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Car Forum / Driving, Maintenance, Tuning / Driving / February 2006

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Here's The Real Problem With Domestic Oil Production

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Dave Head - 04 Feb 2006 17:05 GMT
Here's a link to an interesting study on energy production from oil shale in
the US.

http://www.rand.org/pubs/monographs/2005/RAND_MG414.sum.pdf

The significant paragraph is:

"A firm decision to commit funds to such a venture is at least six years away
because that is the minimum length of time for scale-up and process
confirmation work needed to obtain the technical and environmental data
required for the design and permitting of a first-of-a-kind commercial
operation. At least an additional six to eight years will be required to
permit, design, construct, shake down, and confirm performance of that initial
commercial operation. Consequently, at least 12 and possibly more years will
elapse before oil shale development will reach the production growth phase.
Under high growth assumptions, an oil shale production level of 1 million
barrels per day is probably more than 20 years in the future, and 3 million
barrels per day is probably more than 30 years into the future. "

This is the sort of nonsense that is killing us.  We can'd do _anything_ in
this country any more, except flip burgers, trade stocks, and sue each other
because of "environmental data" gathering and the "permitting process".

Look, we're in a crisis, both in terms of the lifeblood of our economy, oil,
and the vulnerabilities we're exposed to by relying on it from our enemies.
The government should get the hell out of the way, allow whoever thinks they
can do it to set up shale mines and retorts, allow them to work 24/7/365 to
produce as much oil as they can, and gather the data as they go.  Meanwhile,
they produce oil, we refine it (oops - we have to build more refineries, which
once again is a matter of getting the government to get the hell out of the way
with their prohibitive environmental studies (read not too long ago that the
environmental impact statement for 1 refinery is something like 300 million
dollars to prepare)) and use/sell it _while_ they gather their data.  Whoever
has the best process will produce the most oil, make the most money, and others
will adopt that process.  Meanwhile, we get domestic oil production started.

Here's some people that think they can do it:

http://deseretnews.com/dn/view/0,1249,635180294,00.html

We should let 'em, and encourage them to work as quickly as possible.

C'mon, people, its not our technical expertise, our our lack of willingness to
solve the problem.  Its the damned obstructionists and especially those in
government that is the problem.

Dave Head
Brent P - 05 Feb 2006 18:55 GMT
> Look, we're in a crisis, both in terms of the lifeblood of our economy, oil,
> and the vulnerabilities we're exposed to by relying on it from our enemies.
[quoted text clipped - 8 lines]
> has the best process will produce the most oil, make the most money, and others
> will adopt that process.  Meanwhile, we get domestic oil production started.

There is a breakdown in the free market and the existing players are
taking full advantage of it. I don't see big oil doing anything to have
these regulations removed because in the end, they act as market
protections for them. Nobody else can come into the game and under cut
them without billions in capital.
Raybender - 09 Feb 2006 00:17 GMT
> > Look, we're in a crisis, both in terms of the lifeblood of our economy, oil,
> > and the vulnerabilities we're exposed to by relying on it from our enemies.
[quoted text clipped - 14 lines]
> protections for them. Nobody else can come into the game and under cut
> them without billions in capital.

Oh come on.  The "barrier to entry" into the oil business is high enough without any
of these regulations.  What the regulations DO DO, HOWEVER, is prevent expansion by
the current oil companies, and therefore competition among themselves, because they
cannot determine whether or not they will have a reasonable return on investment for
capital spent expanding refineries and the like.  The regulations throw too many
variables into the mix, as well as lots of uncertainty with the timeline for
approvals.

Frank
Brent P - 09 Feb 2006 03:11 GMT
>> There is a breakdown in the free market and the existing players are
>> taking full advantage of it. I don't see big oil doing anything to have
>> these regulations removed because in the end, they act as market
>> protections for them. Nobody else can come into the game and under cut
>> them without billions in capital.

> Oh come on.  The "barrier to entry" into the oil business is high enough without any
> of these regulations.

It's not so much the cost but the TIME. Figure a decade of political time
to build a refinery.

> What the regulations DO DO, HOWEVER, is prevent expansion by
> the current oil companies, and therefore competition among themselves, because they
> cannot determine whether or not they will have a reasonable return on investment for
> capital spent expanding refineries and the like.  The regulations throw too many
> variables into the mix, as well as lots of uncertainty with the timeline for
> approvals.

There is no need to compete with each other when everyone is running at
capacity. One of the reasons independents get bought up and shut down.
It takes so much time for anyone to get into the game, the situation will
be different by then so, yes, that's a big part of the barrier that is
created. I've mentioned before either here or other places or both that
the time is just as much a barrier as the cost, probably more so.
 
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