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Fewer refineries
WASHINGTON - With Congress and the White House pushing to increases the use of ethanol, the oil industry is scaling back its plans to expand refineries — which could keep gasoline prices high, possibly for years to come.
President Bush has called for a 20 percent decline in gasoline use by 2017 and the Senate is debating legislation for huge increases in the use of ethanol as a motor fuel. So, oil companies see a growing uncertainty about future gasoline demand and less need to increase refinery capacity to make more gasoline.
A shortage of refineries frequently has been blamed by politicians for the sharp price spikes in gasoline.
This spring, refiners, hampered by outages, could not keep up with demand and imports were down because of greater fuel demand in Europe and elsewhere. Despite stable — even sometimes declining — oil prices, gasoline prices soared to record levels and remain well above $3 a gallon.
Consumer advocates maintain the oil industry likes it that way.
"By creating a situation of extremely tight supply, the oil companies gain control over price at the wholesale level," says Mark Cooper of the Consumer Federation of America. He argues the refining industry "has no interest in creating spare (refining) capacity."
Only last year, the Energy Department was told that refiners, reaping big profits and anticipating growing demand, were looking at boosting their refining capacity by 1.6 million barrels a day, a roughly 10 percent increase.
But oil companies already have scaled those expansion plans back by nearly 40 percent. More cancelations are expected if Congress passes legislation now before the Sensate calling for 15 billion gallons of ethanol use by 2015 and more than double that by 2022, say industry and government officials.
"These (expansion) decisions are being revisited in boardrooms across the refining sector," says Charlie Drevna, executive vice president of the National Petrochemical and Refiners Association
http://news.yahoo.com/s/ap/20070617/ap_on_bi_ge/ethanol_refineries
Lowman. I know he is a smart guy who is trying to flip hemi. He may know more than me about trading. He will never convince me hemi is not a great play. When he puts up info that might scare off newbies, I like to counter it. It helps me keep my typing skills up as well. LOL
On the Fat Cats board serfdom felt hemi was a decent company but until numbers came out would not have a decent pps. I understand Keith's plan to lock in all the leases before announcing numbers, or even not putting out lower numbers because of the terrible weather this year in Kansas. It also keeps the price down for people trying to acquire more. Maybe next time you communicate with him you might ask him once the leasing deals are completed in Woodson County if he will be releasing those numbers on a regular basis. Thanks. GLTY
Paying as they go. Just bought new leases with cash.
Here is a great analysis by one of our smartest investors.
http://www.investorshub.com/boards/read_msg.asp?message_id=20464241
Its early yet. LOL But ty anyway. Not half as good as zguys analysis of the latest prs he posted yesterday. I emailed it to several friends who are also in hemi but dont read this board because of work.
Jagman this has already been discussed on the board, but because I like you I will bring you up to speed. Some business entities are created for a specific purpose, where they did not exist before. This is the case with Wilshire Capital Group. Now whether they will branch out and do other capital investments with other corporations is really irrelevant to me. As I said, Keith has a long history in the corporate world and many contacts. I am sure a few people with deep pockets saw what many longs here see and recognized a good opportunity to invest and partner with hemi but on a level different from me and you.
I think they will be building value but it cannot happen overnight or even in a couple of months. First they have to do their DD to make sure what they have been told by hemi is true. Then we really do not know what their strategy will be other than a loan, we think. With even more financing, other than the producing wells, hemi will be able to build a pipeline for the large gas field recently mentioned as well as drilling at a faster pace. I am in for the long term, for the dollars so it is all good for me. Glty
The 200 dma has held twice. What makes you think it will break next week? I will buy too, just not sure that will happen. Would value your thoughts on why you think that will happen.
I would believe that the change in strategy is based on the low share price. The pps is artificially low so a change in direction was called for. With Wilshire entering the picture, they may be buying the large T blocks as part of an agreement with hemi. The lack of production numbers would tend to keep the price low which allows them to purchase cheaper. This way they get a good stake in hemi and there is no dilution. It is a good way to trap the MMs too. Or, the leases appeared to be more valuable than anticipated so the decision was made to try to tie them up first. Putting out big numbers would create a bidding war. We know there is good production because the huge amount of land being leased is being done mostly with cash. Of course this is all speculation on my part but it does account for many occurences that are happening.
