Oil Shale - an economic alternative?

ColB · 16 June 2008

Smurf hit the nail on the head in terms of the environmental impact that a shale oil plant has. SPP/CCP who ran the Stuart Oil Shale project a few years ago were targeted by Greenpeace and put through the mill so to speak. They abandoned the project for a number of reasons one of which was the cost associated with the process at the time but also due to meeting environmental guidelines. However as someone else stated the cost per barrel was much lower back then and only time will tell before someone has another go. Good luck Grace! Hope you've found another LNC!

Tysonboss1 · 17 June 2008

I read a funny story last night about a guy in the olden days building a house with a big stone fire place,... turned out the stone he chose to build the fire place out of was oil shale,.... needless to same soon after he lit the fire the whole fire place was burning and it burned down his new home,...

Salamander · 10 July 2008

ghotib said:
What do these companies say about the effect of a carbon price on their prospects?

I haven't seen much at all from the ones I've looked at.

Apparently Innovest Strategic Value Advisors (www.innovestgroup.com) were commissioned by Greenpeace in 2001 to look at this as part of their campaign against the Stuart Oil Shale Project in Australia & found the cost would be a minimum of $38m (not sure if Aus or Can $) each year! at commercial production.

Innovest's report doesn't seem to be available online, but see www.gasandoil.com/goc/news/nts11989.htm for more info.

Salamander · 10 July 2008

numbercruncher said:
There is no oil being extracted from oil shale in Australia. From 2000 to 2004, the Stage 1 demonstration-scale processing plant at the Stuart deposit near Gladstone in central Queensland produced more than 1.5 million barrels of oil using a rotary kiln retort. No oil has been produced since 2004 and the facility is in care and maintenance. However, while design efforts continue on Stage 2 of the development, the facility is maintained in operating condition to allow for any further production testing if required.

Click to expand...

http://www.australianminesatlas.gov.au/info/aimr/shale_oil.jsp

1.5m Barrels at todays prices would be nice pay, might want to fire that fella up again !

Don't think that's possible as it seems the plant equipment has been sold - see sale brochure.

One report said it was most likely to be sold off for scrap. Not great considering it apparently cost around $380m.

sam76 · 12 July 2008

Shale oil all the rage as prices soar

PURE SPECULATION: Robin Bromby | July 07, 2008

IF you haven't heard of the Bakken shale formation, then it's time to get a handle on the story. The US Geological Survey recently termed it the largest continuous oil accumulation it had ever assessed.

This is not just a matter of academic interest to us, because two Australian-listed juniors are right in the middle of the action. Both Samson Oil & Gas (SSN) and Sundance Energy (SEA) not only have acreage there but are about to drill.

The Bakken formation stretches across 65,000sq km under Montana, North Dakota, Manitoba and Saskatchewan. The oil, contained within dolomite, was once difficult to extract, but the modern technology of horizontal drilling has made the oil's recovery not only possible but reasonably cheap by world standards.

It's oil rush time in North Dakota, with 4000 active oil wells and, according to the Associated Press, there's a "drilling frenzy", with farmers becoming overnight millionaires as oil is discovered under their properties.

The US Government was considering a full investigation of the Bakken area in the mid-1990s, but this was abandoned when crude fell below $US10 a barrel. But not only is there oil there, it is widely distributed. According to a Canadian Broadcasting Corp feature on the formation, 98 per cent of wells drilled at the Elm Coulee oilfield in Montana have yielded crude. In early June, Toronto-listed Reece Energy announced it had found oil in the first well it drilled into the Bakken section in Saskatchewan.

In 1995, the US Geological Survey estimated the Bakken formation in North Dakota and Montana contained 151 million barrels of oil; in April that was raised to as much as 4.3 billion barrels of "undiscovered, technically recoverable oil". And that figure does not include discovered oil, or oil not recoverable with present technology, which could total (again according to the USGS) more than 400 billion barrels, several times the size of Saudi Arabia's Ghawar field.

The USGS says the recoverable total for the Bakken is four times that of the next largest continuous oil accumulation, the well-drilled Austin Chalk of Louisiana and Texas. Not that this means that the Australians are going to come up trumps, but it is clearly one of the better places to be looking.

