Posted: Fri Jul 07, 2006 7:49 am Post subject: Oil Sands Cost Explosion
"As we know, the oil sands and oil shales of Canada are put forward as one of the reasons why oil isn’t running out, why there is still a century or more of supplies to use. So this doesn’t look good:
However, before the peak oil crowd start crowing about how it shows that the process will never make sense, will never really amount to much, it’s worth looking at what (well, at least what Shell say) is the problem. It isn’t the process itself, isn’t something wrong with the whole idea. It’s simply a result of an overheated market:"
and also
"SHELL is facing a cost explosion in the expansion of the Athabasca Oil Sands Project, a mining venture that extracts oil from bitumen deposits in the Canadian province of Alberta.
The first phase of expansion, intended to add 100,000 barrels daily to the current 155,000 barrel per day output was budgeted at C$7.3 billion (£3.6 billion) only a year ago. It is now expected to cost as much as C$11 billion, according to estimates published by Western Oil Sands, Shell’s partner in the project.
Shell Canada said yesterday that it was conducting an assurance review of the project’s cost, pending a final investment decision later this year. Planned in three phases, the Athabasca expansion is intended to raise output to 500,000 bpd, and represents a large part of Shell’s oil production ambitions.
Shell admitted to “significant upward pressure on capital costs” but declined to confirm its partner’s prediction of a 50 per cent increase."
Joined: Oct 17, 2005 Posts: 68 Location: The Netherlands
Posted: Fri Jul 07, 2006 8:15 am Post subject: Re: Oil Sands Cost Explosion
Quote:
Oil sands will be too expensive to develop having a ngative EROEI?
I guess you mean an EROEI between 0 and 1.
It is quite possible that oil companies will be interested in fuels that have an EROEI below 1. When the result is a liquid 'gasoline' then this might be worth the loss of energy. So therefor, tar, coal, natural gas, corn and switchgrass can all go into one side of the factory, as long as some commercially viable gasoline replacement comes out on the other end. The corn-to-ethanol factories in the Midwest use coal for the transformation process.
Posted: Fri Jul 07, 2006 8:24 am Post subject: Re: Oil Sands Cost Explosion
KevO wrote:
What's it all mean? Oil sands will be too expensive to develop having a ngative EROEI?
Most probably: Yes
The same goes for biofuels. At $20 oil, biofuels will be viable at $40, at $40 oil, biofuels will be viable at $60 etc, etc.
The infrastructure used to extract the tar sands was built with $20-$50 oil, but with infrastructure built with $75 oil, the tar sands will yield $100 oil. And so on and so on....
Joined: Sep 14, 2004 Posts: 6162 Location: Rural Virginia
Posted: Fri Jul 07, 2006 9:14 am Post subject: Re: Oil Sands Cost Explosion
As conventional sources of fuels deplete, the cost of "alternatives" will continue to rise along with the cost of everything else---another reason why we're screwed. _________________ "Actually, humans died out long ago."
---Abused, abandoned hunting dog
"Things have entered a stage where the only change that is possible is for things to get worse."
---Me and my brother
Posted: Fri Jul 07, 2006 10:14 am Post subject: Re: Oil Sands Cost Explosion
As long as there is a store of moderately inexpensive petroleum flowing alt fuel experiments will continue. Processes which have a miserable to moderate energy return (like super deep-water crude, tar sands, stranded gas, etc.) will continue to run on an infrastructure of that inexpensive petroleum and with government and industry "investment" monies. The crap energy return is merely lost in the mix.
Processes which have scant positive energy returns and long miserable track records (coal to liquids, oil shale, etc. )will continue to burn research and development money but will never be built. Everybody knows the Germans lost the war and Apartheid died with FT.
Now the marginally positive (to grossely negative) energy returns from some biofuels are a magic siren calling us to vast stupidity. That is because the engineer and accountancy types who fund these projects;
1. know nothing about agriculture (and sincerely believe it is the next great thing, listen to self-serving academics and ag associations (like the Corn Growers) who are pulling the green rug over everyone's eyes, and are patriotic and want to believe in "energy independence") and
2. entry fees are pretty cheap. It doesn't cost a lot to build a mill and a fermenter.
Now all these high-tech industrial processes depend on cheap petroleum for development, prototyping, and installation. As long as that drug is available people can continue to delude themselves in thinking the party will continue. Once any and all of these alt fuel facilities are up and running energy inflation will cause energy production costs to inflate in lockstep with materials that are produced with same petroleum. No one will ever make a cent and the investors will drift away to their next gimmick. (bunkers, horse drawn plows, gold?) _________________ ree rah rip ram. sunofabitch godamn. hidey didey christ almighty. rah rah crap
Posted: Fri Jul 07, 2006 10:18 am Post subject: Re: Oil Sands Cost Explosion
Heineken said:
Quote:
As conventional sources of fuels deplete, the cost of "alternatives" will continue to rise along with the cost of everything else---another reason why we're screwed.
Exactly the problem. This is a 1’st and 2’nd Law problem, which no one, even the oil companies seem to understand. The incremental energy output of oil is growing slower than the incremental energy input that is necessary to extract it. The slope of the ERoEI vs. time graph for conventional oil is at or very close to -1. As the slope of conventional oil’s ERoEI falls toward zero, above -1, the ERoEI of most non-conventional sources will go negative. This is because most of them are highly dependent on conventional oil for their processing and maintenance.
Actually, Peak Oil is really just a hydrogen shortage. As long as cheap hydrogen is available, it is true that you can make all the hydrocarbons you want and make them relatively cheap. We're up to our ears in carbon; the coveted cheap hydrogen however is becoming scarce. For the uninitiated, we make hydrogen from natural gas. _________________ "That's the problem with mercy, kid... It just ain't professional" - Fast Eddie, The Color of Money
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ree rah rip ram. sunofabitch godamn. hidey didey christ almighty. rah rah crap 