That is all I saw too. Is there a regulatory requirement that they have to supply that information to KCC,KGS or whatever agency in a timely manner? Even if they dont trumpet it in a pr, it still should be posted there I would think.
Sure, shares issued in 2006 become unrestricted and tradeable. They represent a small percentage of the OS, while hemi's assets and value have recently tripled or quadrupled. Hemi is STILL stronger, more valuable, and more viable as a buyout candidate today than it was last month. And every day of drilling and the process of proving reserves makes it even more valuable. And still no production numbers...........
You are wrong, if you think the "insignificant amount of shares", that are restricted for two years most likely, mean anything. There is no dilution, do not even try to imply that. I realize you are frustrated because the company's actions do not allow you to do your thing. Keith is probably smiling about this whole situation since he obviously reads the board or at least gets a synopsis from someone. I have thousands of dollars worth of tyeg shares that look like they will remain restricted for another year which I was looking to buy more hemi with. If the owners of those new, restricted shares want to buy hemi or groceries, it will take cash. And holding hemi shares for two years will be much more profitable than selling them now.
Will the "stop sign" stop the whining for production numbers and people trying to daytrade this stock. Sure hope so. Will not effect Hemi in the least. They will continue drilling, proving up reserves in oil and gas, building infrastructure, such as gas pipeline, etc. Price should remain low and true longs can buy up the float and/or remove shares from the hands who are flipping at these low numbers.
You know that it is completely untrue about using shares instead of cash. You read the prs. They are using cash. You are whining for production numbers and Keith is not providing. They are wrapping up the rest of the leases in Kansas. They have plenty of cash from the oil they are producing. The plan, as you well know, is to build assets and then sell. He is upset about the pps only because it upsets SOME investors, who are not taking advantage of it, or those that wish to flip. If you listened to the interview he stated clearly the pps does not really matter as far as what we will sell at.
Jagman. I believe you missed Big Mur's whole point. It is not about investors driving up the price based on demand, occurring because of production numbers. It is about value of underlying assets which will make hemi too good a bargain for a "big fish" not to buy. You and others can keep calling for more meat, production numbers, etc. does not matter. Keith said in the latest interview, any sale would be based on standard oil and gas industry value, not share price.
Jagman. Hemi will release all the financials and numbers you are looking for when it starts at over 7.00 per share on the AMEX. LOL jk. I for one am patient. You have heard of the 800 pound gorilla in the room. Hemi is getting larger and larger in terms of asset value. At some point it will be so large it can no longer be ignored, numbers issued for those trying to flip or not.
excellent analysis. I just emailed your post to those who have bought hemi from my having made them aware of it. This sounds somewhere in the neighborhood of where we are going.
Does Ihub have any boards these ah transactions could be taken where someone would be able to explain or at least speculate?
Mine looked better too. But it has allowed me to add more, much in the .20s. It is only a matter of time. We may wake up one day and see a pr of a great buy out offer. If not, we are increasing assets and company value every week.
Isnt this something. All the drama today and we end where we started. LOL
The real money is going to be when there is a 1 or 3 or 5 in front of the decimal point. great time to buy.
So that means they really have less application here. But certainly fundamentals work for any stock as far as value goes. Now if the stock price does not reflect the actual value.....
And since we are profitable, we need to have advertising and administrative expenses to write off against some of the revenues because Keith's low administrative salary is NOT MUCH of an expense. All part of doing business. It will be interesting what happens next week after the Friday night Hemi-palooza with serfdom.
Adding to Starboy's point.
Mexico is second largest exporter for us oil but only has 10 years proven reserves. Another point for domestic oil sources.
06-30) 04:00 PDT Cardenas, Mexico -- Gonzalo Rodriguez has an unenviable task as the boss of a major oil field -- ripping out a large part of the pumping and compressing machinery that collects the output from scores of wells.
"Unfortunately, we don't need this capacity anymore," he said. "This isn't like the old days, and they aren't coming back."
