In a bubble, it is feasible to produce at around $75-$90/barrel starting about 10 years from now.

Jul.25, 2008 in U.S Hot Stocks

However, realize that production of crude from shale produces an intensely low Energy Returned on Energy Invested (EROEI) that is magnitudes lower than typical drilling processes. It also requires tons of water to produce the shale.

Considering our shale is located in some of the driest areas of our country that are far, far away from our strongest electrical grids, how is it feasible to produce at Shell’s estimates of “$75/barrel to start and $30/barrel after 12 years”. It will require billions and billions of dollars of investment in power grids, pipelines, and other infrastructure that will ravage these areas of our country. All to support carbon based fuels? Is this really the right path for our country?

In particular, the water crisis seen in the mid-west is a byproduct of Colorado citizens sucking up all the water coming from the Rocky Mountains. None of Shells estimates take into account skyrocketing prices and increasing scarcity of water and the need for that water to be fed into our bread basket, not the scrublands of Utah and Western Colorado to produce oil. One cannot make water out of nothing. If the shale process stalls due to a lack of water for citizens and farmland to the east of the Rockies, then what?

I won’t argue that, in current economics, the augmentation would be important to reduce the speculation that led to our currently high oil prices… the question is at what cost to our land and our pockets?

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