“Government’s view of the economy could be summed up in a few short phrases: if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Most people know THX as the sound system that is a Lucas property, and yes, the origin of that name comes from that epic, break-through film. Here’s a trip down memory lane for movie lovers.
THX-1138 had problems because it hit too close to the fears people have about the culture of spoils and looting that goes on in politics. It makes people inwardly who participate in this diabolical behavior feel guilt. That’s why the Warner Brothers executives didn’t like the movie. That’s why the audiences didn’t like the movie, initially. It’s not a movie that desires to make people feel good and eat popcorn. It’s a warning of a possible future of which we are quickly heading.
What is terrifyingly obvious once a little investigation is applied to school systems is that superintendents as a group seem prone to fill empty aspects of their lives with the value of money. That’s where Keynes fails as an economist, it does not account for corruption and failures of the human heart.
Here are the immediate articles from the Pulse Journal talking about the two big levy issues ofLebanon and Little Miamifresh off the defeat announcements.
By Richard Wilson, Staff Writer Updated 10:23 PM Tuesday, May 3, 2011
LEBANON – Voters soundly rejected a proposed tax to support Lebanon schools Tuesday, forcing officials to consider laying off teachers and cutting services.
With 100 percent of precincts counted, the numbers show 4,105 voters, or 56 percent, voted against the levy, while 3,202 voters, or 44 percent, were for it, according to final, unofficial results from the Warren County Board of Elections.
The defeat means the district could return to the ballot later this year with a similar proposal. If no new revenue is approved for next year, officials will be looking at cutting $6.5 million out of the district’s annual $44 million budget.
“We just lost by a pretty good margin. The results speak clearly. We have a lot of work ahead of us,” said Lebanon schools Superintendent Mark North.
As part of the defeated tax proposal, the district planned to make permanent annual cuts to the budget of $500,000, effective next school year. North said those cuts, primarily classroom teaching positions being eliminated through attrition, will still be made.
North said he and Treasurer Eric Sotzing have already recommended to the board to return to the ballot if the levy was rejected. North said Tuesday’s results did not change that recommendation.
“We can’t keep a district operating with cuts that would amount to $6.5 million,” he said.
Lebanon schools is not far behind what led to the demise of its neighbor, Little Miami schools, which is in state receivership because of an annual deficit of millions of dollars. Lebanon schools is projected to run out of cash reserves and be operating at a deficit by 2013.
That’s a scary thought for many voters, like Bryan Pennix, a district parent who is a teacher at Blanchester schools.
“I’d like for the schools not to go in the toilet,” Pennix said after exiting the polls. “If Little Miami folds, Blanchester will have to absorb some of those students. I’d hate for Lebanon to head down that path. I think the no voters are shortsighted on what that could do to a community.”
After exiting the polls at the Praise and Worship Center on Miller Road, Gary Conger of Lebanon said he voted against the proposal. He said school salaries are too high and district leaders have shown poor fiscal management.
“They need to work with the funds they got. The administrators are making too much money,” he said.
Voters narrowly defeat Little Miami levy
By Richard Wilson, Staff Writer Updated 9:50 PM Tuesday, May 3, 2011
HAMILTON TWP. — Voters narrowly rejected Issue 2 – a five year, 13.95-mill operating levy to support the Little Miami Local School District, according to early, unofficial results from the Warren County Board of Elections.
With 100 percent of precincts counted, the preliminary numbers show 51 percent voted against the levy, while 49 percent voted in favor of it.
The levy would have enabled the district to resolve its debt, balance the budget and eventually emerge from state receivership. Additional taxes would be necessary to bring back eliminated staff positions, reduced services, like high school busing, or to reopen any of three shuttered elementary buildings, school officials have said.
The school district has been forced by the state oversight commission to reduce services and staffing to state operating standards, amounting to more than $8 million being cut from the annual budget since 2008. Tuesday’s results mean the district has experienced its eighth consecutive defeat of a proposed new tax. The district is likely to return to the ballot later this year, as the key factor determining Little Miami’s future is getting a levy approved, according to the state commission’s financial recovery plan.
In 1944, FDR was fulfilling a long sought after promise of progressives, which his cousin Teddy Roosevelt helped begin, to create a better, more fair world, which were a direct play-book from socialist thought. FDR like his cousin, whom I admire because of his energy and intelligence, suffered from a desire for power, and a belief that he was one of the elites that were enamored by God to help the less-fortunate.
