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Oil Shale May Almost Be Commercial, or Not

Published
American Association of Petroleum Geologists (AAPG)

Not oil, not shale, but a huge resource!

Industry interest in developing oil shale production technology rises and falls with oil prices and the availability of cheaper options. Shale oil in formations like the Bakken is currently more economically attractive and less risky. Chevron, Shell and Exxon-Mobil have ended their oil shale projects in the past year, but Red Leaf Resources is moving ahead.

Utah has has recently granted a groundwater permit, the last major regulatory hurdle, to Red Leaf Resources for a proposed shale mine and below-grade ovens on Utah state land. Mining operations are expected to begin in the spring. The small-scale demonstration project could produce 300,000 barrels of oil.

The kerogen-rich, lacustrine, silty marls in the Piceance, Uinta and Greater Green River basins of Colorado, Utah and Wyoming are estimated to have 4.285 trillion barrels of oil in place (recoverable volumes would be much less). However, an economic production technique has not been demonstrated at commercial scale.

The difficulty is that kerogen is an immature source rock. It will yield oil and gas only when heated, which requires large amounts of energy. Production is more complex than drilling wells into more-conventional oil reservoirs. Oil production involves either mining (surface or underground) and surface retorting, or in-situ retorting.

There are also serious environmental concerns: Mining and retorting require water, which is in short supply in the arid basins containing oil shales. There is also the potential risk of air emissions or pollution of groundwater resources during shale retorting.

Highlights of research and development activities:

  • The federal government and several companies launched research and pilot demonstration projects in the 1970s, but low oil prices in the 1980s ended most of that work.
  • The 2005 Energy Policy Act directed the U.S. Bureau of Land Management to offer federal tracks for research, development and demonstration (RD&D) and to develop regulations and procedures for commercial leasing. Several companies obtained federal RD&D leases to test novel production techniques.
  • By 2013, the three major oil companies involved in oil shale projects stopped their work. Smaller companies continue their involvement. China, Estonia and Brazil commercially use oil shale.
  • Some oil shales occur in the eastern U.S., but are not being commercially pursued.

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