Many people seem to think that higher oil prices will make oil shale deposits a valuable resource. On the other hand, the last time anyone attempted commercial development of oil shale resources, it led to an economic bust in 1982. Factor in the environmental concerns created by strip mining and toxins, and maybe oil shale is no more than the “fool’s gold” that some have called it.[1]
Oil shale is rock that contains kerogen, an organic sedimentary material that can be converted to petroleum products such as high quality jet fuel and number 2 diesel. Oil shale formations are geologically younger than formations that contain crude oil, so the natural forces of pressure and temperature have not yet converted the kerogen into oil.[2] Oil shale can also be burned for power generation or heating. Estonia and China have established oil shale industries, but burning, mining and/or processing oil shale raise a number of environmental issues including air pollution, water pollution and waste disposal.
While total U.S. oil shale resources could exceed 6 trillion barrels, most of the deposits do not contain enough kerogen to make extraction economically viable. The richest deposits in the United States occur in the Green River Formation, which underlies 17,000 square miles in the Piceance and Sand Wash Basins in Colorado, the Green River and Washakie Basins in Wyoming, and the Uinta Basin in Utah.
The U.S. Department of Energy's Office of Petroleum Reserves estimates that the Green River Formation contains 1.8 trillion barrels of shale oil in deposits yielding greater than fifteen gallons per ton, with over eighty percent of the formation's recoverable resources located in Colorado's Piceance Basin. (Oil shale formations yielding less than 15 gallons of oil per ton of rock are not considered economically viable for extraction.)[2]Even though the Green River Formation is the largest fossil fuel deposit in the world, extracting the kerogen and converting it into usable petroleum products has proven problematic. The traditional method of exploiting kerogen-bearing rock starts with a mining operation that resembles either strip mining or hard-rock mining. Once the rock has been mined, it must be baked in a furnace to turn the kerogen into oil and release it from the rock. Oil-Tech, a privately held Utah company, claims to have perfected this process at its plant near Vernal, Utah. Company officials say that they have solved the problems of gummed-up equipment that plagued major oil companies’ efforts for decades. And while Oil-Tech claims it has addressed air pollution issues, its process would involve strip mines, and the byproduct would be piles of waste a third larger than the volume of rock fed into the system due to a “popcorn” effect.
In Colorado, Shell Oil Company’s Unconventional Resources unit has been quietly developing a new technology for extracting oil from the Green River Formation. Shell conducted a closely guarded test of the new technology that they refer to as In-situ Conversion Process, or ICP. Using electric heaters, ICP slowly heats the kerogen-containing rock to 650 degrees (F) in the ground, a process that takes three to four years. By heating the rock in place, ICP accelerates the natural process of oil and gas maturation, making it accessible to conventional oilfield technology.
Shell pumped 1,400 barrels from a basketball-court-sized test plot, and the ICP oil is much lighter and easier to refine than traditional crude oil — about two-thirds liquids and one-third natural gas. The liquid component is typically about 30% each of jet fuel, diesel and naphtha (a gasoline precursor) with the remaining 10% being slightly heavier.
Shell’s ICP requires significant amounts of energy to heat the subsurface rock formations. Nevertheless, according to Steve Mut, CEO of Shell’s Unconventional Resources unit, ICP produces about 3.5 units of energy for each unit of energy consumed. The main drawback to Shell’s process seems to be groundwater, which can contaminate the newly released oil and vice versa. Nevertheless, Shell engineers believe they have the answer to the groundwater problem. By inserting refrigerated pipes into the rock around the site, Shell engineers believe they can maintain an “ice curtain” that will repel groundwater and contain the oil for retrieval. Shell is currently working to determine the viability of the process on a larger scale, a determination that will take a few years.
The Department of Energy calls Shell’s process the most promising existing technology for developing oil shale resources. The department also estimates that the United States could produce 10 million barrels of oil a day from oil shale by the year 2020, but even Steve Mut takes issue with that claim. In his November 2006 appearance at the Denver World Oil Conference, Mut acknowledged, “It’s really difficult for me to see that happening.”
Mut insisted that U.S. oil production from shale would be “far less than 1 million barrels a day” in 2015, making it difficult to reach the 10-million-barrel-a-day mark just five years later. “Any extrapolation from where we are today would have to be prefaced on the success of cracking a nut that people have been trying to crack for 100 years and haven’t yet,” Mut said at the Denver conference.
With the recent peak in gas prices, many economists and oil industry experts seem to think that higher oil prices will make oil shale deposits a valuable resource. On the other hand, the last time anyone attempted commercial development of oil shale resources, it led to an economic bust in 1982. Factor in the environmental concerns created by strip mining and toxic byproducts, and maybe oil shale really is “fool’s gold.”References
- Randy Udall and Steve Andrews, “When will the Joy Ride End? A Petroleum Primer,” Hubbert Center Newsletter, Jan. 1999 (99;1) Colorado School of Mines.