Like much of Mexico's giant oil production apparatus, this area, known as the Bellota oil field, is in an apparently unstoppable decline. At current extraction rates, the nation has only 10 years of proven oil reserves remaining. And as Mexico prepares to vote in Sunday's presidential election, the leading candidates disagree bitterly about what, if anything, can be done to halt the impending collapse of the industry that forms the backbone of the national economy.
Left-of-center candidate Andres Lopez Obrador wants to de-emphasize production of crude oil and focus instead on refined products such as gasoline and plastics, while his main challenger, conservative Felipe Calderon, proposes opening the industry to foreign oil corporations to help increase crude exports.
Because Mexico is the second-largest source of U.S. oil imports, the outcome of this struggle will have a huge effect on U.S. energy security in the coming decades. Oil income accounts for more than 40 percent of the Mexican federal government's annual revenues, so the decline of oil output could leave the country's next president with a nightmarish budget crisis.
Oil industry experts say that whoever wins Sunday's election will be forced to play an increasingly weak hand of economic cards.
"There is no question that it will be very difficult to maintain (Mexico's) production levels under any institutional arrangement, no matter who wins the election," said Adrian Lajous, who was chief executive of Petroleos Mexicanos, or Pemex, the state-owned monopoly, from 1994 to 1999 and now is chairman of Oxford Institute for Energy Studies, a British think tank. "It will be a major fiscal problem over the foreseeable future."
At stake is one of the most sacred cows of Mexican politics: government ownership and control of the oil industry, which was nationalized in 1938 and remains in the tight grip of Pemex. Even now, despite the free-market rules adopted by Mexico under the North American Free Trade Agreement, the oil sector is a bastion of old-style socialism, with tighter restrictions on foreign investment than any other major petroleum-producing nation.
Calderon, candidate of the pro-business National Action Party (PAN), says that foreign companies, which are allowed only as contractors providing oil-field services such as drilling, seismic work and infrastructure construction, should be allowed to enter into joint-production agreements with Pemex.
"Pemex should be given the freedom to buy the technology or put together the contracts necessary to be able to increase reserves and produce oil," he said Monday.
Yet Calderon has repeatedly denied that he would privatize Pemex, as outgoing PAN President Vicente Fox has tried to do since he took office in December 2000. Such a step, which would require amending the Mexican Constitution, has been crushed repeatedly in Congress by lawmakers from Lopez Obrador's Party of the Democratic Revolution (PRD) and the centrist Institutional Revolutionary Party (PRI).
Lopez Obrador defends the ban on most foreign investment and has pledged to build three gasoline refineries and boost petrochemical production. He notes that Mexico annually spends $4.5 billion in gasoline imports and nearly $10 billion in petrochemical imports, mainly from the United States. Pemex has made no significant refining investments in 20 years, and none in petrochemicals in 15 years.
"All this has brought us to an extremely grave situation of dependency," he said in a recent speech.
Situated in the hot, swampy lowlands of southeast Mexico's Tabasco state, the Bellota complex was built in 1992 and remains one of the country's most modern petroleum facilities. But daily output from surrounding fields has fallen to only 35,000 barrels of oil, about one-quarter of the average during the 1990s, said Rodriguez, the oil-field boss.
The nation's largest producing area, the Cantarell offshore oil field in the Gulf of Mexico, is facing a similar decline, though on a much larger scale. Its current production of 2.1 million barrels per day -- which makes it the second-largest single oil field in the world, after the Ghawar field in Saudi Arabia -- is expected to fall to anywhere between 1.4 million and 520,000 barrels per day by 2008, according to government estimates.
If the worst-case projections turn out to be correct, Mexico's oil exports to the United States could decline by as much as 1 million barrels a day from its current 1.5 million.
Pemex predicts that the declines will be offset by new wells coming online in deepwater Gulf of Mexico and in the Chicontepec field in Veracruz state. However, many experts say both areas would require at least a decade of exploration and development before significant production begins.
"There is no quick fix for the Mexican oil industry, and it's very unclear where enough new output is going to come from," said David Shields, an energy industry consultant in Mexico City.
Pemex declined to make an official from Mexico City headquarters available to talk to The Chronicle.
