WSP07533 - Laserfiche WebLink

Home Browse Search

Oil Shale's Uncertain Place in the Energy Picture "He Is the one man who has done more than anyone else to alert us to 'he problems our nalion faces on energy." So said Intedor Secretary Rogers Mor- ton of his formsr assistant secretary for mineral resources. Hollis M. Dole, who now is senior executive in charge of the Colony Development OperatIon head- quartered in Denver, Colony is a cansor- /lurn of companies studying the feasIbility 01 building a commercial oil Shale plant In Colorado's Piceance Basin. In the following interview by Lee Olson, member 01 The Post's edlt~ial page staff. Dole talks about oil shale and energy. aUESTlON. Oil shale has be~n a source of luel in somB countrIes lor 100 years or mors. Why has the United Slates. which has such large reserves, not developed its oil shale? ANSWER. I think it is practically criml~ nal that U.S. oil shale hasn't been devel- oped belore now because here we have the largest known energy resource in the world. And we really do not have the ex- pertise to actually know how much It costs to develOp it, what processes are best. We don't really know the problems 01 environment. despite all 01 our studies, and we will not know until commerCial plants are built. We kno..... very httle about a commercial industry. Q. Why Is this? A. Our approach to energy over the years has been that we want it 8S cheap 8S .....e can get it. We were able to gi3t cheap oil domestically from 1920 to 1955 and then. when that got more expensive. we got cheap oil from overseas tram '955 to the present. In other .....ords. the user of energy was concerned about one thing: prIce, He was not concerned with what we're looking at now; a secure suffi~ ciency of supply. Q. When did our petroleum reserves begin to weaken? A. It has been evIdent for 10 to 15 years but it did not come home to us until about 1971 that we were unable to main- tain our consumption demands. Up 'til about 1969 we had a shut-in supply of oil. If vou'lI recall. when oil was cut oN in 1967 by the Arab countries, Europe had a deficiency. This was made up Irom the United States' shut-in supply. But today when the Arabs shut off our Oil, we and the rest of the world feel the eHects im- mediately. We're producing flat~out on oil, we're producing 1Iat--out on gas. and we're running farther' behind each day. Q. Where does coal fit Into the picture? . . A. The president has said that never again wilt we be placed in a position where we can be blackmailed on energy . _ _ we will never again be put In a po- sition where turning off the U.S. energy supply will be in command or someone outside of our country, whose aspirations might be different than ours. Theretore. we should become sell-sufficient and coal, as well as oil shale. Will be part or that sell-sufficiency. Q. How do we become self-sufficient? A. ThiS country has more energy re- sources than any other country with the possible exception of Russia. But they're not in the forms we're used to using. namely liquids and gaseous forms. We need to explore the continental shelf for more oil (we've only explored about 5 per cent of it) and we need to develop coal a lot more than we have. We have a ca- pability in coal that is very great. We need to look at geothermal energy; we need to look at solar power; we need to look at oil shale. There are many options in energy that we should be ellercising that can help us achieve self-sufficiency. But It is going to take determination and time. Q. How large a place will shale oc- cupy? A. 1 daub! very much that shale oil wlll supply more Ihan 5 to 7 per cent of our energy by the laner part of this century, On the other hand, 1 doubt if geothermal sources will contribute very substantially. Coal. which has been going down In use. produced 50 per cent of our needs 50 years ago. . _ now it"s down to around 17 per cent. Coal should be up to around 30 per cent. We should go forward WIth nuclear power. All of these things give you the capability of an energy supply that will keep factories running. houses warm and jobs available, Put these all to- gether and you can plan to be warm and you can have a pay cheCk and you can plan a vacation without worrying tnat other people are gOing to dictate what you do. Q, How do we get there? A. There are two lactors In the equa. tlon, In the past we have emphasized onty one factor; cheapness But we want 8 certain supply-the second factor-and to get it means energy is gomg to be more ellpensive. But someday it could be that our cost of production of shai9 oil could very well set the world price 01 oil. Q. If you can produce shale 011 8t, say, $8 e. barrel, then that could become the worl~ petroleum. price? A. If you know how to do that. That's Important that you know how to do it at that price. But we won.t know until we try. Q. But suppose the Mideast and North African nations say. "Okay, now. we're going to sell petroleum for $4 a barrel." . . . where does that leave. oil shale at $6. Do you shut down the shale plants? A. My reply Is Ihat it is the job of the energy industries to produce energy tor the economy of the United Slates. The job 01 government is to assure thai we will have a secure supply. The government Will have to consider whether It wants to play the yo-yo game With those govern. ments who want to influence our busi. ness. Is the government going to let them (the Mideast and other foreign prOducers) tell us how our energy is to be devel- oped? Or will the government give the people of the United States a planning base on which a secure and adequate supply can be developed? Q. How can so little dependence on foreign supply cause so much havoc? A. The reason the Arab nations have caused such a hassle is multi-faceted. When the federal government in 1964 al- lowed