A Real Energy Strategy for America: Shale Oil

New Media Journal ^ | May 31, 2008 | Jonathon Moseley

[K-oneTexas]

A Real Energy Strategy for America: Shale Oil by Jonathon Moseley
May 31, 2008

If shallow talk could solve America’s energy crisis, politicians in Washington would have all the answers. But Americans are still carrying a crushing burden while little changes. Fortunately, there are many real solutions available for the U.S. economy even if the politicians don’t seem to know it.

America’s dependence on foreign oil is more than a threat to our economy. It has become a threat to America’s national security. American money is being funneled to America’s enemies around the world and is strengthening our enemies while weakening America.

The Mid-West hides the largest untapped oil reserve in the world — estimated at 1 to 2 TRILLION barrels of oil trapped inside shale (rock). This could be more than 8 times Saudi Arabia’s proven oil reserves of 261 billion barrels. In fact, an article in The Denver Post estimated this to be more than all the other oil reserves on the planet earth.

If only we could discover out how to extract this oil from its shale prison economically and with environmental safety, America might have the largest single source of oil in the world. So, why isn’t the U.S. running on home-grown U.S. oil? There are four reasons – all false.

Official Washington decided a long time ago that extracting oil from shale is too expensive. However, oil was trading for as little $19 per barrel at the time. Shale oil becomes competitive when prices stay consistently above $40 per barrel. In recent years, oil has risen from $19 per barrel to over $130 per barrel. It is now high time to unleash this vast resource.

The technology to extract usable oil from shale deposits has been proven. Shale oil currently supplies about 90% of the electricity and 76% of the total energy for Estonia, in Eastern Europe, on the Baltic Sea. An oil shale demonstration plant in Queensland, Australia produced 700,000 barrels of oil between 2001 and 2003.

Early reports dating to the Carter Administration incorrectly claimed that the ‘retorting’ process would require large amounts of energy and water. Repetition of this false information in government studies has discouraged the immediate use of shale oil.

The Unocal commercial demonstration plant project in the Colorado Piceance Creek Basin actually produced more water than it consumed, as former Paraho Corporation head Larry Lukens found from talking with Unocal’s engineers. Colorado oil shale contains, on average, 2-5% by weight of water. That water is liberated from the rock during the ‘retorting’ process. Unocal actually had to construct evaporation ponds to get rid of all the excess water generated.

Similarly, the waste rock, still containing some oil residue, becomes a fuel in its own right. So the process actually produces its own energy. Larry Lukens estimates that a 100,000 barrel a day plant would actually produce enough surplus energy to generate 500 megawatts of electrical power which can be exported to other uses or nearby cities. Once jump-started, the shale oil extraction process actually feeds itself. After all, it is oil we are extracting…

The fourth obstacle is the popcorn myth. Environmental opponents claim that disposing of the left-over gravel will be a problem. However, rock does not expand. Instead, when rock is ground into smaller sizes, air pockets are introduced. The solution is to compact the gravel debris back into place with heavy machinery. The gravel is also good for building roads.

It is time to take the lessons from these demonstration projects and build much-more efficient retorting plants to harness America’s vast shale oil reserves now that oil is trading at $120 per barrel and up. This should be given a crash-program status as the highest priority, like landing a man on the moon and the Manhattan Project. The only real problem is the lack of political will to truly achieve energy independence.

Progress on shale oil could be stimulated by (a) private business, (b) a consortium of State governments for States containing shale oil deposits, (c) Congress, or (d) the President through leadership of the bully pulpit and through action in the Executive Federal Departments. Any Presidential or Congressional candidate could also call attention to this opportunity by issuing a John F. Kennedy style challenge to the nation.


Jonathon Moseley is the Executive Director of the U.S. Seaports Commission for the nonprofit US Intelligence Council

[servantboy777]

The point was, there are others with research that indicate abuses.

I am not anti-business. I am however weary of corporate Americas relentless pursuit of the bottom line to the extent that it has harmed the middle class standard of living substantially over the last decade.