Here is FDR reading his Second Bill of Rights from 1944. Just like a king from a far away land, he consults his subjects in a similar manner, which is fundamentally an incorrect American philosophy. Unfortunately, for those in society that have a tendency to be skittish by nature, socialism is an attractive idea because they naturally lack courage. Those are the kind of people who embraced FDR and his New Deal policies.
“The Economic Bill of Rights”
Excerpt from President Roosevelt’s January 11, 1944 message to the Congress of the United States on the State of the Union[1]:
“ It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.
This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights—among them the right of free speech, free press, free worship, trial by jury, freedom from unreasonable searches and seizures. They were our rights to life and liberty.
As our nation has grown in size and stature, however—as our industrial economy expanded—these political rights proved inadequate to assure us equality in the pursuit of happiness.
We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. “Necessitous men are not free men.”[2] People who are hungry and out of a job are the stuff of which dictatorships are made.
In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.
Among these are:
The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education.
All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.
Americas own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for all our citizens.
For unless there is security here at home there cannot be lasting peace in the world.
Cass Sunstein is working toward a different kind of America. People like me completely reject what Cass proposes.
This is a video from Cass Sunstein during 2006, long before he was Obama’s regulatory tzar. He is exactly why the FDR’s Second Bill of Rights would never work, because people like Cass are weak-kneed intellectuals that would rather have price fixes instead of allowing competition to drive the market.
“Our problem is not merely to help the students to adjust themselves to world life, but to make them as unlike their fathers as we can. While we are followers of Jefferson, there is one principle of Jefferson’s which no longer can obtain in the practical politics of America. You know that it was Jefferson who said that the best government is that which does as little governing as possible…but that time has passed. America is not now and cannot in the future be a place for unrestricted individual enterprise. The people of the United States do not wish to curtail the activities of this Government; they wish, rather, to enlarge them and with every enlargement, with the mere growth, indeed of the country itself, there must come, of course, the inevitable increase of expense…It is not expenditure but extravagance that we should fear being criticized for.”
That is a quote from the father of modern education and president of progressive policy who along with Social Gospel soldiers such as John Dewey created the situation you see on the below chart. The quotes are from Woodrow Wilson.
Government is a corrosive, corruptible creature, and teachers are a reflection of everything that’s wrong with it. They take too much and do too little. Tocqueville proclaimed in 1840 “Having thus taken each citizen in turn in the powerful grasp and shaped him to its will, government then extends its embrace to include the whole of society. It covers the whole of social life with a network of petty, complicated rules that are both minute and uniform, through which even men of the greatest originality and the most vigorous temperament cannot force their heads above the crowd. It does not break men’s will, but softens, bends, and guides it; it seldom enjoins, but often inhibits, action; it does not destroy anything, but prevents much from being born; it is not at all tyrannical, but in hinders, restrains, enervates, stifles, and stultifies so much that in the end each nation is no more than a flock of timid and hardworking animals with the government as its shepherd.”
Few tax payers ever really consider how much they actually pay in taxes, which robs them of money for themselves and gives it them to the mediocre only to feed a government monster with a big appetite.
And that’s where your tax money is going ladies and gentlemen. Remember, if you vote for a school levy, a social welfare levy, a tax increase of any kind…………………………..you’re stupid!
“If we can prevent the government from wasting the labor of the people, under the pretense of caring for them, they will be happy.” Thomas Jefferson.
I spent my twenties reading Joseph Campbell who was an intellectual very well-respected among virtually everyone no matter what the political affiliation. And after I read every Campbell book, some of them several times, I read his autobiography by Stephen and Robin Larsen called A Fire in the Mind, The Life of Joseph Campbell and I remembered with some surprise the quote from that book on page 466 paragraph 3, “Campbell believed in a great revolution of the spirit, and deplored the authority figures of the world who sought to keep human-kind in line. While he seemed to be siding with the powers that be, on the other hand he felt that the revolution of the Marxists and the Maoists was no real revolution but only the triumph of a new kind of collectivism, perhaps even worse than the old religious orthodoxies, because it had totally repudiated the spiritual element—and even worse, the celebration of individuality.” That comment came on March 10th in 1969. It made Campbell very upset that many of his students at Sara Lawrence College were missing class to protest the war and that is the context of his comments.