Iree importation of residual fuel into the East Coast it did two things: It drove all coal-Ilred electric generatmg plants east of the Ohio RlVer out of bUSiness. It (Cheap lorelgn residual oil) also took hold as a major housing fuel and put homes on an oil dependency. That drove many coal mines out 0' bUSiness and, in effect. caused the overseas export of our relin~ ery capacity. Even when you only pinch a little blt it hurts. Q_ The Imported amount Is small but it hurts? A. That's right. You mlghl use the old average bit - the guy who drowned crossing the river that had an average depth of two leet. But out in the middle It was a lot deeper. Q. $0 we have to make sacrifices for security? A. Yes. But people who wanl only cheap oil forget about adequacy of sup- ply. Okay_ If we develop our coal industry, our offshore oil, our nuclear mdustry, our geothermal potential, our oil shale in- dustry, these are all sources 01 energy which cost us more than it costs the Arab states to produce their oil. Maybe the ex- ,porting countries are going to see how much they can get for their 011 and we can.t blame them too much for thaI. And we're going to have to play the game at developing the supplementary sources In order that the foreign sources will not get too high. It's going to be an International game and I'll tell you what is at stake: the economic well-being of the world and that translates directly into peace in the world. Q. Then the oil shale In northwest Cot- orado could be a place where we decide the future well-being of the world? A Not only oil shale - I think too much emphasis is being placed on oil shale. It has to be placed on all energy sources. But I think that if you take these supple. mentary energy sources away from de- velopment - 11 the climate develops where it Is Impossible to develop these supplementary sources - then I think that what you are plaYing with is peace In the world. Q. Is it possible that when we get Into big olf-shore development that this source Is going to compete against oil shale so strongly that the investment here will not look that 9ood? A. Take a look at the supply-demand gap; it's not a matter of either/or. It's a matter of everything we can get. In the past oil shale had to compete with con- ventional oil and gas. Today I do not think it IS a m8Mer 01 oil shale competing With coal or coal with oil. It is now that we need to exercise all our options. Q. How does the government guaran. tee price protection lor shale and other new supplementary supplies? A. There are a number of things. The government can guarantee the techno- logy: train the scientists, engineers and technologists. The manpower shortage Is 8 major problem. The federal government should go to the stales with an equlva4 lent 01 the land grant COllege program in agriculture. which changed the world through the "green revolution." W. can do something similar in energy. The government also can supply capi- tal through guaranteed loans. It will cost $300 to $400 million 10 develop oil shale. We're going to have to borrow. If govern- ment would say. "we'll guerantee 50 per cent of the risk," the banks would then say, "no problem:' Other ways the government could underwrite shale costs would be mandatory oil import restrictions such as it used during the 1950s and 19605. Or the government can guarantee the price of the product by saying it will purchase all at a lupported price In the . :same way the government supports the price of wheat. m,,( P,&! - .-07,/71- By LEE OLSON Q, What about the environmental "cost" 01 an oil shale industry? A. To be a bUSinessman today. you have to be an environmenlalist. I can as- sure you that we are gOing to take a lot better care of the environment than ever belore. Right now in the Parachute Creek area (where COlony ha~ an ellperlmental shale plant). .<IS the result of our investi- gatIons, we know more - by several orders 01 magnitude - than was ever known about the environment of that re- gion. We're going to be careful. We .are trying, and we'll do what's proper; plan~ nlng now Is the main redeemer. Q. What do you think of proposals for a new severance tax on developing min~ erals? A. 1 think anyone can visualize that with the amount of investment these things (shale oil plants) cost. it is gOing to give Colorado's weslern counties and the state a real addition to their tall base. The real question here, as I see it, is the con. cern for Iront-end money - to get ready for the indLlstry. Now, the oil shale Industry could be substantial. Irs going to pay its fair share 01 the talles. But it is also an industry that Is still aborning. . . its economic health Is still not known. It Will not be known until we do have an industry. So we - the le- gislators, the industry and the people - are going to have 10 fjllercise some real statesmanship in order that we do not put too great a burden on the Western Slope - on the people 01 the state - prior to establishment of the industry. I am con~ vinced there are ways a tax burden can be worked out so that the people of the community and Industry will not be pena- lized In the early stages. But it's going to take working together. Q. How could you help? A. We're going to have our experts on these matters coming In here: we're going to talk to the school boards, the highway people the county commissioners. and everyone to see what IS needed. It could well be that vanous financing approaches could be suggested or developed which togelher with suggestions 01 others wiU help WIth the overall problem until a sound tax base is realized, But If exc$S_ slve talles. large g,fts or grants are re- quired. the industry won't ever develop . . . but I know damned good and well there ars ways these maMers can be worked out If people are willing _ and we're willing. 0014