So keep an eye on these two. Samson, which holds 1540ha at its North Harstad lease, is in a joint venture new well that will be drilled to a vertical depth of 3455m and then directed horizontally for a distance of 1463m into the Bakken formation. Samson said an independent study showed its lease area could hold 7.7 million barrels of recoverable oil, of which 3.2 million barrels would be its share.

In May, Sundance announced it had acquired acreage in North Dakota within the Bakken formation. It has recently received a permit to drill its first well with spudding expected in August.

http://www.theaustralian.news.com.au/story/0,25197,23978394-18261,00.html

rederob · 12 July 2008

If Bakken had the quantities of free flowing oil that speculators are hoping for, then the oil majors would have had it pegged in a flash.
Bakken is likely to continue to be for small fry, with small scale projects yielding small quantities of oil, albeit profitably for some.
The term "largest continuous oil accumulation" means what?
It means the oil finds will be largely dispersed, requiring substantial outlays on a regular basis over a long time. Importantly, it won't do anything to ameiorate the US supply problem presently faced - not now, not soon, and not into the future.

So_Cynical · 12 July 2008

wikilink said:
The United States has the largest known deposits of oil shale in the world, according to the Bureau of Land Management and holds an estimated 2,500 gigabarrels of potentially recoverable oil, enough to meet U.S. demand for oil at current rates for 110 years. However, oil shale does not actually contain oil, but a waxy oil precursor known as kerogen.

http://en.wikipedia.org/wiki/Oil_reserves
http://en.wikipedia.org/wiki/Oil_shale_reserves

I believe that with oil above 100 a barrel....its a whole new ball game.

The historical oil experience has been with cheap oil, expensive oil has only been with us a year or so...our oil infrastructure and our economic dependence on oil isn't gona go away in a hurry, so shale oil as an alternative
supply will surly get developed.

Like the Americans are just gona leave 2,500 gigabarrels in the ground.
Its a win win win situation for the Americans

The US developing a "shale oil" industry will.

Counter OPEC and the Arab producers, disempowering them somewhat.
Provide a substantial economic stimulus to domestic America, Jobs etc.
Strategically reduce Americas dependence on foreign oil.
Save the US Billions of dollars NOT importing as much oil.

All of the above is politically very easy to sell to the US people and Congress etc.

nioka · 12 July 2008

Salamander said:
Don't think that's possible as it seems the plant equipment has been sold - see sale brochure.

One report said it was most likely to be sold off for scrap. Not great considering it apparently cost around $380m.

I listened to an interview with someone from QER who are selling the plant. They are a private company that bought the plant after it was closed down. I gathered that the reason for the sale of that plant is that they are looking at newer technology which will be much more effecient and more enviromentally friendly. The project is far from dead. However it is a private company and the spokesperson indicated that they intended to stay that way. I think we will hear more about this in the near future. There are other listed companies though that have leases in that area and plans that are worth watching.

Smurf1976 · 12 July 2008

So_Cynical said:
http://en.wikipedia.org/wiki/Oil_reserves
http://en.wikipedia.org/wiki/Oil_shale_reserves

I believe that with oil above 100 a barrel....its a whole new ball game.

The historical oil experience has been with cheap oil, expensive oil has only been with us a year or so...our oil infrastructure and our economic dependence on oil isn't gona go away in a hurry, so shale oil as an alternative
supply will surly get developed.

Like the Americans are just gona leave 2,500 gigabarrels in the ground.

Some serious questions:

1. How much of that is net recoverable oil? That is, oil that can be taken from the ground and which is left after powering the production process (including desalination if used)? I'd guess it will be a lot less than 2,500 Gb.

2. Where will the waste be dumped? We're talking some pretty massive amounts of expanded rock here.

grace · 12 July 2008

nioka said:
I listened to an interview with someone from QER who are selling the plant. They are a private company that bought the plant after it was closed down. I gathered that the reason for the sale of that plant is that they are looking at newer technology which will be much more effecient and more enviromentally friendly. The project is far from dead. However it is a private company and the spokesperson indicated that they intended to stay that way. I think we will hear more about this in the near future. There are other listed companies though that have leases in that area and plans that are worth watching.

Yes, I did read that somewhere, newer technology to be used....still alive.

nioka, what was the oil shale industry news here during the past week? I missed it I think.

rederob · 12 July 2008

So_Cynical said:
The US developing a "shale oil" industry will.

