Senate Energy Bill Opens Way for Use of Shale Oil Reserves

Published August 1, 2005

During the past few years, Canada has tapped its bountiful tar sands to produce 175 billion barrels of oil, giving it the second largest oil reserves in the world, behind only Saudi Arabia.

The U.S. may soon tap even larger domestic oil shale reserves, under encouragement from the Senate energy bill passed June 28.

Huge Shale Oil Reserves

Oil shale deposits, located primarily in Colorado, but also in Utah and Wyoming, are believed to hold roughly 2.6 trillion barrels of oil. Oil shale is a claylike, grainy rock that when heated releases a liquid that can be processed into oil.

According to the Department of Energy, the U.S. has about 2 trillion barrels of oil in shale and sand deposits. That would mean the U.S. has more oil than the entire Middle East.

According to the May 20 Greenwire, James Bunger, a consultant who is currently acting director for energy for the Utah governor’s office of economic development, estimated that at least 400 billion barrels’ worth could be developed from the shale.

Economic, Political Issues

Congress is starting to push for legislation encouraging oil shale recovery, with the Senate version of the energy bill approving its production. Provisions of the Senate bill call for an inventory of oil shale reserves and accelerated research into oil shale recovery technologies.

However, economic and political obstacles remain. Oil shale recovery is a relatively expensive form of energy production. Rob Bradley, president of the Institute for Energy Research, said oil shale recovery will be economically profitable only if long-term oil prices stay above $40 per barrel. Oil companies are leery of taking losses if oil prices drop below $40 per barrel again.

“Oil shale is uneconomic at present,” Bradley said. “It is currently just a backstop energy. Companies would have to have long-term contracts guaranteeing them sales in the $40-to-$50 per barrel range to invest the billions required. And there is no long-term market for oil at such prices.”

Environmental activist groups usually oppose any resource recovery on federal lands. Seventy percent of oil shale deposits are on federal lands.

Large Potential Benefits

“We have more oil shale in the U.S. than the Saudis have crude. The timing is right. U.S. ingenuity has given us the technology to make this economically viable,” said House Resources Committee Chairman Richard W. Pombo (R-CA) in a June 21 news release. “Our immense oil shale supplies will play a serious role in our economic and national security. I have already begun to pursue this opportunity aggressively this Congress because I believe in its potential so strongly.”

With such an abundance of potential oil, some members of Congress are excited about the opportunity for the United States to become energy independent.

“Continued dependence on foreign oil sources remains one of the United States’ number one vulnerabilities,” said Subcommittee Chairman Jim Gibbons (R-NV). “By supplying our own energy needs through domestic resources, we will strengthen our national security, provide affordable fuel alternatives, and importantly, support our overall economy.

“Currently, the vast availability of oil shale provides an opportunity for the U.S. to boost world supplies and become more self-sufficient, reducing energy costs for all Americans,” Gibbons said.

Greg McConnell ([email protected]) is a freelance writer based in Palatine, Illinois.