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U.S. Shale Oil: A Multitude of Frauds - Jeff Nielson

U.S. Shale Oil: A Multitude of Frauds - Jeff Nielson
By Jeff Nielson 4 years ago 2689 Views No comments

May 28, 2014

It would be inaccurate to assert that “everything” we are told about U.S. shale oil by the U.S. government (and Big Oil) is a lie. What these corporate fronts are extracting out of their ground with their rapacious “fracking” is oil. Beyond that, everything we are told about U.S. shale oil is either half-truth, or complete fiction.

The most-obvious place to start in exposing the multitude of frauds associated with the U.S. shale oil industry is a blockbuster article from The Guardian, one of the few enclaves of (independent) journalism which still remain within the Western corporate media.

Write-down of two-thirds of US shale oil explodes fracking myth

There we have it, our starting point: (at least) two-thirds of the “gigantic reserves” of shale oil of which Big Oil and the U.S. government have been boasting (with ever-increasing exuberance) are pure fiction. But while that article exposes one of the great myths/lies associated with U.S. shale oil, it doesn’t explain it.

How was it possible for the Liars of Big Oil to convince the puppet politicians, media drones, and idiot-economists that U.S. “shale oil reserves” were at least three times larger than they are in reality? The answer to this question says as much about the infantile minds of the puppet politicians, media drones, and idiot-economists as it says about the Liars themselves.

To understand this big lie first requires a basic understanding of how “oil reserves” are calculated/estimated for conventional oil fields (using conventional oil-extraction technology). Enterprising geologists devised a “formula” for the calculation of these reserves, which (through decades of subsequent, empirical evidence) has been proven reliable.

The formula is produced from taking the geological data of the conventional oil field, applying the dynamics of conventional oil-extraction technology to those geological parameters, and then producing a calculation which not only indicates the total amount of oil in the deposit (which can potentially be extracted), but also the rate at which that oil can be extracted.

Wat Big Oil did in manufacturing its fraudulent lies about U.S. “shale oil reserves” (and production) was to take this formula for conventional oil fields (and conventional oil-extraction) and apply it directly to the shale oil deposits. As is common knowledge to even those with no exposure to the oil industry; shale oil deposits are radically different than conventional oil fields in terms of their geological properties/parameters. Consequently, shale oil extraction technology is radically different from conventional extraction technology.


What this means is that there never was, and never could be, the slightestdegree of validity or reliability in these estimated (i.e. falsified) “oil reserves”. More specifically:

1) It would have been immediately obvious to anyone (even those with no oil/geology expertise) that there could not be any analytical validity whatsoever in applying this Conventional Oil Formula to the calculation of shale oil reserves.

2) In particular; it would have been immediately obvious that (because of the differences between shale oil and conventional oil, and because of the huge differences in extraction methodology) using the Conventional Oil Formula to “calculate” the shale oil reserves would produce wildly inflated numbers.

In other words; there is no possibility that what has taken place here was merely the product of innocent mistake, or even gross incompetence. Rather; the evidence is unequivocal that what we have here is a deliberate fraud by Big Oil (with the U.S. government as an obvious accomplice to that fraud).

But this is still only the beginning of this multitude of frauds. Obviously Big Oil needs to have real estimates for the reserves of its shale oil fields, and it knows the fraudulent numbers it has been feeding to the public are totally fictitious. For internal purposes, these fracking companies need reliable data in order to map-out their own operations, as multi-billion corporations are not going to “fly blind” in their oil production. Thus obviously Big Oil has a second set of Secret Numbers on its shale oil reserves – the real reserves.

However, all this ‘puts the cart before the horse’. Prefacing the multitude of particular crimes and acts of fraud within the U.S. shale oil industry; we have the inherent fraud of shale-oil extraction itself: it is still prohibitively expensive (even at current oil prices), and it is insanely inefficient.

Here the theoretical groundwork was laid-out by Chris Martenson in his superb economic presentation which he entitled The Crash Course. As Martenson explains; when humanity first began mass-producing oil, the fields were not only large/plentiful, but oil-extraction was very, very efficient.

With one barrel of oil as “input”; as much as 100 barrels of output could be produced from these fields. But not only has the West’s rapacious consumption of oil dramatically reduced the quantity of oil which can potentially be extracted; much (most) of what remains can only be extracted with much, much, much less efficiency.

According to Martenson; this inefficiency has reached such an insane (and environmentally intolerable) extreme that with some of the least-efficient oil extraction, one barrel of (oil) input is producing as little as 1.1 barrels of output. What this (up to) 99.9% decline in extraction efficiency means is that with some of the least-efficient extraction technology (like shale oil); Big Oil is using almost every barrel produced from its marvelous “shale oil boom” just to produce that oil.

Little-to-no surplus oil is being produced which will ever be available for anyone to use. Americans get maximum environmental pollution (and squandering vast quantities of precious water resources), while the “shale oil boom” accomplishes very little other than fattening the bottom-line of Big Oil. The “oil production” itself is almost entirely illusory.

Then there is the prohibitive cost which goes along with the environmental devastation. How is it that Big Oil is able to report “profits” with its shale-oil fraud? It’s not just the $billions in “subsidies” (i.e. corporate welfare) handed to Big Oil each year by the U.S. government which allows these phantom profits. The Canadian government (and each-and-every Canadian) also provides a massive subsidy to the U.S. shale oil industry.

By selling all of Canada’s (dirty) tar-sands oil to the U.S. at a 1/3 discount versus current, global prices; Canada’s Conservative government provides vast supplies of cheap oil which Big Oil can use in its fracking. Currently; this gigantic Canadian oil-subsidy to Big Oil amounts to roughly $25 billion per year (and rising) – or, roughly $800 is being taken out of the pockets of every Canadian (every year) by the Harper government, and handed to Big Oil.

This brings us to the last of the shale oil Big Lies: “shale oil production” itself. Given all the lies and fraud already clearly/unequivocally exposed (and given the serial lying by the U.S. government with respect to nearly any-and-every “statistic” it produces); can we really take the Corporate media seriously when it produces headlines like this?

U.S. Crude Output Advances to 28-Year High on Shale Boom

Put another way; knowing that the “shale boom” itself is largely a fraud, are we really to trust these Liars when they boast of a “28-year high” in production? Do you still believe in Santa Claus?

Put still another way; U.S. “shale oil production” is little more than taking one barrel of (cheap) Canadian oil and then adding some tiny, little “surplus” from all that time/effort/expense/environmental devastation. So why bother with all that time and effort?

Why not simply take the barrel of cheap, Canadian oil; peel off the “made in Canada” sticker; attach a “made in the USA” sticker; call it a barrel of shale oil – and then sell it for 1/3rd more? Given all the fraud and lying taking place in this “industry” already; what’s one more, little fraud?

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