Corps have been shifting manufacturing all over the world in an attempt to get the cheapest labor force, circumvent the cost of basic worker benefits, rid themselves of any or all environmental safeguards and worker safety regulation.

True, Congress has made doing business here in the states burdensome, but with over 60 thousand lobbyist in Washington alone, I can't help but to think corporate America indeed has the upper hand when it comes to policy favorable to their interest.

Tell me, do the American people have sixty thousand lobbyist roaming the halls of Congress with pockets stuffed full of cash and perks to sway policy????

I'm thinking we have a government for and by the corporate / foreign lobby. Again, sad.

[servantboy777]

>>Oil companies typically show a profit margin of 9% to 10%”

I'm thinking your facts are a bit skewed.

Over the past 12 months, for example, ExxonMobil has made pre-tax profits of $164 billion on sales of $369.5 billion.

This would be 45% margin.

[thackney]

Taxes are not part of business profits. They are an expenses and include things like the pass through excise taxes and royalties.

No business in any industry includes taxes as part of their profits. That is an attempt to make oil industry seem more profitable when the reality is more of the revenue goes to taxes than nearly any other industry.

[servantboy777]

The GAO reported in 2000, 94% of all U.S. companies paid less than 5% — and 61% paid nothing at all.

In 2000 alone, 94% of all U.S. corporations paid less than 5% of their total income in corporate taxes, the GAO said in a report. Among the largest corporations — the 1% of all corporations that owns 93% of all corporate assets — 82% paid less than 5% of their income in taxes.

Yea, that's fair. Small to medium business and the middle class are left to pick up the tab for the willy nilly spending of our federal government.

[thackney]

Among the largest corporations — the 1% of all corporations that owns 93% of all corporate assets — 82% paid less than 5% of their income in taxes.

Show me some oil companies that get to pay those rates.

ExxonMobil 2007
Revenue $404.6 Billion
Profit $40.6 Billion (10.0%)
Taxes $102.5 Billion (25.3%)

Sales-Based taxes $31.728B
Other taxes and duties $40.953B
Income taxes $29.864B

2007 Financial & Operating Review
http://www.exxonmobil.com/corporate/files/news_pub_fo_2007.pdf
Page 16

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ConocoPhillips 2007
Revenue $194.5 Billion
Profit $11.9 Billion (6.1%)
Taxes $30.4 Billion (15.6%)

Taxes other than income taxes $18.990B
Income taxes $11.891B

2007 Annual Report
http://www.conocophillips.com/NR/rdonlyres/3838234F-F20C-4BCE-AE8D-78DE29D67455/0/07RevisedARfinal.pdf
Page 60

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Chevron 2007
Revenue $220.9 Billion
Profit $18.7 Billion (8.5%)
Taxes $35.7 Billion (16.2%)

Taxes other than income taxes $22.266B
Income taxes $13.479B

2007 Annual Report Supplement
http://media.corporate-ir.net/media_files/irol/13/130102/reports/CVX_ARsupp07.pdf
Page 3

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Marathon 2007

Revenue $62.8 Billion
Profit $4.0 Billion (6.3%)
Taxes $8.5 Billion (13.5%)

Consumer excise taxes $5.163B
Other taxes $0.394B
Income taxes $2.901B

2007 Annual Report
http://www.marathon.com/content/documents/investor_center/annual_reports/annual_report_2007_book.pdf
Page F-4

[reaganator]

$42 billion a quarter? Okay. I think I remember hearing something like $14 billion last quarter. I’ll be checking.

I’m all for drilling more oil and producing more fuel, and I know it will be the oil companies doing it, if Congress let’s them.

[reaganator]

I went to the Exxon Mobil finacial report for year 2007.

Sale and other operating revenue $390 billion,

Net Income $40 billion, 10%

Where the money goes is laid out, dividends, shareholders, reinvestment, much more.

The oil companies profit margin is not out of line compared to other industries.