Recent proposals for government support for the commercialization of shale oil : a review and analysis

Abstract

This report is intended to accompany a paper prepared by the Policy Study Group of the M.I.T. Energy Laboratory, entitled "Government Support for the Commercialization of New Energy Technologies: An Analysis and Exploration of the Issues". The paper was prepared for the U.S. Energy Research and Development Administration and is referred to herein as "Issue Paper".

The Issue Paper discusses the general principles of government-supported commercialization programs. This report applies those principles to a specific case, that of a proposed program for the commercial demonstration of shale oil production. This case has significance as a result of the national goal of greater energy independence.

The report begins with a brief discussion of a proposed commercial demonstration program, followed by a section that sketches the historical, technological and economic background of shale oil. The commercial implications of this background are discussed in the next section. Based on this information, the report then outlines probable industry action in the shale oil field if no government action were taken. The next section discusses rationales for the proposed program, both those explicitly offered by the government and others that could have been offered. The program is then evaluated for its effectiveness in dealing with the various problems involved in starting and maintaining a commercially viable shale oil industry. The findings of the analysis are summarized in the final section.