Despite its troubles, Pemex is still a giant. It is the largest corporation in Mexico and the fifth-largest oil firm in the world, with average daily production in 2005 of about 3.3 million barrels of oil, 4.8 million cubic feet of natural gas and 435,000 barrels of natural gas liquids. It is the second-largest oil source of U.S. imported oil, after Canada, at a daily average of 1.9 million barrels.
The huge rise in international petroleum prices has been a godsend for the nation, if not for Pemex itself.
The price rise -- from about $12 per barrel in 1999 to more than $70 currently -- has injected tens of billions of dollars into the federal government's coffers. Pemex's revenues this year are expected to be about $89 billion, with 59 percent of this amount siphoned off by the government through tax and dividend payments totaling about $52 billion.
This flood of revenue has allowed Fox to opt for a conservative version of economic pump-priming. Instead of boosting spending, he has overseen strengthening government reserves and cutting federal borrowing, thus allowing bank credit to expand by almost 500 percent during his term, according to government data. The result has been an explosion of consumer purchases and home building.
Lopez Obrador hopes to spread around that wealth in a more traditional Mexican way -- slashing Pemex's gasoline pump prices, which average about $2.50 per gallon, and cutting taxes on natural gas and electricity. Many experts say that would make it impossible for Pemex to pay the multibillion-dollar price tags for new refineries and petrochemical plants while the company continues to pay high taxes to help Lopez Obrador pay for campaign promises such as pensions for the elderly poor.
"It's sheer populism to rely on oil revenues to subsidize prices," said Luis Rubio, president of the Center of Research for Development, a free-market think tank in Mexico City. "Lopez Obrador can't spend billions on price subsidies, billions on new infrastructure, and still take billions more from Pemex to help pay for his proposed social welfare programs. Especially after overall production starts to fall."
But earlier this month, as Lopez Obrador took the lead in most opinion polls, Calderon joined in with a promise to cut taxes on cooking gas and electricity, although not gasoline prices -- and only for the poor. "He's stealing my policies," Lopez Obrador complained, "and he's the one calling me a populist."
In recent years, Pemex's professional staff has been rent by protests and purges over the issue of privatization.
"The current management has tried to privatize as much as it could, but the results speak for themselves," said Francisco Garaicochea, a former chief of oil-field technology at Pemex who now leads a left-leaning group of retired company executives, Pemex Engineers Group of the 1917 Constitution. "We have talked with Lopez Obrador's advisers, and we are confident there would be a reversal of Pemex's mistaken strategy, its focus on only exporting raw materials rather than processed petroleum products."
In Tabasco, engineers who have been fired from the company complain that Pemex under the Fox administration has unnecessarily given billions of dollars of service contracts to U.S. companies such as Bechtel, Halliburton and Schlumberger.
"Calderon wants to privatize Pemex, but that's just a recipe for more corruption," said Ricardo Decle, a petroleum engineer who was frog-marched off his workplace by soldiers in 2004 as part of a purge of about 50 dissenting technical staff and is now chief of a group of local Pemex retirees. "In Pemex, there is no transparency, nobody watches over the contracts. For starters, they ask for a 10 percent (bribe) off the top of the price. When anyone complains, they are repressed. This is the way business is done here."
Feeling the criticism, some U.S. companies are mounting a feel-good public-relations counteroffensive. Halliburton, for example, has placed giant billboards along highways that show idyllic jungle wildlife scenes with the slogan, "We work to protect the environment."
"We need to industrialize, to move up the value-added chain," said Gonzalo Rodriguez as he toured the Bellota complex in the midday heat with a team of sweating Pemex engineers. Privatization is unproved, he said, provoking vigorous nods from his colleagues.
"Somebody said this is the era of plastics and chemicals, not oil, and that is true," he added, receiving more mumbles of support. "Mexico must find its own solutions."
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/06/30/MNGAAJN9JG1.DTL&hw=mexico+oil+reserv...
Jagman, you are the one that relies on charts and TA. I am the one who relies on fundamentals. Thanks for the support.
(OT)TA question for Jagman
The upper aroon crossed above the lower aroon. Does that mean an uptrend?
