Monday, May 28, 2012

US Oil Boom Busted

The latest version of “Don’t Worry, Be Happy” being sung by the Big-Oil Tabernacle Choir is a variant of the old favorite, “Drill, Baby, drill.” The new lyric is that we have drilled, baby, drilled (or more accurately, fracked) and that now there is plenty of oil and gas in America, and there will continue to be plenty as long as you don’t dare tax or regulate Big Oil. You can even hear the backup singers muttering, “Energy independence! Energy independence!” Alas, the song is wrong.

Here’s the reality check. The most important thing to remember is that no one has discovered any oil or gas in America that we didn’t previously know was there. Instead, increasingly desperate, expensive and dangerous methods have been deployed to get at the last remaining drops of combustible petroleum.
  • Fracking (hydraulic fracturing, blowing underground shale formations apart with high-pressure bursts of water and chemicals to get at trapped oil and gas) is wringing some oil out of North Dakota and gas from Wyoming and Pennsylvania. The wells are more expensive, less productive, and play out sooner, than anyone expected. Meanwhile the temporary gas glut from 1500 new wells has dropped prices to just over one-half the $4 per million BTUs the operators of fracking wells need to turn a profit. Far from booming, about half the wells have been shut down because they’re not making money. (For details and charts, see “Everything You Know about Shale Gas is Wrong,” by Chris Nelder writing for CBS’s SmartPlanet.com.
  • In Alberta, scooping up planet-sized gobs of oily dirt, washing them with oceans of water and cooking them with all the gas they can frack is yielding some low grade, corrosive crude. In all the furor over Big Oil’s plan to pipeline the stuff across the US, or Canada (to sell it to China, not to bring us energy independence), it is seldom mentioned that it takes almost exactly as much energy to process a barrel of this crap as you get from burning a barrel of it.
  • Off shore, the drillers who blew up a rig and polluted the Gulf of Mexico are telling us with crossed hearts and fingers that they can go deeper, safer and deliver more oil, faster. One day. Honest. Read More