud1 writes:

Cellulose ethanol(E85) in the north. Algae based bio diesel in the south. Infrastructure is intact, engines are already on the roads, all we need is a push for production. Consistent oil prices at $50+ per barrell will do it.

Paul N writes:

I agree that these discussions are interesting among friends as a means of predicting the future. However, the implication that policy should somehow be affected by our (or anyone else's) ruminations over which energy form is superior, I believe is wrong.

The market will decide whether shale oil makes sense, whether new nuclear power plants make sense, etc. - it does not make a difference whether AK thinks they're a good idea or not. Trust me, the people who decide whether a new plant gets built have a lot more information than us.

If you want to tax CO2 emissions, I'm fine with that, but do it in a source-neutral way. Legislative incentives for one source of power over another are always perverse and distorting. It's embarassing to me that economists who (correctly) rail against agricultural subsidies often then say things like "we need to give out massive government grants to kick-start nuclear power plant construction".

Ivan Kirigin writes:

Note that it isn't cost that is calculated in EROEI, so you can't subtract costs of regulation. Perhaps the issue is slightly muddled when regulations require certain equipment or transportation mechanisms that might be less efficient.

It is difficult to get an authoritative report, because so much is from companies that self-report in their own self interest, but this site has a table of EROEI.

For nuclear, they list Nuclear, light-water reactor as ~5. Does this include the building of the plant? Disposal of irradiated materials? Mining of Uranium, when a model of depletion and difficulty of extraction of the multi decade life of a plant.

Perhaps it's just too simplistic for a complicated situtation. This leads me to agree with the above comment "However, the implication that policy should somehow be affected by our (or anyone else's) ruminations over which energy form is superior, I believe is wrong."

Politicians will want it all boiled down to a single number, or will listen to a local special interest group regardless of cost/benefit or EROEI. That is one reason why I only advocate research on technology decades out: it's decentralized.

Dezakin writes:

Nuclear energy's payback ratio for light water reactors in the once through fuel cycle is around 50, not 5.

Keep in mind this is just about the least efficient cycle on an energy basis also.

Barkley Rosser writes:

As I noted before and is noted in the econbrowser piece, at least in Wyoming the really big problem is water and pollution. These may be less of a problem in other places, such as Estonia.

spencer writes:

Last spring at a lunch I ran into an old friend I had not seen for years.

He makes his living as an energy economist, so I started asking questions.

He wanted to tell me about his big investment in a Canadian tar sands stock.

He knew what the variable costs of extracting the oil from tar sands, but had no idea what the fixed costs were.

I suspect a lot of us are like him, we know almost enough to make good decisions.

KenS writes:

Ivan K comments that solar costs will rise with the price of petroleum.

Don't overlook the fact that the solar installation subsequently cuts the demand for petroleum.

As a nation we should consider that alternative energies and nuclear - if made here - free us from all sorts of defense, political, and trade balance problems caused by importing fossil fuels. And even foreign alternative energy use has the same effect, to a lesser extent.

You might notice that I did not cite coal and ethanol. That is my bias, I am not convinced that coal will be clean enough or that ethanol produces an energy gain. And both can be ruinous to immense tracts of land.

mcwop writes:

If the 3 units needed to extract cost $1, but the one unit of oil extracted is worth $6 - well you do the math.

Robert Schwartz writes:

"by the time they can be brought on stream, solar power or some other alternative may be superior."

Waiting for Goldilocks. This has been going on for 30 years.

There is no magic in there. All energy sources involve costs and trade offs. Even the ones (like solar and fusion) that no one has been able to make work yet.

Solar has been around the corner as long as I have been alive, and I am old. It is actually old technology (although not as old as wind-mills which are ancient). Why does anybody think it is going to bail us out of our current predicament?

My instinct is that 100 years from now our great grand children will live in an economy powered by fossil fuels and nuclear fission. The fossil fuels may change, the Saudis may run out of oil (I pray for that daily), but I think there will still be fossil fuels.

