The Green River Formation

Money Management Knowledge Base:

As the price of oil continues to rise, there have been many efforts to generate alternative sources of energy within the United States. Through technological advances and increased exploration efforts, a viable replacement for foreign oil has been found in the form of Oil Shale. Oil Shale refers to any sedimentary rock formations that contain the substance kerogen, which is a petroleum-like liquid that when processed properly can be converted into oil¹. Oil Shale formations can be found all over the world, but the United States plays host to the largest formation that has been discovered so far, the Green River Basin Oil Shale Formation.

The Green River Basin is a region on the western edge of the Rocky Mountains and includes portions of Wyoming, Utah, and Coloradothat can be viewed in the map above².

The most exciting aspect regarding the Green River Basin Oil Shale Formation, aside from the fact that it is potentially a domestic energy source for the United States, is its abundance of recoverable oil. Early estimates show that the Green River Basin contains anywhere from 1.2 to 1.8 trillion barrels of oil¹. As of right now, not all of the reserves can be captured and utilized, but the portion of the reserve that is retrievable is estimated in the500 billion to 1.1 trillion barrel range³. The midpoint of this estimate suggests the potential to recover 800 billion barrels of oil, or triple the proven oil reserves of Saudi Arabia. With current U.S. oil consumption of around 20 million barrels of oil per day, the staggering amount of reserves would represent an estimated 100 year supply of domestic oil. This, coupled with the fact that the United States Government owns 72% of Green River Basin Oil Shale Formation lands, including the regions with the richest and thickest deposits, makes it potentially the most valuable U.S. asset.

The introduction of abundant new oil supplies can have an incredible impact of the price of fossil fuels on the global markets. As the supply increases, the price of these commodities should decrease. Because fuel is such a huge portion of operating costs for almost every company in the United States, a decrease in fuel costs could potentially translate into increased profits for those companies. An increase in profits could also improve the stock performance of those companies in our financial markets. The Green River Basin formation has the potential to drastically improve the financial outlook of the United States, and its financial markets.

References:

1. About Oil Shale. Oil Shale & Tar Sands Programmatic EIS Information Center. Web. 4 March 2011.
2. Green River Oil Shale Formation – Oil Field. OilShaleGas.com. 2010. Web. 3 March 2011.

3. Oil Shale Development in the United States, Prospects and Policy Issues. The RAND Corporation. 2005. Web. 4 March 2011.

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This material is for general information only and is not a solicitation. Information and opinions presented have been obtained or derived from sources believed to be reliable. Additional information is available upon request. Associates of Chlebina Capital are not registered to offer commodities futures.

Chlebina Capital Management is a money management firm that primarily serves, but is not limited to, Akron, Cleveland, Medina, Canton, and the surrounding Northeast Ohio. Larry Chlebina, President of Chlebina Capital, is the primary financial advisor who developed the Integrated Tiger Strategy. The Integrated Tiger Strategy is an investment approach that seeks to achieve aggressive capital appreciation while balancing risk.