Counter OPEC and the Arab producers, disempowering them somewhat.

Provide a substantial economic stimulus to domestic America, Jobs etc.

Strategically reduce Americas dependence on foreign oil.

Save the US Billions of dollars NOT importing as much oil.

All of the above is politically very easy to sell to the US people and Congress etc.

Oil shale proponents are just pissing in the wind.
There will be better ways of generating energy in the future than squeezing oil out of rocks.
One of the baseline studies on oil shale is from RAND, and this is part of their summary:

Development Timeline. Currently, no organization with the management, technical, and financial wherewithal to develop oil shale resources has announced its intent to build commercial-scale production facilities. A firm decision to commit funds to such a venture is at least six years away because that is the minimum length of time for scale-up and process confirmation work needed to obtain the technical and environmental data required for the design and permitting of a first-of-a-kind
commercial operation. At least an additional six to eight years will be required to permit, design, construct, shake down, and confirm performance of that initial commercial operation. Consequently, at least 12 and possibly more years will elapse before oil shale development will reach the production growth phase. Under high growth assumptions, an oil shale production level of 1 million barrels per day is probably more than 20 years in the future, and 3 million barrels per day is probably more than 30 years into the future.

Let's be generous and assume the "go ahead" is given tomorrow and commercial production of 1 million barrels a day is achieved in 10 years.
Frankly, it's too little, too late.
RAND had some other interesting points. In 2005 dollars an above ground shale oil retort facility might be commercially viable if actual per barrel prices of oil were never less than $70. Although we might never again see oil as low as $70 again, we have yet to see a commercially viable oil shale plant
Shell have a trial concept of in-situ retorting that they suggest could extract oil at a cost of $20/barrel. I reckon the difference between theory and practice is so great that it won't see the light of day.

So_Cynical · 12 July 2008

Oil Shale Development in the United States: Prospects and Policy Issues

Is an interesting read...i liked this bit.

In-Situ Retorting. In-situ retorting entails heating oil shale in place, extracting
the liquid from the ground, and transporting it to an upgrading or refining facility.
Because in-situ retorting does not involve mining or aboveground spent shale disposal,
it offers an alternative that does not permanently modify land surface topography
and that may be significantly less damaging to the environment.
Shell Oil Company has successfully conducted small-scale field tests of an insitu
process based on slow underground heating via thermal conduction. Larger-scale
operations are required to establish technical viability, especially with regard to
avoiding adverse impacts on groundwater quality. Shell anticipates that, in contrast
to the cost estimates for mining and surface retorting, the petroleum products produced
by their thermally conductive in-situ method will be competitive at crude oil
prices in the mid-$20s per barrel. The company is still developing the process, however,
and cost estimates could easily increase as more information is obtained and
more detailed designs become available.

Also liked this bit RE: my earlier comments about US strategic interests and benefits to the domestic economy, jobs etc.

The Strategic Significance of Oil Shale
If the development of oil shale resources results in a domestic industry capable of
profitably producing a crude oil substitute, the United States would benefit from the
economic profits and jobs created by that industry. Additionally, oil shale production
will likely benefit consumers by reducing world oil prices, and that price reduction
will likely have some national security benefits for the United States.

rederob · 13 July 2008

It's hard to envisage any thinking person reckoning oil shale can make a meaningful contribution to "oil prices" within 10 years.
Canada's oil sands have been going for several decades as commercially viable operations and presently contribute a meagre percentage of oil to the global pot.

On the $20 oil matter, I am a geographer by trade, and I think it will snow in hell before in-situ retorting gets a commercial jersey. The environmental risks and mitigation costs are massive.
In any event, the more important sentence to highlight was "The company is still developing the process, however, and cost estimates could easily increase as more information is obtained and more detailed designs become available."

So_Cynical · 13 July 2008

rederob said:
It's hard to envisage any thinking person reckoning oil shale can make a meaningful contribution to "oil prices" within 10 years.

Agreed...So Rob what would make a meaningful contribution to reducing fuels prices over the next Decade??? :dunno:

Some more questions to consider.

1.What will bring the US out off the Recession its now in?