And the early nature may have given some folks an opportunity to do a quick read about hemi before their day started. It was not the kind of pr that is an investor magnet, thats due to Keith's preference to overperform and not make promises he cant keep. We need potential new investors to take a little time to read. With all the info on this board, in the Ibox, it does not take long to pique people's interest. Hope Friday night goes well. Hit another homerun and bring in some more people.
Lowman Happy Birthday. Maybe Hemi will give you and everyone else a present today. GLTY
What I liked best about the interview is that when Keith talked about a buyout it would be "based on oil and gas industry standards, not on stock price". For those longs waiting on that,possible eventuality, the stock price is really insignificant. Except it allows for more accumulation at cheap prices. For those looking to flip and move on. OOPs, wrong stock.
Good link for the ibox me thinks. Thanks Bedwards.
I am not sure I said that. Where longs end up is related to how many shares they have and when they sell. But if the value of our assets has at least doubled, and that can be inferred conservatively from the interview and the pr yesterday, then instead of fmv of at least a buck, now we are at least two bucks per share. This number is conservative and the situation is dynamic. Hemi is still leasing, still producing and still working on the undervalued share situation. And, obviously, this is not a momo play as you like to mention to people, as you are learning.
Not going to happen Jag. This is NOT a momo play as you like to say. It is a looonnnngggg term buy and hold. The more you ask for numbers and financials, the more Keith does the opposite. I love it. I am not here to flip. I am here to change my financial fortunes, as most longs are. Might as well buy more while low and chill. Maybe you were right in saying 4 or 5 years, by then all longs will be flush with cash.
Jagman sounds like hemi will be a buy for you in four or five years when it becomes a blue chip stock. And that would be double digit dollars I believe.
dont forget "non-reporting" and unaudited. lol
Good Pr.
Another 'tortoise-like' move by hemi. And I mean this in a good way. Keith is securing the leases BEFORE putting out numbers on how good they are which is smart. Talking about expected bpd is not viewed as credible unless one has trust in the CEO, which all of us do. Projected numbers and "we believe" statements are usually discounted on the street. I think we can believe them based on Keith's track record and the way he is conservative with estimates. Talking in terms of square miles instead of acres is exciting. I think there are two reasons we are not seeing a huge pop today.
1. Some selling into the news. Volume is large yet we did not see much movement.
2. The pr is not the kind that makes the average investor drop everything and start looking at hemi. WE understand the meaning and the long term implications but anyone not already familiar with hemi would not become over excited upon reading it.
I like the pace Keith is operating at. Slow and steady wins the race. GLAL
Hemi operating in stealth mode.
We are still waaaay undervalued and way under the radar.
Which is okay because oil is still being pumped, leases still being negotiated, oil and gas reserves in place and even growing, Wilshire still working on necessary measures for uplisting, Keith deciding how many more rigs will be purchased after the financing, Keith and Craig making decisions about next wells. Price still extremely attractive for fundamentalists.
Soon enough our cover will be blown by WBR, Wilshire pr, production pr, lease pr, or some other pr. Until then it is good to just add and be patient.
Ratings from stockinformationsystems.com. Second one might be worth a look.
90% DPBM
89% HMGP
87% GZFX
69% USFI
62% IFSL
62% NCHP
62% HDIA
62% PGMC
62% ATWT
62% RKMB
60% AMNI
59% KLGE
59% EVDR
58% CPHC
57% ACMI
57% SYGG
56% POWN
54% GLBM
53% PMGJ
53% FTVT
52% OTMN
52% MGWB
Oil shale — Colorado, Utah deposits rival OPEC reserve
By Joe Carroll
Bloomberg News
Colorado and Utah have as much oil as Saudi Arabia, Iran, Iraq, Venezuela, Nigeria, Kuwait, Libya, Angola, Algeria, Indonesia, Qatar and the United Arab Emirates combined.
That's not science fiction. Trapped in limestone up to 200 feet thick in the two Rocky Mountain states is enough so-called shale oil to rival OPEC and supply the U.S. for a century.
Exxon Mobil Corp. and Chevron Corp., the two biggest U.S. energy companies, and Royal Dutch Shell Plc are spending $100 million a year testing new methods to separate the oil from the stone for as little as $30 a barrel. A growing number of industry executives and analysts say new technology and persistently high prices make the idea feasible.
