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The Denver Post: Oil-shale funding promoted

A study by the National Petroleum Council says shale could help alleviate a future supply shortfall.

By Steve Raabe Denver Post Staff Writer
Article Last Updated: 07/18/2007 11:03:15 PM MDT

Funding to develop oil shale should be increased to help meet a coming shortfall of petroleum, according to a major energy report released Wednesday.

The study by the National Petroleum Council concluded that world demand for oil will significantly outstrip supplies by 2030 and that development of alternative sources such as oil shale may help bridge the gap.

Commissioned by Energy Secretary Samuel Bodman, the study said global oil production by 2030 could be 11 percent below U.S. government forecasts for 118 million barrels a day of demand.

The report said the U.S. must launch initiatives to conserve energy, expand production of oil and natural gas, increase development of energy from “clean coal,” nuclear and renewable sources; and develop ways to capture and store carbon emissions.

“Over the next 25 years, the United States and the world face hard truths about the global energy future” that will require “all economic, environmentally responsible energy sources to assure adequate, reliable supply,” said the petroleum group report, led by former Exxon Mobil Corp. chairman Lee Raymond and based on forecasts from the world’s largest oil companies.

But the study generated criticism from foes of fast-paced oil- shale development and skeptics who said the report does not go far enough in laying out the problem of too much world demand for too little oil.

Carbondale energy analyst Randy Udall, a proponent of “peak oil” theory that suggests world petroleum production will soon peak and then gradually decline, said the report overestimates the ability of oil-producing countries to increase production to meet rising demand.

Udall was critical of the report’s recommendation that the federal government accelerate funding of oil-shale research and speed the leasing of the West’s massive shale deposits.

“Oil shale is such a marginal long shot that we ought to let oil companies spend their own money on it,” he said. “Leaving it to the private sector brings a discipline to oil-shale investments that we did not see back in the ’70s and ’80s when we had a lot of federal price supports for shale.”

Oil-shale fields in Colorado, Utah and Wyoming contain an estimated 500 billion to 1.1 trillion barrels of oil, according to Rand Corp.

The midpoint of the Rand estimate – 800 billion barrels – is three times the size of Saudi Arabia’s oil reserves. It would be enough to meet 25 percent of current U.S. oil demand for the next 400 years.

A spokeswoman for Shell Oil, whose research on Colorado oil shale is the most advanced among several initiatives, said executives hadn’t had a chance to review the petroleum council’s recommendations on shale.

“Many would argue that oil shale has a long way to go, but few doubt that it is a very substantial resource,” said Donald Paul, Chevron’s chief technology officer, who headed the “supply” segment of the petroleum council’s report.

“If you want oil shale to be a resource for the future, we’ve got to get going on that because the time frame is going to be very long to get it developed,” Paul said. “We can’t go straight from the lab to full-scale field production.”

A 2005 report from Rand energy researcher James Bartis said a best-case scenario suggests that commercial-scale production of oil shale is 20 years away, and it could be at least 30 years before shale produces enough oil to make a significant contribution to U.S. oil supplies.

Staff writer Steve Raabe can be reached at 303-954-1948 or [email protected].

http://www.denverpost.com/business/ci_6407908

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