Today is my 23rd wedding anniversary with my wife. She knows what to give me, a guy that reads and writes continuously while watching the news and cutting hours of radio broadcasts into digestible bits so people who miss valuable information can hear them at their convenience. So she made me an American flag blanket which she gave me this morning.
I agree with the Bull Dog from 700 WLW that Donald Trump is the kind of guy that can level out that curve. He may not be the guy everyone loves, but we need a media equivalent to the Marxists, Socialists, Maoists, radical extremists, union interests composed of the same elements, that are embedded in our culture and it will take someone like Trump to do it. If someone comes up with better candidate, fine, but the Bull Dog articulates the problem very well in this bit.
. To repair the nation it will take each and every person that makes up that nation to do their part, be good individuals and work toward the goal of renewal, and we’ll do it one stitch at a time, or one word at a time, but we will get there because I have committed myself to as much in this next phase of my marriage. That’s why my wife gave me that gift, to show her support of my effort.
OKLAHOMA CITY, OK — More Oklahoma families will be able to send their children to the schools of their choosing, following today’s passage of the Oklahoma Equal Opportunity Education Scholarship Act. The bill will provide partial tax credits to individuals and businesses that donate to nonprofits that distribute private-school scholarships to eligible families.
By a vote of 64-43, the Oklahoma House of Representatives approved the measure, which previously passed the Senate chamber by a vote of 30-14.
“This is another step in the direction of choice for Oklahoma’s parents and children,” Robert Enlow, president and CEO of the Foundation for Educational Choice, said. “We look forward to seeing school choice continue to flourish in the Sooner State, and we are eager to watch other states follow Oklahoma’s lead.”
The Oklahoma Equal Opportunity Education Scholarship Act, sponsored by Rep. Lee Denney (R) and Sen. Dan Newberry (R), would make families with incomes up to 300 percent of the income needed to qualify for the federal Free and Reduced-Price Lunch program eligible to receive scholarships; however, scholarship-giving nonprofits must spend a portion of their expenditures for low-income students in an amount equal to or greater than the percentage of low-income students in the state.
Eligible students, 50 percent of whom must be enrolled currently in public schools, can receive scholarships worth up to $5,000 or 80 percent of the average per-pupil expenditures in the school districts where they reside. With a “cap” of tax credits allowed set at $1.75 million—and with the tax credit itself being worth 50 percent of the donation—the program will provide potentially $3.5 million toward scholarships. The program also provides a separate $1.5 million in tax credits for donations made to nonprofits that distribute “educational improvement grants” to public schools, which is similar to a 10-year-old program in Pennsylvania.
If the Senate agrees to the changes made in the House, the bill will proceed to Gov. Mary Fallin.
The Foundation for Educational Choice is a 501(c)(3) nonprofit and nonpartisan organization, solely dedicated to advancing Milton and Rose Friedman’s vision of school choice for all children. First established as the Milton and Rose D. Friedman Foundation in 1996, the foundation continues to promote school choice as the most effective and equitable way to improve the quality of K-12 education in America. The foundation is dedicated to research, education, and outreach on the vital issues and implications related to choice and competition in K-12 education.
I don’t want my tax money to pay for communist thought. That’s what they have been doing, and that’s what they want to continue. When this issue goes to the ballot in November that’s what we’re all fighting is an attempt by these groups to preserve a communist cause in the United States.
Below is a great article from the Daily Reckoning about Oil Shale in Colorado. There is only one reason that our country is in a financial mess, and that is because fools are standing in the way. I am thinking of a speech from John Galt uttered in the book Atlas Shrugged. “You propose to establish a social order based on the following tenets: that you’re incompetent to run your own life, but competent to run the lives of others—that you’re unfit to exist in freedom, but fit to become an omnipotent ruler—that you’re unable to earn your living by the use of your own intelligence, but able to judge politicians and to vote them into jobs of total power over arts you have never seen, over sciences you have never studied, over achievements of which you have no knowledge, over the gigantic industries where you, by your own definition of your capacity, would be unable successfully to fill the job of assistant greaser.”
