It is estimated that the oil shale potential in the western United States could yield an amount of oil greater than the proven petroleum reserves in the Middle East. And if fully developed, oil shale could supply the current U.S. consumption of oil for more than 70 years. Some studies forecast even higher estimates. A Rand Corp. report points out that the current domestic demand for petroleum products is about 20 million barrels per day. If oil shale could be used to meet a quarter of the daily demand, the recoverable resources could last for more than 400 years.
Consequently, the magnitude of this energy resource potential is making it attractive for some energy industry stakeholders to invest in its development, or at least take a second look at its viability—something that was briefly explored and then abandoned in the early 1980s due to excessively low oil prices and a lack of advanced cost-effective technologies. Estonia and China already have well-established oil shale industries, and Brazil, Germany, and Russia currently utilize oil shale for various uses. Australia recently commissioned its pilot demonstration oil shale plant in Queensland to begin the production phase.
The largest known oil shale deposits in the world are in the Green River Formation, an area spanning portions of Colorado, Utah, and Wyoming, with earlier oil estimates ranging from 1.5 to 1.8 trillion barrels. In 2011-12, though, the U.S. Geological Survey increased its estimate of the amount of oil shale contained in the region to more than four trillion barrels, but not all resources in place are recoverable. Rand notes that potentially recoverable oil ranges roughly from 1.1 trillion barrels on the upper scale to about 500 billion barrels on the lower side. However, the research organization emphasizes that for policy planning purposes, any amount of oil in this range is very substantial and worthy of consideration for development.
Low-cost oil shale commercialization would, of course, yield tangible benefits, including reduced world oil prices, increased employment, and bolstered national security due to less dependence on foreign oil imports. Additionally, direct economic profits could range as high as $20 billion annually for an oil shale industry producing just three million barrels per day. Rand reports that through lease bonus payments, production royalties, and corporate income taxes, roughly half of these profits would likely go to federal, state, and local governments, thereby broadly benefitting the public at large.
The National Oil Shale Association admits that commercial operations cannot occur overnight, but they could evolve in a methodical manner over years to achieve production levels in the range of 1.5 to 3.0 million barrels per day, which translates into upwards of 40% of the U.S. oil imports from OPEC countries in 2012 and 100% of the oil imported from the OPEC Persian Gulf countries. NOSA adds, however, there are critical issues that must be addressed before successful commercialization of oil shale can be realized cost effectively. Some of these include land use and ecological impacts, air quality, greenhouse gas emissions, water quality and consumption, socioeconomic impacts, leasing restrictions, and market risks.
Additionally, some confusion exists among the general public and the media regarding the term “oil shale,” which is often used synonymously—and sometimes incorrectly—with “shale oil,” also called “tight oil” or crude oil. Oil shale contains an organic chemical compound known as kerogen, from which liquid hydrocarbons called shale oil can be extracted via high temperatures and vaporization, using either surface or underground retorting technologies. Oil-bearing shale (shale oil), on the other hand, actually contains petroleum elements or crude oil, which is extracted through an underground hydraulic fracturing process. Shale oil is often found near drilled wells or known oil reserves, with significant deposits located in Saskatchewan, Canada, and extending southward through Montana, the Dakotas, Nebraska, Kansas, Oklahoma, and into Texas. Ohio and other Midwest regions have documented large shale oil deposits, too.
Water management is a key element in the oil shale landscape because direct consumptive water requirements range from one to three barrels of water for every barrel of shale oil produced, depending upon the recovery technology being employed. However, NOSA points out that the quality of the required water also varies for commercial oil shale projects, and much can come from non-potable sources. For instance the wastewater currently produced from the oil and natural gas wells and coal-bed methane wells may be treated and used for various uses within an oil shale complex.
Moreover, the amount of water necessary for oil shale development compares favorably with other energy sources, according to NOSA. The consumption is much less that ethanol produced from irrigated crops and not significantly greater than fuel generated from conventional petroleum resources. Also, the required amount of water will likely be less as more advanced technologies evolve and alternative sources of water are developed.
Perhaps the greatest challenge for the oil shale industry currently lies in leasing rights and restrictions. The U.S. Bureau of Land Management controls more than 70% of the western oil shale resource. In 2008, BLM published a Programmatic Environmental Impact Statement that amended 10 resource management plans in Utah, Colorado, and Wyoming to make about two million acres of public lands potentially available for commercial oil shale leasing and development and 430,000 acres potentially available for tar sands leasing and development.
However, in spring 2011, BLM initiated a new planning effort to reassess the appropriate mix of public lands to be made available for oil shale and tar sands leasing. In November last year, new PEIS regulations for eight land use plans in Colorado, Utah, and Wyoming were issued. BLM’s preferred alternative now reduces the leasing acreage available for new oil shale development projects to 676,967 acres and to 129,567 acres for tar sands development. Also, the new regulations only authorize research, development, and demonstration projects, which can be later converted to commercial leases when all conditions and regulations of the RD&D lease have been satisfied and all further environmental reviews and public comment periods have been conducted.
Currently, there are oil shale projects or applications under operation or development by American Shale Oil, AuraSource, Colorado Energy Research Institute, ConocoPhillips, Enefit American Oil, Energy Dynamics Laboratory, Enshale, ExxonMobil, Genie Energy, Hatch, Idaho National Laboratory, Natural Soda Holdings, Red Leaf Resources, Sage Geotech, Shell Mahogany Research, and Total.
[ return to top ]