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Oil Shale vs. Shale Oil June 18, 2013

The difference between oil shale and shale oil: It’s not like the two ways you can say “tomato”. It’s more like the distinction between apples and oranges. Let’s break their differences down to the basics.

OIL SHALE: Rock That Turns into Oil

Oil Shale is an organic-rich, fine-grained sedimentary rock that contains a solid organic compound known as kerogen. Oil shale generally contains enough oil that it will burn, earning it the nickname, “the rock that burns”. Kerogen is one of the first stages of organic matter processing into petroleum, and all oil and gas are ultimately derived from kerogen. Oil shale contains the remains of algae and plankton deposited millions of years ago that have not been buried deep enough to become hot enough to break down into the hydrocarbons targeted in conventional oil projects.

To generate oil, the kerogen-rich rock is heated in the absence of oxygen. This process is called retorting. At high temperatures, kerogen undergoes a complex set of chemical reactions, which result in producing a vapor containing a mix of hydrocarbons and other organic compounds. When it then condenses, it becomes oil (with some natural gas) that can be refined to make liquid fuels and lubricants. Oil shale can be either mined like coal, crushed, and retorted on the surface. Or it can be heated underground, known as in situ retorting, to encourage it to flow and be pumped to the surface. The rapid surface processing requires high temperatures (as high as 950° Fahrenheit), and creates a dense oil that can be used as fuel oil, or it can be upgraded. In situ oil is produced by slower heating (to about 700° F), and results in a high quality product. Like most oil, it can require a bit more upgrading and refining to turn it into the final product. Spent shale is disposed or returned to its source through reclamation, and all mined land is eventually reclaimed. The latest published estimate of costs to produce oil from oil shale suggests costs in the range of $40 to 80 per barrel. It is not clear that production is more costly than for oil sand oil.

Deposits of oil shale occur around the world and estimates range around 5 trillion barrels of recoverable oil. One of the largest reserves in the world is found in the Green River Formation, federal lands where Wyoming, Utah, and Colorado meet and contains about 4.29 trillion barrels. At current U.S. consumption rates, this would last several hundred years. However, of the 4 trillion barrels in the Green River Formation, three quarters of the oil is in rock that is probably too lean to be commercially produced, even with the new technology now being tested. With ongoing research and new technological advancements, oil shale is becoming more promising.

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PO Box 540, Denver, CO 80201 • Phone: 303.861.0362 • www.COGA.org

© 2013 Colorado Oil & Gas Association. All rights reserved.

SHALE OIL: Oil Locked in Rock

Shale Oil is more accurately termed as oil-bearing shale. Unlike oil shale, oil-bearing shale contains oil (and some gas), trapped in relatively low porosity and permeability rock, commonly shale or tight siltstone limestone or dolomite, that typically resides a mile below the earth’s surface. These rocks have been buried deeply enough to convert part of their kerogen into oil and gas. Because the hydrocarbons are locked in place so tightly that they cannot be released in economic quantities simply by drilling, shale-hosted oil plays are considered unconventional. .

Oil-bearing shale formations include U.S. plays such as the Bakken Shale, Niobrara Formation, Barnett Shale, and the Eagle Ford, and world formations like the R’Mah in Syria, Sargelu in the northern Persian Gulf region, Athel in Oman, Bazhenov and Achimov in Russia, the Coober Peby in Australia, Vaca Muerta in Argentina, and the Chicontepec in Mexico. Experts are routinely assessing deposits around the world and the estimates for technically recoverable reserves constantly increase.

Producers have refined two developed and historically used technologies to unlock shale resources: horizontal drilling and hydraulic fracturing. Horizontal drilling involves actively turning the direction of drilling a well from the vertical into the horizontal, which enables a larger area of the very tight rock layers that contain the oil or gas to be exposed. Hydraulic fracturing induces fractures in the rock that further increase the ability of hydrocarbons to flow out of the rock into the borehole. Once out of the ground, the oil is typically refined in the same way as oil from conventional oil fields. This is due to its general category as a light sweet crude: “Light” means it flows quite readily, and “sweet” means it contains little sulfur, which makes it compatible with conventional refineries designed to process low-sulfur oils.

Due to major technological advancements, the shale-hosted oil (and shale gas) revolution has redefined our known petroleum reserves. Production from these new fields has surpassed one million barrels per day. Less than a decade ago, we worried that world oil and gas production had peaked and begun to decline (peak oil); we now know there are enough oil and gas reserves to support current energy needs for generations to come.