Oil Shale Reserves: Stinky Water, Sweet Oil
A Daily Reckoning White Paper Report By Dan Denning
You won’t think much of Rio Blanco County if you ever drive through it. In fact, unless you take a right turn off Interstate-70 West at Rifle, head north on Railroad Avenue and then west on Government road to Colorado state highway number thirteen, odds are you’ll never even step foot in Rio Blanco County.
But even if you keep heading west toward Grand Junction, through the town of Parachute and the shuttered oil shale refineries from the 1970s, you’ll see the Book Cliffs geologic formation on your right. For miles and miles. It’s a bleak landscape. Almost lunar. At first glance, it’s the kind of land you’d never want to explore, much less settle down in.
Oil Shale Reserves : America’s Strategic Future
In the small world of geologists, though, the region is well-known. In fact, you might even say it’s the single most important patch of undeveloped, unloved, and desolate looking land in America. But you’d never guess this particular corner of the Great American Desert may play an integral role in America’s strategic future just by looking at it. You’d never guess that the whole stretch of brown, red, and orange land contains enough recoverable oil and gas to make you forget about the Middle East for the rest of time.
There are places in Rio Blanco County like Stinking Water Creek, named after the smelly mix of oil and water the first white settlers found there, that tell you oil’s always been around the Rocky Mountains. It’s just not always been easy to find. It’s one thing to find oil that bubbles out of the ground in liquid form. It’s quite another to drill a thousand feet down, and encounter oil locked up tight inside a greasy rock.
The first seeping pools of oil were discovered in Western Colorado as far back as 1876, the year the state entered the Union. But exploration didn’t get serious until drillers settled in the town of Rangely in Rio Blanco County.
By 1903, thirteen different drillers had come and gone in Rangely. According to the local museum, the only six wells that actually struck oil were producing just two to ten barrels of oil a day. Hardly a Spindeltop, the gusher that launched the Texas oil-boom on January 10th, 1901, and immediately began producing 100,000 barrels per day.
The energy reserves of the Piceance Basin, upon which Rio Blanco County sits, contain massive petroleum reserves of a very unusual nature: Oil shale.
Oil Shale Reserves : A Congressional Legacy
Most of the nation’s oil shale reserves rest under the control of the U.S. government – a legacy of a 95-year old Congressional Act. In 1910, Congress passed the Pickett Act, which authorized President Taft to set aside oil- bearing land in California and Wyoming as potential sources of fuel for the U.S. Navy. Taft did so right away. The Navy was in the process of switching from coal-burning ships to oil burning ships. And the U.S. military, conscious of the expanding role of America in the world, needed a dependable supply of fuel in case of a national emergency.
From 1910 to 1925 the Navy developed the Naval Petroleum and Oil Shale Reserves Program. The program became official in 1927 and President Roosevelt even expanded the scope of the program in 1942 as the U.S. geared up for war with Japan and Germany.
Several of the oil fields set aside for the nation’s first strategic reserve, particularly Elk Hills in California, would go on to produce oil for the U.S. government. Elk Hills was eventually sold off to Occidental Petroleum for $3.65 billion in 1998 in the largest privatization in U.S. history. The shale reserves, however, still remain, locked 1,000 feet underground in the Colorado desert.
Unlocking The Future
The destruction of Hurricane Katrina shows the importance of a strategic petroleum reserve, or, more accurately, a strategic energy reserve. But the SPR in Louisiana only holds about 800 million barrels of emergency, enough to get the country through about 90 days of regular oil usage. That’s barely a band-aid for a country that faces a potential energy heart attack.
In other words, the future of oil shale may have finally arrived. Extracting oil from shale is no simple task, which is why the reserves remain almost completely undeveloped. But an emerging new technology promises to unlock the awesome potential of the oil shale.
“The technical groundwork may be in place for a fundamental shift in oil shale economics,” the Rand Corporation recently declared. “Advances in thermally conductive in-situ conversion may enable shale-derived oil to be competitive with crude oil at prices below $40 per barrel. If this becomes the case, oil shale development may soon occupy a very prominent position in the national energy agenda.”
Estimated U.S. oil shale reserves total an astonishing 1.5 trillion barrels of oil – or more than five times the stated reserves of Saudi Arabia. This energy bounty is simply too large to ignore any longer, assuming that the reserves are economically viable. And yet, oil shale lies far from the radar screen of most investors.