Robert writes:

The trouble with EROEI is that at a practical level, not all energy is equal. Charging and discharging a battery obviously has an EROEI of less than 1.0, but if the production costs of an electric car with similar range and performance to petrol models were to be brought down to the point where it could be sold for less than $20k, the market would be all over it.

For that matter, transmitting electricity obviously has an EROEI of less than 1.0, but I still pay for electricity to be transmitted to my house, rather than stopping by the power plant on my way to work, so I can plug in, make coffee, check email, and shave.

Generally, the market says that losing some energy is OK if in the process you make the remainder more useful.

What we're seeing now is not contrained supply of energy, but constrained supply of liquid fuel.

Ivan Kirigin writes:


EROEI is only used for energy generation mechanisms. There is no reason to apply it otherwise.

Robert writes:


What is an "energy generation mechanism"? Physically speaking, mass-energy can be neither created nor destroyed. What I think you would call "energy generation" is really just improving the usefulness of energy. And if this is true, how is it useful to distinguish between some methods of improving energy's usefulness and others, and saying that this metric is good for talking about some methods of improving energy and not so much for others, and if you say that something is impractical because it has a low EROEI, how do you know the low EROEI is truly a sign of impracticability, or just a sign that EROEI is a poor metric for judging the practicability of the method?

Why are ergs better units than dollars for judging returns on investment in the energy industry?

Boonton writes:
I wonder if solar energy can be used to extract oil from oil shale.

I doubt it, it says that to even begin the process you have to heat large amounts of rocks up to 700 degrees F. Solar is great for hot water and is getting in shape for electricity (the price increases in solar panels is happening more from increasing demand than increasing manufacturing costs due to oil)...I doubt you could use it to heat large numbers of rocks to such a high temp.

K writes:

re: solar to extract oil from shale

Any source of heat can work. But the devil is in efficiency and tradeoffs.

example only -

If you spend 10 billion on solar to generate electricity you might replace the use of 20 million barrels of oil/year in power plants. If you spend the same amount heating the shale you might get only extract 10 million barrels/year. So all else equal, you generate the electricity.

In the fifties experiments were conducted using nuclear bombs to shatter rock deep underground thus oil. I never heard about the results. Obviously politics won't let us use those bombs now even if they work.

Randy writes:

Still picturing small nuclear reactors (like the type used on navy ships) dotting the landscape of the Green River Basin, heating up shale. And a railroad to the salt beds in Utah to haul away the waste - not a long haul and no need to pass through major population centers.

Randy writes:

Oops. Nevada, not Utah. A bit farther - same basic concept.

Boonton writes:

I don't know about using nukes to release oil but I do remember reading about a test to extract energy from nukes. The idea was to set off a nuke underground which would asorb most of the energy into the surrounding rocks. Then use those hot, nearly molten, rocks as a sort of geothermal batter to extract power from.

I believe the experiment worked as far as heating up underground rocks but I don't know how long they remain warm and if enough of the energy is able to be captured to make it worth the effort.

wkwillis writes:

I am a solar power inventor so read this with a grain of salt.
Wind is irregular in time. IE, sometimes when comes when demand is high and price is high, and sometimes when demand is low and price is low. So electrically heating shale in situ is a sink for surplus wind electricity.
Solar power always comes when demand is high for airconditioning and other daytime peaks. Solar power is not a power source for oil shale.
Shale oil is a transportation fuel source, not an energy source. EROEI is not a usefull concept.

jeff tarrand writes:

RE: Oil Shale, Sept 28, 2005 opinion by James hamilton.
Unit energy ratio of nuclear plants may be fifty but it would not solve the problem of shale oil tailings. The best solution may be to retort in the ground, using nuclear explosions as proposed in project bronco in 1967! Nuclear power in this format has an exergy ration of many thousands. Nuclear explosions could be used to produce 400 years of oil at current rates. The radioactivity stays in the ground. There are no secondary radionucleides formed from hydrocarbons. Thanks for your interesting discussion/ site. jt

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