2. How will the US address the Trade imbalance?

3. How will the US stimulate the domestic economy and create, blue collar (middle America) jobs?

Developing a shale oil industry help do all the above...in fact its the only initiative that
would make a substantial contribution to all 3...a win win win solution.

I just cant see how the US wouldn't throw money at this, what would the average american
want...if given the choice between, giving the Saudis or Iranians 150+ dollars a barrel or keeping
that money at home....what other industrial, middle America jobs are there on the horizon? :dunno:

rederob · 13 July 2008

My blue with you:

So_Cynical said:
Agreed...So Rob what would make a meaningful contribution to reducing fuels prices over the next Decade??? :dunno:
Answer: In the short term we need higher higher prices that stimulate demand destruction and a flight to alternative energy that could be cheaper, but at least will be sustainable.

Some more questions to consider.

1.What will bring the US out off the Recession its now in?
Answer: Time - to work through the debt burden and return the population to a "savings" mentality rather than a credit mentality.

2. How will the US address the Trade imbalance?
Answer: In regard to oil debts, it will be a slave to oil purchases for many years to come until its energy paradigm shifts elsewhere.
3. How will the US stimulate the domestic economy and create, blue collar (middle America) jobs?
Answer: I really don't know!

Developing a shale oil industry help do all the above...in fact its the only initiative that would make a substantial contribution to all 3...a win win win solution.
If you believe that a commercially unproven, risky, dirty technology that could supply 5% of US demand - but not for 20 years - is the answer, then far be it for me to convince you otherwise.

I just cant see how the US wouldn't throw money at this, what would the average american want...if given the choice between, giving the Saudis or Iranians 150+ dollars a barrel or keeping that money at home....what other industrial, middle America jobs are there on the horizon? :dunno:
A recent CSIRO study has suggested that before the US could get an operational retort into production the price of petrol could reach $35 per gallon. Building nuclear power plants and converting as much transport over to fully electric models would be less costly, quicker, and produce a viable outcome that Americans might swallow.

Salamander · 15 July 2008

sam76 said:
Shale oil all the rage as prices soar

PURE SPECULATION: Robin Bromby | July 07, 2008

IF you haven't heard of the Bakken shale formation, then it's time to get a handle on the story. The US Geological Survey recently termed it the largest continuous oil accumulation it had ever assessed.

This is not just a matter of academic interest to us, because two Australian-listed juniors are right in the middle of the action. Both Samson Oil & Gas (SSN) and Sundance Energy (SEA) not only have acreage there but are about to drill.

The Bakken formation stretches across 65,000sq km under Montana, North Dakota, Manitoba and Saskatchewan. The oil, contained within dolomite, was once difficult to extract, but the modern technology of horizontal drilling has made the oil's recovery not only possible but reasonably cheap by world standards.

It's oil rush time in North Dakota, with 4000 active oil wells and, according to the Associated Press, there's a "drilling frenzy", with farmers becoming overnight millionaires as oil is discovered under their properties.

The US Government was considering a full investigation of the Bakken area in the mid-1990s, but this was abandoned when crude fell below $US10 a barrel. But not only is there oil there, it is widely distributed. According to a Canadian Broadcasting Corp feature on the formation, 98 per cent of wells drilled at the Elm Coulee oilfield in Montana have yielded crude. In early June, Toronto-listed Reece Energy announced it had found oil in the first well it drilled into the Bakken section in Saskatchewan.

In 1995, the US Geological Survey estimated the Bakken formation in North Dakota and Montana contained 151 million barrels of oil; in April that was raised to as much as 4.3 billion barrels of "undiscovered, technically recoverable oil". And that figure does not include discovered oil, or oil not recoverable with present technology, which could total (again according to the USGS) more than 400 billion barrels, several times the size of Saudi Arabia's Ghawar field.

The USGS says the recoverable total for the Bakken is four times that of the next largest continuous oil accumulation, the well-drilled Austin Chalk of Louisiana and Texas. Not that this means that the Australians are going to come up trumps, but it is clearly one of the better places to be looking.

So keep an eye on these two. Samson, which holds 1540ha at its North Harstad lease, is in a joint venture new well that will be drilled to a vertical depth of 3455m and then directed horizontally for a distance of 1463m into the Bakken formation. Samson said an independent study showed its lease area could hold 7.7 million barrels of recoverable oil, of which 3.2 million barrels would be its share.