But we here at The Daily Reckoning are on the case. Just yesterday, I caught a first-hand glimpse of a cutting-edge oil shale project spearheaded by Shell. I trekked out to a barren moonscape in Colorado to tour the facility with Shell geologists. To summarize my findings, oil shale holds tremendous promise, but the technologies that promise to unlock this promise remain somewhat experimental. But sooner or later, the oil trapped in the shale of Colorado will flow to the surface. And when it does, it will enrich investors who arrive early to the scene.
Can Oil Shale Change The World?
America’s oil shale reserves are enormous, totaling at least 1.5 trillion barrels of oil. That’s five times the reserves of Saudi Arabia! And yet, no one is producing commercial quantities of oil from these vast deposits. All that oil is still sitting right where God left it, buried under the vast landscapes of Colorado and Wyoming.
Obviously, there are some very real obstacles to oil production from shale. After all, if it was such a good thing, we’d be doing it already, right? “Oil shale is the fuel of the future, and always will be,” goes a popular saying in Western Colorado.
But what if we could safely and economically get our hands on all that oil? Imagine how the world might change. The U.S. would instantly have the world’s largest oil reserves. Imagine…having so much oil we’d never have to worry about Saudi Arabia again, or Hugo Chavez, or the mullahs in Tehran. And instead of ships lined up in L.A.’s port to unload cheap Chinese goods, we might see oil tankers lined up waiting to export America’s tremendous oil bounty to the rest of the world. The entire geopolitical and economic map of the world would change…and the companies in the vanguard of oil shale development might make hundreds of billions of dollars as they convert America’s untapped shale reserves into a brand new energy revolution.
Presidents Gerald Ford and Jimmy Carter may have been entertaining similar ambitions in the late 1970s when they encouraged and funded the development of the West’s shale deposits. A shale-boom ensued, although not much oil flowed. The government spent billions and so did Exxon Mobil. New boomtowns sprung up in Rifle, Parachute, Rangely, and Meeker here in Colorado.
And then came Black Monday. May 2, 1982. The day Exxon shut down its $5 billion Colony Oil Shale project. The refineries closed. The jobs left (the American oil industry has lost nearly as many jobs in the last ten years as the automobile and steel industries.) And the energy locked in Colorado’s vast shale deposits sat untouched and unrefined.
Oil Shale Technology – Old & New
Extracting oil from the shale is no simple task. The earliest attempts to extract the oil utilized an environmentally unfriendly process known as “retorting.” Stated simply, retorting required mining the shale, hauling it to a processing facility that crushed the rock into small chunks, then extracted a petroleum substance called kerogen, then upgraded the kerogen through a process of hydrogenation (which requires lots of water) and refined it into gasoline or jet fuel.
But the difficulties of retorting do not end there, as my colleague, Byron King explains:
“After you retort the rock to derive the kerogen (not oil), the heating process has desiccated the shale (OK, that means that it is dried out). Sad to say, the volume of desiccated shale that you have to dispose of is now greater than that of the hole from which you dug and mined it in the first place. Any takers for trainloads of dried, dusty, gunky shale residue, rife with low levels of heavy metal residue and other toxic, but now chemically-activated crap? (Well, it makes for enough crap that when it rains, the toxic stuff will leach out and contaminate all of the water supplies to which gravity can reach, which is essentially all of ‘em. Yeah, right. I sure want that stuff blowin’ in my wind.) Add up all of the capital investment to build the retorting mechanisms, cost of energy required, cost of water, costs of transport, costs of environmental compliance, costs of refining, and you have some relatively costly end-product.”
But a new technology has emerged that may begin to tap the oil shale’s potential. Royal Dutch Shell, in fact, has recently completed a demonstration project (The Mahogany Ridge project) in which it produced 1,400 barrels of oil from shale in the ground, without mining the shale at all.
