This is an excerpt from EERE Network News, a weekly electronic newsletter.

March 07, 2007

Study Sees Potential in Unconventional Oil and Gas Sources

The world's potential "unconventional" sources of oil and natural gas exceed the current estimates of undiscovered conventional oil and gas sources around the world, according to a study released in February by energy analysts at Wood Mackenzie. The study estimates that unconventional sources such as heavy oil (including oil sands), "tight" gas (gas trapped in nearly impermeable rock formations), coal bed methane, and shale oil could add up to the equivalent of 3.6 trillion barrels of oil. The report estimates that unconventional oil sources could provide more than 20 percent of the global oil supply by 2025, and that unconventional natural gas sources could provide more than 40 percent of the U.S. natural gas supply by 2010. See the Wood Mackenzie press release, an overview of unconventional gas sources from the Natural Gas Supply Association, and an overview of oil shale and oil sand (also called tar sand) technologies on the "Oil Shale and Tar Sands Leasing Programmatic EIS Information Center" Web site, provided by DOE's Argonne National Laboratory.

Wood Mackenzie took a closer look at Canadian oil sands in early March, and found that rising costs at current Canadian oil sands developments are making it more difficult for companies to see a return on their investments. Wood Mackenzie found that capital costs per barrel of oil production capacity increased 55 percent since 2005. The company expects more than $100 billion to be invested in Canadian oil sands between now and 2015, but warns that labor shortages and rising material costs have created a hyper-inflationary environment. Canadian oil sands have the potential to yield 174 billion barrels of oil. Wood Mackenzie expects the current output of about 1 million barrels per day to quadruple by 2020. See the Wood Mackenzie press release.