EUREKA!

CRUDE OIL IS A RENEWABLE RESOURCE

It may seem hard to believe, but crude oil actually is a renewable resource, and it is being renewed right now quite naturally.

First we need to dispense with the misbegotten notion my 4th grade teacher proclaimed, “crude oil comes from dinosaurs”. At 9 years old I knew she was out to lunch. Just how would billions of dinosaurs come together and become buried before they had a chance to rot, leaving behind just the oil? The chemistry of that notion is totally wrong.

The real source of crude oil was probably established through an experiment performed by a company in Houston in 2004. They decided to test a Russian theory dating from the 1960’s that states that crude oil comes from plankton in the sea.

Here is the theory:

Phytoplankton in the sea perform photosynthesis and absorb CO2 from the air. The phytoplankton are eaten by zooplankton that produce tiny shells. When the zooplankton die, they fall to the bottom of the sea. Their organic matter rots, but their shells leave behind Calcium Carbonate, CaCO3, a durable carbon containing compound. Over millions of years the calcium carbonate becomes bonded together into solid marble or limestone.

Sometimes that marble is thrust up out of the sea by seismic forces as it is in places like Vermont. In other areas, it can be thrust downward into the earth (subducted). When it reaches a depth of about 60 miles, the extreme pressure and heat causes Calcium Carbonate to react with water and iron oxide to produce natural gas (methane, CH4). When it reaches a depth of about 100 miles, it is converted to crude oil.

Note that when we burn crude oil, CO2 is released to feed the plankton, to produce more calcium carbonate, to produce more oil… thus crude oil is a renewable resource.

So how does the Russian theory stack up? The Houston experiment found that crude oil was produced in exactly the composition and proportions we find in the ground today. It makes perfect sense from a chemistry standpoint. It also agrees with everything we see in the distribution of crude oil and where we find it in the Earth.

The crude oil we find is percolating UP from far below, where we discover it trapped in the Earth. The crude we see is like the coffee in the small glass bubble on the top of a percolator – most of it is down below.

There’s a very interesting oil well on an island off the coast of Louisiana. a few years ago it appeared to be reaching the end of its productive life, its production was declining.

Suddenly its oil production went up and the oil changed from a medium crude to a light crude! This means a younger source of oil was coming up from below.

It’s also worth noting that in the 70’s Saudi Arabian crude was predicted to have run out by now, yet their reserves have risen. In all probability, younger crude is coming up from below.

So what was the problem with crude oil prices? A few years ago the surge in demand from China and India upset the balance and new oil production could not be ramped up fast enough to maintain a healthy margin of supply over demand. We also had a problem with hedge funds speculating billions and driving the cost of crude to unrealistic levels.

Fundamentally there was a gigantic obstacle to free market stability in oil, it was the simple fact that Arabian gulf states can produce oil for $2/barrel at levels as high as they wish, if they install adequate infrastructure.

On the other hand, producing the oil we need in the US costs more than $30/barrel. that might look good when oil is $70/barrel, but who would want to risk the investment if the Saudis could cut them off at the knees at any time?

As the population of the Arab oil states became dependent upon high oil revenue and Russia expanded production, they lost control of the price of oil. We had huge amounts of oil in the ground, the problem was the cost of getting it out.

Fortunately there was a technical solution – horizontal drilling with hydraulic fracturing. The Saudis and Russians tried to derail it by claiming that fracking was dangerous and used toxic chemicals. There is no reason to use toxic chemicals in fracking. It is simply an ingenious solution to the problem. It has reopened the Permian Basin in West Texas where there are thousands of old, capped wells and the geology is fully understood and mapped. There is no exploration risk, and extraction is cheap and practical. There is plentiful, cheap oil that will last for generations. On a $7 million investment, they are getting 1,500 barrels of crude oil a day with a 93% internal rate of return.

Of course we could all subject ourselves to battery powered cars, but note, no one has come up with a practical battery. A lithium battery typically loses 20% of its capacity per year. How many people would really want a car that had a range of 250 miles when new, that dropped to 200/150/100/50/0 miles as the years passed? After 3 years they would likely want a new battery, but it would probably cost them $10,000 or more. Tesla deals with the problem by downrating the battery. This minimizes the damage caused each time you discharge it. The reason lithium batteries are so expensive is because they contain a lot of cobalt along with the lithium. Cobalt is expensive. It comes from Russia and Africa.

I love the idea of an electric car, but not with any batteries that exist today. Imagine on a cold day having to choose between heating the car with the battery and having a range of 50 miles, or wearing a snowmobile suit so you can drive 150 miles. Air conditioning? Forget it. Leave the windows open. It would still be fun to drive on nice days – if you can afford it. If money is no object and you are retired living in Florida, you can drive an electric car to the grocery store and plug it in when you get home – as long as all your neighbors can’t afford an electric car and pull down the power grid.

To me, a practical car would have to fully recharge in 5 minutes, the amount of time it takes to refuel a gasoline or diesel car. To build just one recharge station to do that with just 8 chargers would require a very large transformer substation. It would require power comparable to the largest snowmaking systems in America today. Moreover, no one knows how to build a plug and cable to safely deliver that amount of current to the battery or keep the battery from overheating, catching fire, and exploding. That seems to be lost on the people advocating conversion to electric automobiles.

So it all comes down to cost and practicality. We need cheap energy and oil is nearly perfect for transportation purposes. It packs a tremendous mount of energy per gallon, is conveniently pumped, and produces a nice CO2 feedstock for plankton.

We take it for granted that we can pump enough energy into a gasoline car in 5 minutes to hurtle it down the road for 400 miles, and repeat that indefinitely. From a technology standpoint, it is actually breath taking and people should appreciate it.

China is moving to convert their cheap coal to oil. It’s not a practical process as you lose half the energy in the coal during conversion and the equipment is expensive, but China’s costs are so low, they may make it work. Importing oil is very expensive to China at current exchange rates.

There’s probably oil in the South China Sea. That’s why China is trying to gain control of it and is in conflict with Vietnam, Japan, and the Philippines.

So why is it very few people have heard about the Houston experiment? It has the distinct ring of truth, and it is probably the most important scientific experiment performed so far this century. It may be that journalists just don’t understand the significance, or they may still believe that crude oil comes from dinosaurs.

It’s good to know that crude oil is being renewed.

Fergus S. Smith

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