Instead, Shell utilized a process called “in situ” mining, which heats the shale while it’s still in the ground, to the point where the oil leaches from the rock. Shell’s Terry O’Connor described the breakthrough in testimony before Congress earlier this summer (And Congress may have an acute interest in the topic, since the U.S. government controls 72% of all U.S. oil shale acreage):
“Some 23 years ago, Shell commenced laboratory and field research on a promising in ground conversion and recovery process. This technology is called the In-situ Conversion Process, or ICP. In 1996, Shell successfully carried out its first small field test on its privately owned Mahogany property in Rio Blanco County, Colorado some 200 miles west of Denver. Since then, Shell has carried out four additional related field tests at nearby sites. The most recent test was carried out over the past several months and produced in excess of 1,400 barrels of light oil plus associated gas from a very small test plot using the ICP technology…
“Most of the petroleum products we consume today are derived from conventional oil fields that produce oil and gas that have been naturally matured in the subsurface by being subjected to heat and pressure over very long periods of time. In general terms, the In-situ Conversion Process (ICP) accelerates this natural process of oil and gas maturation by literally tens of millions of years. This is accomplished by slow sub-surface heating of petroleum source rock containing kerogen, the precursor to oil and gas. This acceleration of natural processes is achieved by drilling holes into the resource, inserting electric resistance heaters into those heater holes and heating the subsurface to around 650-700F, over a 3 to 4 year period.
“During this time, very dense oil and gas is expelled from the kerogen and undergoes a series of changes. These changes include the shearing of lighter components from the dense carbon compounds, concentration of available hydrogen into these lighter compounds, and changing of phase of those lighter, more hydrogen rich compounds from liquid to gas. In gaseous phase, these lighter fractions are now far more mobile and can move in the subsurface through existing or induced fractures to conventional producing wells from which they are brought to the surface. The process results in the production of about 65 to 70% of the original “carbon” in place in the subsurface.
“The ICP process is clearly energy-intensive, as its driving force is the injection of heat into the subsurface. However, for each unit of energy used to generate power to provide heat for the ICP process, when calculated on a life cycle basis, about 3.5 units of energy are produced and treated for sales to the consumer market. This energy efficiency compares favorably with many conventional heavy oil fields that for decades have used steam injection to help coax more oil out of the reservoir. The produced hydrocarbon mix is very different from traditional crude oils. It is much lighter and contains almost no heavy ends.
“However, because the ICP process occurs below ground, special care must be taken to keep the products of the process from escaping into groundwater flows. Shell has adapted a long recognized and established mining and construction ice wall technology to isolate the active ICP area and thus accomplish these objectives and to safe guard the environment. For years, freezing of groundwater to form a subsurface ice barrier has been used to isolate areas being tunneled and to reduce natural water flows into mines. Shell has successfully tested the freezing technology and determined that the development of a freeze wall prevents the loss of contaminants from the heated zone.”
It may seem, as O’Conner said, counter-intuitive to freeze the water around a shale deposit, and then heat up the contents within the deposit. It’s energy-intensive. And it’s a lot of work. What’s more, there’s no proof yet it can work on a commercial-scale.
Yet both technologies, the freeze wall and the heating of shale, have been proven in the field to work. The freeze wall was used most recently in Boston’s Big Dig project. It was also used to prevent ground water from seeping into the salt caverns at the Strategic Petroleum reserve in Weeks Island, LA.
But still, you may be wondering, does it really make sense to heat the ground up a thousand feet down for three or four years and wait? Of course it does. In case you missed O’Conner’s math, Shell could harvest up to a million barrels per acre, or a billion barrels per square mile, on an area covering over a thousand square miles.
It’s still early days in the oil shale fields of Colorado and Wyoming, but it looks to me like someone’s gonna make a lot of money out there. I’m working hard to discover how we outside investors can play along.
Shell’s Mahogany Ridge
Last week, I paid a visit to Royal Dutch Shell’s oil shale project in Colorado. The visit left me with more questions than answers, but I came away from the place with the sense that this opportunity is very real…or, at least, it soon will be.
After driving across a vast expanse of “Nowhere,” Colorado, my brother and I met up with a few geologists from Shell. Of course it’s just those large, unpopulated tracts of high desert that make the area so appealing from a geopolitical point of view. Tapping into the oil shale 2,000 feet underground isn’t going to bother too many people. And there are no spotted owls around either. If the technology to turn shale into oil works, the entire area will become a new American boom patch.
Soon after we arrived, the geologists escorted us around the facility, chatting all the while about the successes and challenges of their venture.
