Editor’s Note:  In a recent Outpost column on our site, Colorado Energy News was taken to task by Jeremy Boak, Director of the Center for Oil Shale Technology and Research at the Colorado School of Mines in Golden. Mr. Boak complained of our oil shale coverage, which he described as unbalanced, and in his article, he also faulted  the Headwaters Economics report, “Oil Shale in the West: 14 Unanswered Questions.” In an attempt to present all sides of the oil shale issue, we are publishing a response to Mr. Boak’s comments authored by Julia Haggerty of Headwaters Economics.

By Julia Haggerty

Headwaters Economics appreciates the opportunity to respond to Mr. Boak’s criticism of our June 2009 report, Oil Shale in the West: 14 Unanswered Questions. We appreciate his insights and thank him for the opportunity to benefit from his review.

Boak accurately pointed out a mistake we made regarding the scale of Saudi Arabia’s current daily oil production, which we understated significantly.  Nonetheless, according to most scenarios, a commercial-scale oil shale industry would be so large as to dwarf any industrial development the region has ever seen.  A better way to describe the scale of the oil shale industry as envisioned under the Bush Administration’s Strategic Task Force on Unconventional Fuels “accelerated scenario” would be to state that, at 2.5 million barrels of oil/day, the industry would rank somewhere around 10th or 11th in daily oil production among nations, according to 2008 production figures.

We took Boak up on his invitation to attend to the 29th Annual Oil Shale Symposium at the Colorado School of Mines. That experience prompted us to issue an update to our 14 Questions report that identifies emerging trends in oil shale research and development not mentioned in our June 2009 report. As our update notes, industry efforts are focused on overcoming a host of daunting technical challenges around first understanding and second mitigating the environmental, technical, public policy, and financial hurdles needed to bring oil shale profitably to market. The presentations we witnessed suggested that, while in many cases inspired, the majority of these efforts for now remain in their infancy.

In fact, what we concluded above all from the Conference–and what our 14 Questions report emphasizes–is exactly what Boak himself wrote in his post here, “Economic viability of any amount does remain to be validated, as no production has yet been established.” As admittedly skeptical observers of the oil shale industry, we believe that the public will be best served by industry (and the academic community it helps to support) that actively shares the information it is generating in peer-reviewed publications based on contemporary data. In his post, Mr. Boak criticized our use of “outdated” sources–namely the RAND Corporation’s extensive evaluation of oil shale production for the DOE in 2005. That report, like many white papers written about oil shale, relies heavily on information generated during the 1970s and 1980s. However, a critical difference between the RAND report and some of the more recent white papers generated by the Department of Energy under the Bush Administration is transparency regarding sources.

Consider the economic model that informs optimistic estimates of the economic viability of oil shale released by the national Strategic Unconventional Fuels Task Force (a product of the 2005 Energy Policy Act). To generate a key model input–the cost of production, the model designers collaborated with industry. While the results of the model are public, the details behind production cost estimates are considered proprietary and are not available for review. With regards to that particular economic model, the public is forced to take industry’s word for it that a commercial oil shale industry is viable under various fiscal and regulatory scenarios. Thus, while the RAND report is becoming increasingly dated, we were unable to identify more contemporary sources with a similar degree of transparency and thus credibility.

This lack of peer-reviewed, contemporary research is an issue that Boak and the Department of Energy are keen to remediate: Mr. Boak’s co-authorship of a forthcoming book chapter with Stanford University expert Adam Brandt notes, among other things, that lifecycle carbon dioxide emissions for oil shale derived fuels are likely to be 25 to 75 percent greater than those of conventional oil, is just such a start. As we note in our research update, the DOE/NPOSR has funded a number of promising studies that are due out late in this year and in 2011. We look forward to the results of these efforts.

Julia Haggerty PhD, Headwaters Economics, julia@headwaterseconomics.org