"The breakthrough is that now the oil companies have a way of getting this oil out of the ground without the massive energy and manpower costs that killed these projects in the 1970s," said Pete Stark, an analyst at IHS Inc., an Englewood, Colo., research firm. "All the shale rocks in the world are going to be revisited now to see how much oil they contain."
The U.S. imports two-thirds of its oil, spending $300 billion a year, or 40 percent of the record trade deficit. Every $10 increase in a barrel of crude costs an American household $700 a year, according to the Rand Corp., founded in 1946 to provide research for the U.S. military. Oil prices have risen 63 percent since 2004, and higher fuel costs have slowed growth in the world's largest economy to the lowest in four years.
The last effort to exploit the Colorado and Utah shale fields foundered in the 1980s after crude prices tumbled 72 percent, resulting in a multibillion-dollar loss for Exxon. Techniques developed to coax crude from tar sands in Alberta, 1,600 miles to the north, may help the U.S. projects' engineers.
"The potential for shale is large," said Joseph Stanislaw, senior energy adviser for Deloitte & Touche LLP and co-author with oil analyst Daniel Yergin of "The Commanding Heights: The Battle for the World Economy" (Simon & Schuster, 464 pages, $26). "Assuming the technology proves out, the size and scale of the reserves are significant."
Energy providers are investing in shale oil production because the reserves are large enough to generate higher returns than smaller fields in Oklahoma and Texas, where output is declining after eight decades.
Shale is also a more attractive investment than new U.S. refineries, which Shell and Chevron say may lose money as rising use of crop-based fuels such as ethanol lowers domestic gasoline demand. Exxon says it isn't interested in building new fuel plants in the U.S. because the company expects North American fuel consumption to peak by 2025.
"You're going to build refineries where demand is increasing, and that's the developing world," Scott Nauman, Exxon's manager of economics and energy planning, said in a May 18 presentation at a University of Chicago oil conference.
Shell's project
In the high desert near Rifle, Colo., Shell engineers are burying hundreds of steel rods 2,000 feet underground that will heat the shale to 700 degrees Fahrenheit, a temperature at which Teflon melts.
The heat will be applied for the next four years to convert the hydrocarbons from dead plants and plankton, once part of a prehistoric lake, into high-quality crude that is equal parts jet fuel, diesel and naphtha, the main ingredient in gasoline.
Chevron, which helped build the Saudi Arabian energy industry when it struck oil in the kingdom in 1938, plans to shatter 200-foot thick layers of shale deep underground, said Robert Lestz, the company's oil-shale technology manager.
Rather than using heat to transform the shale into crude, Chevron plans to saturate the rubble with chemicals to convert it. The method will reduce power needs and production costs, Lestz said in a May 24 interview. Using chemical reactions to get oil from shale also means fewer byproducts such as ash and fewer greenhouse gases, he said.
Chevron scientists are working with researchers at the Los Alamos National Laboratory in New Mexico to determine which chemicals work best for converting shale to crude oil. Shell's heating technique amounts to "a brute-force approach," said Lestz, who is based in Houston.
Raytheon Co., the maker of Tomahawk missiles and the first microwave ovens, is developing a process that would use radio waves to cook the shale.
Exxon Mobil, based in Irving, Texas, plans to shoot particles of petroleum coke, a waste by-product of oil refining, into cracks in the shale. The coke will be electrically charged to create a subterranean hot plate that will cook the shale until it turns into crude. The company declined to discuss the progress of its oil shale tests.
'Oil is here'
"These are quite remarkable technological approaches," said Jeremy Boak, a geologist at the Colorado School of Mines in Golden, Colo., who spent 11 years cleaning up radioactive waste and disposing of weapons-grade plutonium at U.S. government sites. "The oil companies don't have the exploration problem of finding resources to drill. We know the oil is here. It's just a matter of getting it out."
U.S. oil shale deposits likely hold 1.5 trillion barrels of oil, according to Jack Dyni, a geologist emeritus at the U.S. Geological Survey. All 12 OPEC countries combined have proved crude oil reserves of about 911 billion barrels, led by Saudi Arabia, with 264.2 billion barrels, according to statistics compiled by BP Plc.
