Oil Shale vs. Shale Oil
There is often confusion between the definition of oil shale and shale oil.
Shale Oil and Shale Gas
Over the last few years, there has been a dramatic increase in domestically produced natural gas and oil from “shale plays.” Some of the most well-known are the Bakken Shale in North Dakota (oil), the Eagle Ford Shale in Texas (oil), the Marcellus Shale in Pennsylvania (gas), and the Haynesville Shale in Louisiana (gas). These are natural gas and liquid oil deposits that are found in mature shale formations. These formations have long been known to contain large volumes of oil and gas, but the shale was so tight/dense that the oil or gas could not flow into a well bore. Improvements in the use of horizontal drilling and multi-stage hydraulic fracturing have allowed developers to produce oil and gas economically from these shales.
While these regions are producing shale oil and shale gas from tight shale formations, they are not producing oil from oil shale.
By contrast, oil shale is a fine-grained sedimentary rock containing kerogen, an organic material that has not reached thermal maturity. Heat, pressure and the passage of millions of years would eventually turn this organic material into liquid oil or natural gas. All of the various oil shale processes apply heat to the shale to accelerate the natural process of converting kerogen to liquid oil and gas. This conversion process is called pyrolysis. Different technologies (e.g. Red Leaf’s EcoShale® technology) use different approaches to apply heat to the shale.Red Leaf’s EcoShale® process involves mining the shale, placing it in a reusable surface retort, and heating the shale to the pyrolysis point (approximately 700° Fahrenheit). Reclamation can begin concurrently with production. To be clear, Red Leaf does not employ horizontal drilling or hydraulic fracturing.
Oil shale deposits occur around the world, but the resource’s accessibility and the quantity of oil per ton of rock varies dramatically. The Green River formation of Colorado, Wyoming, and Utah, where all of Red Leaf’s oil shale leases are located, is estimated to contain over 4 trillion barrels of oil, and is widely considered to be the largest, most accessible, and richest oil shale deposit in the world.
History of Oil Shale
Because it can be burned without processing, oil shale has been used as a fuel source since prehistoric times. As far back as the 10th century, there are written records of experiments to extract oil from shale rock. Apothecaries and physicians in Austria used oil from shale for medicinal purposes as early as 1350. The first known oil shale extraction patent was granted by the British Crown in 1684 to a group that had “found a way to extract and make great quantities of pitch, tarr, and oyle out of a sort of stone.”
The First Commercial Wave
Modern industrial extraction of oil shale liquids originated in France in 1838, and within a decade commercial extraction was found in Scotland, China, Estonia, New Zealand, South Africa, Spain, Sweden, and Switzerland. During the late 19th century, oil shale plants were built in Australia, Brazil, Canada, and the United States.
Commercial production, in which large quantities of shale were mined and heated in specialized ovens called retorts, began in France in the 1830s. Following the French lead and improving upon their methods, Scottish energy entrepreneurs initiated an oil shale industry around Edinburgh in 1850 that successfully operated into the 1960s. During the late 19th century, commercial production of oil shale was found throughout Europe, Estonia, New Zealand, South Africa, Brazil, Australia, and North America.
The first North American processing facility for oil shale was opened in Alberta, Canada in 1815. While this first facility was small, by the eve of the U.S. Civil War, more than 50 companies in Canada and the United States were retorting shale to distill oil from rocks (albeit none very successfully); most of this oil was used to produce kerosene.
Oil Shale in Early Utah
Ute Indians spoke of “the rock that burns”. This indicates that they recognized oil shale’s unique properties. According to Utah’s State Historical Preservation Office, early pioneer settlers in eastern Utah accidentally discovered oil shale after chimneys constructed with the sedimentary rock caught fire and burned the first few cabins built by the pioneers.
Mormon settlers founded the first known oil shale operation in the Rocky Mountains, perhaps as early as 1855, building a retort in a ravine near the small, present-day town of Levan, Utah, about 100 miles south of Salt Lake City.
20th Century Activities
Liquid crude oil discoveries in the U.S. in the late 19th century and in the Middle East in the mid-20th century brought most oil shale industries to a halt. Vast, easily accessible crude oil drove prices down to the point that most oil shale development became uneconomic.
Still, in 1944 the U.S. recommenced oil shale extraction as part of its Synthetic Liquid Fuels Program. This program and its related industries continued until 1986 when drastically declining oils prices forced its abolishment. Because of the dramatic drop in oil prices, in May of 1982 Exxon shuttered the billion dollar Colony Oil Shale Project, which had produced 270,000 barrels of oil. The last oil shale retort in the U.S., operated by Unocal Corporation, closed in 1991.
Modern Oil Shale Industries
In recent years oil shale extraction has continued in Estonia, Brazil, and China, both for power (by burning the ore like coal) and for liquid production. In 2008, these countries produced about 930,000 metric tonnes of oil from shale (17,700 barrels per day).
The U.S. Synthetic Liquid Fuels Program was restarted in 2003, followed by a commercial leasing program in 2005 that permitted the extraction of oil shale and oil sands on federal lands in accordance with the Energy Policy Act of 2005. Since then, six federal demonstration projects have been put under lease by the Bureau of Land Management (BLM). In addition, several private ventures have shown renewed interest in U.S. oil shale production, including Red Leaf Resources.
In addition to the U.S., Australia and Canada have tested shale oil extraction techniques via demonstration projects and are planning commercial implementation. Morocco and Jordan have announced their intent to do the same.
Global Oil Shale Resource Statistics
While oil shale has been a known source of energy for centuries, its commercial development has been limited. Today, only three countries have commercial oil shale production.
Not having other natural resources like coal or natural gas available for power generation, Estonia has used oil shale for electricity generation for over 100 years. While they have always produced liquids as a by-product, the Estonians are currently increasing the proportion of liquid fuels they are producing as part of their power generation operations. Estonia produces approximately 6,300 barrels per day, with the goal of doubling that production with a new retort facility scheduled to go online in 2014.
In China, like Estonia, oil shale is burned for electricity production. The Chinese also use oil shale to develop petrochemical products and cement. Despite having significant in-place resources, the Chinese only produce about 7,600 barrels per day.
Brazil uses their oil shale primarily for liquid fuel production, generating approximately 3,800 barrels per day.