You have to pity the poor deluded Canadians and the Chinese. Both countries are overexcitedly leaping aboard the latest oilrush pipedream. Luckily, the United States will be spared embarassment, due to the measured advice from it's lawmakers and the oil industry.
It's all about oil shale. Every barrell of the oily sludge pumped from these sandy underground strata can be turned into half a barrell of oil. And the USA is sitting on enough oil shale to rival the Middle East -up to 1.9 trillion barrels.
It does to Senator Orrin Hatch, who enthused about oil shale recently, in testimony before the Senate Energy and Natural Resources Committee.
'Who would have guessed that in just Colorado and Utah, there is more recoverable oil than in the Middle East?' Hatch said. 'We just don't count it among our nation's oil reserves because it is not yet being developed commercially.
With oil costing up to $60 a barrel recently, his excitment is perhaps understandable. But Sens. Wayne Allard and Ken Salazar of Colorado, are "wisely urging caution" reports the Denver Post.
"I think that I'm in favor of moving forward on a trial basis and we'll see what the environmental impacts are," said Allard.
"It should be looked at," Salazar says. He favors moving forward "in a thoughtful manner, based on good science and also in a manner that's going to protect our environment."
Such concern for the environment is refreshing in lawmakers, by the way.
Shell Oil told the Committee it'll take at least five years to learn if the new technology really works. The oil giant has already deleloped a recovery process wherby holes are drilled into shale formations and electric heaters suspended in the wells to "cook" out the oil.
The Rush is On
Even though Mideastern oil costs less than $5 a barrel to find and recover, the silly Canadians are already extracting oil from Canada's Athabasca Oil Sands at a cost of $10 to $15 a barrel.
And the giant Chinese offshore oil producer CNOOC Ltd has just paid US$121 million to take a 16.69 percent stake in Calgary-based MEG Energy Corp. [source] The little-known start-up, plans to use steam-assisted technology to melt the tar-like bitumen underground before pumping the heavy oil to the surface. The private firm owns a 100-per-cent stake in oil sands leases that hold recoverable reserves of about 2-billion barrels, the Chinese company said.
And other goofy Chinese investors are being caught up in this hysteria. According to the Hong Kong newspaper South China Morning Post, China's two major onshore producers, China Petrochemical Corp and PetroChina are also negotiating purchases of oil sands assets in Alberta.[source]
"Lower operating costs and higher recoveries resulting from recent advances in technologies have made many similar projects economically viable," Yang Hua, CNOOC's chief financial officer, said in a statement.
CNOOC's chairman and chief executive officer, Fu Chengyu, said the skills learned in Alberta would be useful in exploiting oil sand and shale in China.
There is a conspiracy theory that Big Oil and those behind the invasion of Iraq are using supply chain manipulations to drive up the price of oil -thus flooding the coffers of the U.S government with capital inflows to the dollar. This theory also says that oil companies are push 'Peak Oil' propaganda as a smokescreen for their current vast profits. The further claim is that limited oil is a useful geopolitical lever for key great powers.
But nothing could be further from the truth. Oil companies like Shell are just being prudent, they are not deliberately downplaying this new source of oil. And U.S. legislators are not in league with them, they are simply concerned for the environment.
But for some strange reason the silly Chinese and Canadians aren't listening.