Skeptics of the potential for shale oil include Cathy Kay, an organizer for the environmental group Western Colorado Congress, who says the techniques will drain water supplies, scar the landscape and require so much power the skies will be choked with smoke from coal-fed generators.
"They are going to do absolutely massive environmental damage," said Kay, a South Africa native who's been spearheading the Grand Junction, Colo., group's anti-shale campaign since September.
"Why don't these companies invest these giant sums of money developing the cheapest, cleverest solar panel or geothermal process, instead of chasing this elusive oil?" Kay asked.
Shell, based in the Hague, estimates it can extract oil from Colorado shale for $30 a barrel, less than half the recent price of about $66 for benchmark New York futures.
Shell's process includes surrounding each shale field with an underground wall of ice. The so-called freeze walls are to prevent groundwater from swamping the heating rods and to protect the local water supply from contamination as the organic material in the rocks turns to oil, according to Terry O'Connor, the Shell vice president in charge of the company's Colorado shale project.
500,000 barrels
"There's a lot of testing to be done," O'Connor said in a May 24 interview. "We're proceeding cautiously."
O'Connor declined to say how much oil Shell expects it could produce from shale. Stark at IHS and other analysts said Shell expects to get 500,000 barrels a day from its project, 25 percent more than comes from Alaska's Prudhoe Bay, the largest U.S. oil field.
"This is an amazing resource," said James Bartis, an oil analyst at Rand, based in Santa Monica, Calif. Bartis says that success in the Rockies could cut crude prices by 5 percent, saving American consumers $20 billion a year.
"It's been raised before as a panacea for impending shortages, but never before has it been shown to be competitive with conventional oil," Bartis said.
Drillers, pipe-makers and metal fabricators such as Nabors Industries Ltd. and closely held UOP LLC will be the first to profit as Shell, Chevron and Exxon drill thousands of wells a half-mile underground by 2011.
The oil companies may begin pumping commercial quantities of oil from Colorado shale within a decade, about as long as Chevron will need to develop the 500 million-barrel Jack prospect in the deepwater Gulf of Mexico, according to Stark, who is a former Mobil Corp. geologist.
"Given the state of the oil market, more and more effort is being put into making shale a viable source," said Stanislaw. He estimated it will take six to eight years before oil companies perfect their extraction methods. "The timeframe is very long," he said.
In the 1970s, oil shale efforts involved mile-wide strip mines and factory-size cookers to boil giant limestone boulders. This time, no company expects to bring in front-loaders, heavy-duty dump trucks or thousands of miners to haul shale from open pits.
"The old technique required them to dig the equivalent of a new Panama Canal every month," said former Colorado Gov. Richard Lamm, whose tenure from 1975 to 1987 included the last attempt to extract oil from shale.
'More sane process'
"This new approach is a much more sane process, but that's all relative," Lamm said in an interview. "They're doing this in an immensely fragile area where wagon ruts from the Oregon Trail in the 1840s are still visible. It doesn't excite me because I think they're about to indelibly change our state."
Local residents are also leery, recalling the ghost towns and job losses left behind from the last shale boom and bust.
Battlement Mesa, Colo., a town Exxon built to house an expected 25,000 shale workers, was abandoned when the company shut its mine on May 2, 1982, a day locals still refer to as "Black Sunday." The town is now a retirement community.
"I don't think this is going to go anywhere," said John Savage, an attorney in Rifle whose father started a shale-oil company in 1956. "It's just too tough to get that oil out of the ground. There's trillions of barrels down there, but there's too much rock on top of it."
Oil companies also are exploring shale fields in Jordan, Morocco and Australia, though preliminary assessments indicate none is as oil-rich as the Colorado and Utah deposits. The final approval for full-scale projects in the U.S. won't be made until after 2010.
"If we waited a few million years, all this stuff would turn to oil," Rand's Bartis says. "Some people don't want to wait that long."
http://deseretnews.com/dn/view/0,1249,660227927,00.html
Outstanding!!!
That happens to be my street address but I accept the compliment. You have a lot to add to the board with your knowledge and experience. I like it when you are more balanced regarding hemi. I hope you have a great weekend.