Lecture 8 Summary and Notes

Some important concepts for the day...

1. The term "resources" describes the entirety of some MSI (such as oil) in a defined area (such as an oil reservoir or a country) while the term "reserve" describes the fraction of the resources that are technically, energetically, and economically recoverable. The % of a resource that is designated as a reserve is fluid and can change with changes in price or available technology.

2. The EIA predicts that the share of liquid petroleum production from unconventional sources will at least double by 2035. The EIA is smoking crack if it thinks that crude oil will sell for $50/barrel in 2035.

3. Three factors are driving the increase in production from unconventional hydrocarbon resources:

a. declining availability of hydrocarbons from conventional sources

b. increasing price of petroleum

c. advancements in technology that allow for more effective and/or cheaper exploitation of unconventional petroleum reserves.

4. The cost of production for petroleum from unconventional sources is substantially higher than the cost of production for petroleum from conventional sources; this means that petroleum from many unconventional sources is uneconomic at moderate to low crude oil prices.

5. Some of the technological improvements that have allowed for the exploitation of unconventional sources of petroleum are:

a. enhanced recovery (steamflooding (injection of hot water) and CO2 injection)

b. directional drilling (aka horizontal drilling)

c. hydraulic fracturing

You should be able to describe how steamflooding and CO2 injection methods work, why they are used, as well as any potential problems. You should also be able to describe why directional drilling is an important technological advancement in the exploitation of certain types of petroleum reserves.

6. So far, we have discussed domestic sources of unconventional petroleum from Kern County, CA, the Bakken Formation in and around ND, and the oil shale of the Green River Formation (WY, UT, and CO). You should be able to describe the factors that have prevented these systems from being conventional petroleum reserves.

Slides from today's lecture are on Sakai. Tomorrow, we will continue our discussion of unconventional petroleum with a look and shale gas and fracking; the reading for tomorrow can be found here.