What exactly is oil shale?

Those in debt often find a way to turn the tables on their creditors by pointing out the old saying: you can't squeeze blood from a stone. Thanks to the end of debtors' prison, this remains true. But when it comes to oil, is the saying still relevant?

Many oil experts believe that we've reached a critical point where the global supply of conventional oil is on the decline, known as 'peak oil.' Since oil is a finite resource, its availability is limited. While some experts believe peak oil is still a century away, there are others who argue that advancements in oil technology could delay the inevitable depletion of oil resources.

As we’ve grown increasingly reliant on technology powered by petroleum—ranging from the gasoline in your car to essential pharmaceuticals—more unconventional oil sources are being explored. Among the most promising yet underutilized reserves is oil shale, which consists of oil trapped in solid rock.

Around 100 million years ago, a vast sea split the North American continent into two, separating the eastern and western regions. As the sea level fell, the water receded, leaving behind inland seas and fertile grasslands. Organisms from the Tertiary period that lived and perished here became fossilized. Over millions of years, these remnants were subjected to intense heat and pressure, turning them into petroleum. However, the conditions that generated liquid petroleum elsewhere weren't as intense or prolonged, resulting in the creation of oil shale. Consider oil shale as crude oil that underwent all stages of development, except the final one that would have turned it into liquid oil. It is now up to energy scientists to complete the process.

However, this is no easy task. Next, let’s dive into the oil shale extraction process.

Oil Shale Extraction

Extracting liquid crude oil from the earth is relatively straightforward compared to the process of obtaining oil shale. Gases trapped within the oil chamber create pressure, forcing crude oil to the surface. Once this pressure is relieved, the more complex secondary and tertiary phases of drilling commence. In some situations, water is pumped into the chamber to help loosen the oil. Occasionally, gases are used to repressurize the chamber. In many cases, the remaining oil is left for future extraction using more advanced technology.

Extracting crude oil from rock is one of the most challenging processes. Oil shale must be mined using either underground or surface mining methods. After excavation, the shale undergoes retorting, where the mined rock is exposed to pyrolysis — applying extreme heat in the absence of oxygen, causing a chemical change. At temperatures between 650 and 700 degrees Fahrenheit, the kerogen trapped inside begins to liquefy and separate from the rock [source: Argonne National Laboratory]. This oil-like substance can be further refined into synthetic crude oil. When the retorting process takes place above ground, it is called surface retorting.

The issue with this process is that it adds two extra stages to the standard oil extraction method, where liquid oil is pumped directly from the earth. In addition to mining, the shale must undergo retorting and refining to convert the kerogen into synthetic crude oil. Oil shale also poses environmental concerns. It takes two barrels of water to produce one barrel of oil shale liquid [source: Argonne National Laboratory], and without advanced water treatment, the wastewater from refining can increase the salinity of surrounding bodies of water, causing environmental damage [source: RAND].

Another challenge involves the rocks left behind. For every barrel of oil produced from shale, about 1.2 to 1.5 tons of rock remain [source: RAND]. What should be done with this leftover rock? There are some projects that might require loose rock, such as using it to cover the ground under highway overpasses to prevent homeless settlements. However, if oil shale production scales up, the demand for rock may not match the supply.

Royal Dutch Shell Oil Company has proposed a solution to some of the challenges associated with oil shale refining. Their solution is called the In Situ Conversion Process (ICP) [source: Fortune]. In ICP, the rock remains undisturbed; it is not removed from the site. Instead, holes are drilled into the oil shale reserve, and heaters are placed underground. Over the span of two or more years, the shale is gradually heated, and the kerogen is released. It is then collected on-site and pumped to the surface. This method eliminates the need for mining and reduces costs by removing the need for rock transport and disposal.

Shell's approach incorporates a unique freeze wall—a protective barrier constructed around the oil shale site, through which chilled liquids are injected into the ground. This method freezes any incoming groundwater, preventing it from entering the site and stopping harmful substances, such as hydrocarbons, from leaking out [source: Argonne National Laboratory].

Currently, oil shale is not commercially viable on a large scale due to several challenges. The process is more costly and environmentally damaging compared to traditional drilling methods. However, as crude oil supplies dwindle and petroleum prices rise, oil shale—particularly with Shell's strategy—becomes a more appealing option. Discover more about the potential global impacts, both positive and negative, of the rising oil shale industry.

The Geopolitical Consequences of Oil Shale

In response to the oil crisis of the 1970s, the Jimmy Carter administration allocated federal funds to oil shale research. However, when oil prices dropped, interest in alternative sources diminished [source: Fortune]. With oil prices soaring to unprecedented levels—reaching a forecasted $150 per barrel in 2008—oil shale is once again becoming a highly attractive option [source: NPR].

This is particularly true in the United States, where the largest oil shale reserve in the world is found in the western region of the country, covering areas of Wyoming, Utah, and Colorado. This 17,000-square-mile deposit is known as the Green River Formation [source: DOE]. If crude oil can be extracted from this shale on a large scale, the U.S. could emerge as the global leader in unconventional oil reserves.

The reserves in the Green River Formation are estimated to hold between 1.5 and 1.8 trillion barrels of crude oil [source: RAND]. This is three times more than the oil reserves currently held by Saudi Arabia. This quantity could meet the United States' oil needs for about 400 years [source: Argonne National Laboratory]. The prolonged supply is due to the slower depletion rate compared to conventional reserves, as well as the gradual extraction of kerogen from shale. Some estimates suggest that peak production from U.S. shale reserves could reach 5 million barrels per day, though this is still insufficient to cover the U.S.'s daily demand of 21 million barrels, with nearly 10 million of those barrels being imported [source: Fortune].

Halving foreign oil imports would significantly reduce the U.S.'s dependency on foreign sources. In January 2008, the U.S. imported around 3.8 million barrels per day from Venezuela, Nigeria, and Saudi Arabia combined [source: EIA]. While relations with Saudi Arabia remain stable, tensions exist with Venezuela, and Nigeria faces constant threats from rebel factions targeting oil supplies. These groups oppose foreign oil companies, claiming they receive insufficient compensation for the resources extracted. The development of commercial oil shale production could protect the U.S. from energy supply disruptions caused by these countries.

Venezuela also illustrates another aspect of commercial oil shale production in the U.S.: immense financial potential. Most of the U.S.'s oil shale deposits are located beneath federal lands. In contrast, countries like Venezuela operate state-owned oil companies, which could inspire the U.S. to explore socialist energy policies. Venezuela's state-owned oil company reported $10.7 billion in revenues during the first quarter of 2007, reflecting a 10 percent drop from the previous year [source: AP]. Similarly, Vietnam’s PetroVietnam reported earnings of $4.8 billion in the first quarter of 2008 [source: Viet Nam News].

Although these amounts seem small compared to the $2.5 trillion the U.S. government collected in taxes in 2007 [source: Tax Policy Center], every billion counts.

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