The two trickiest aspects of oil shale development, as the geologists and engineers explained, are heating the shale to extreme temperatures, while simultaneously surrounding the heated area with a subterranean ice wall. Shell doesn’t know, or isn’t saying, which part of the project will be the most challenging. If you were about to change the world by making it economic to tap into as much as 2 trillion barrels of oil under the Colorado plateau, you’d be pretty careful about showing your competitors how you were going to do it.
First, anything that heats up rock around it to around 600 or 700 degrees Fahrenheit has to conduct electrically generated heat well. The most conductive metals on the Periodic Table of Elements are, in order, silver, copper, and gold. Naturally, the number of heaters you put in a place affects the amount of time it takes to turn the shale goo into API 34 crude. The more heaters, the more cost, though.
And given the fact that Shell does not know yet if the heaters will be recoverable, you can see that sticking silver, copper, or gold heaters 2000 meters underground and then leaving them there once the kerogen has been pumped has a serious effect on the economics of your operation.
At the moment, Shell is not sure what the optimal size of production zones ought to be. The big issue here is how big can a freeze-wall be to be effective and freezing the groundwater surrounding a shale deposit? The test projects, as you can see, were quite small. Shell doesn’t know, or isn’t saying, what the optimum size is for a each “pod” or “cell”. That’s what they’ll have to figure out at the next stage…and the picture with the dirt is a football field sized project….where rather than creating the freeze-wall at 50 meters down…they will do it at 1,000 ft. down…. with 2,000 being the desired and necessary depth for commercial viability. I’m not sure anyone has ever created a freeze-wall at that depth….neither is shell. But we’ll find out. The oil itself that comes from the process looks like…oil. No heavy refining needed.
Shell thinks the whole thing is economic at a crude price of $30. So barring a major reversal of geopolitical trends, they’re forging ahead.
Since the Bureau of Land Management owns about 80% of the oil shale acreage in Colorado, there is no investment play on private companies that might own land with rich shale deposits. Although, if Shell and the DOE are right that you can recover a million barrels of oil per acre…it wouldn’t take much land to make a man rich out here.
Oil Shale: Testing Public Lands
The Bureau of Land Management recently received ten applications (by eight companies) for a pilot program to develop Colorado’s shale reserves. The program allows the companies access to public lands for the purpose of testing shale-extraction technologies. You see below an interesting mix of large, publicly traded oil giants and small, privately held innovators.
Natural Soda, Inc. of Rifle, Colorado.
EGL Resources Inc. of Midland, Texas.
Salt Lake City-based Kennecott Exploration Company.
Independent Energy Partners of Denver, Colorado
Denver-based Phoenix Wyoming, Inc.
Chevron Shale Oil Company.
Exxon Mobil Corporation.
Shell Frontier Oil and Gas Inc
There is dispute within the industry over how long, if ever, demonstration extraction technologies can become commercially viable. I’ve spoken with some of the smaller companies that have applied for leases from the BLM. Some of them will have to raise money to conduct the project. And some of them have been less than forthcoming about how exactly their extraction technology is different or better than previous methods.
How will it all unfold? Well, for starters, it could all utterly fail. To me, Shell’s in-situ process looks the most promising. It also makes the most sense economically. There may be a better, less energy-intensive way to heat up the ground than what Shell has come up with. But Shell, Chevron, and Exxon Mobil clearly have the resources to scoop up any private or small firm that makes a breakthrough.
And there are a host of smaller firms involved with the refining and drilling process that figure to play a key role in the development of the industry, should that development pick up pace.
The Energy Policy Act of 2005, otherwise known as a listless piece of legislation without any strategic vision, does, at least, make provision for encouraging research into the development of shale. But government works slow, when it works at all. It’s going to take an external shock to the economy to really ratchet up interest and development of the nation’s energy reserves…say…something like a nuclear Iran.
Al Gore and his friends of communism advocates want to stop the American economy and they are what is driving up our fuel costs by standing in the way of technological development. Our country is being run by fools and idiots by our default, because while the rest of us work at real jobs, those thieves of our tax dollars are using our own resources to destroy us. Those of us that think will never get along with communists. I’m going to call them that for now on, because that’s what they are. I don’t want the world they are advocating. I want oil, fast cars and government off my back.
The Overmanwarrior 