In May, Sundance announced it had acquired acreage in North Dakota within the Bakken formation. It has recently received a permit to drill its first well with spudding expected in August.

http://www.theaustralian.news.com.au/story/0,25197,23978394-18261,00.html

The headline of this article is wrong - the Bakken shale formation is not oil shale, but just contains conventional oil beneath a layer of 'normal' (not oil) shale although it requires an unconventional horizontal drilling technique to reach it.

Some in the US media have also incorrectly called it oil shale - I think they see the words oil & shale & automatically assume that it's oil shale.

Salamander · 23 July 2008

The Queensland Sunday Mail newspaper (Sunday version of the Courier Mail) has come out opposing shale oil in an editorial last weekend - see the last paragraph below

Sunday Mail
July 20, 2008
Editorial

Our greenhouse must be in order with energy sources

THE discovery of what could be one of the world's largest geothermal sites in northwest Queensland is exciting news.

Free of greenhouse gas emissions, geothermal – or hot rocks technology – is set to become one of the country's most important energy sources as the search for alternatives to fossil fuels intensifies in the race to beat climate change.

According to a CSIRO assessment, Queensland is blessed with such alternatives: geothermal, solar and wind. Each could provide enough electricity to meet all of the state's current power consumption.

Less exciting is the seemingly ho-hum response to date of Mines and Energy Minister Geoff Wilson. Climate-change campaigners are justified in feeling disappointed at the lack of progress in coming up with a strategy and directing investment into developing these solutions to global warming.

There are worrying signs that the same sluggishness and lack of vision which for years marked the Government's approach to roads, transport, other infrastructure and other vital services such as health may also be afflicting its response to the greatest challenge facing us all.

There's no time to waste, particularly in Queensland. While Mr Wilson prefers to spruik that our rate of emissions is improving faster than any other state, that spin cycle does not remove the dirty fact that Queensland is the country's biggest greenhouse gas polluter.

The Government's current strategy of putting the vast majority, if not quite all, of its eggs in the one basket of clean-coal technology is risky indeed.

Coal is vital to the economy, and clean coal undoubtedly must be part of the overall suite of solutions, but the opportunities presented by investing in renewable energy sources must not be overlooked.

The renewables "gold rush" is under way around the globe and the shift away from fossil fuels to sustainable alternatives will only accelerate. In that new world, proposals like that for a shale oil mine and processing operation in the ecological jewel of the Whitsundays are an anachronism and should be ruled out as quickly as possible.

www.news.com.au/couriermail/story/0,23739,24046422-13360,00.html

So_Cynical · 23 July 2008

Salamander said:
The Queensland Sunday Mail newspaper (Sunday version of the Courier Mail) has come out opposing shale oil in an editorial last weekend - see the last paragraph below

The renewables "gold rush" is under way around the globe and the shift away from fossil fuels to sustainable alternatives will only accelerate. In that new world, proposals like that for a shale oil mine and processing operation in the ecological jewel of the Whitsundays are an anachronism and should be ruled out as quickly as possible.

Agreed...Renewables are the future...the distant future, along with hover cars and travel
to mars etc....Geothermal has been studied for a while and will have its place in the energy
mix along with wind farms etc.

However..Govt and industry do whats easy and politically palatable, the worlds multi trillion
dollar oil infrastructure IS NOT GOING ANYWHERE IN A HURRY.

A Shale oil industry will be developed, according to this guy (Dr. Harold J. Vinegar) and his
employer Royal Dutch Shell....apparently Dr Vinegar is a genius.

cnnmoney story said:
Shell is convinced that oil shale is no myth and that after
years of secret research, it is close to achieving this oil-based alchemy. Shell is not alone in
this assessment. "Harold has broken the code," says oil shale expert Anton Dammer, director
of the U.S. Department of Energy's Office of Naval Petroleum and Oil Shale Reserves.

Vinegar has developed a cutting-edge technology that, according to Shell, will produce large quantities of high-quality oil without ravaging the local environment - and be profitable with
prices around $30 a barrel.

now the veil of secrecy has lifted. With some 200 Shell (Charts) oil shale patents already filed
and approvals needed from Colorado and the U.S. Department of the Interior to proceed with commercial production, Shell knows it has to make the public case for developing the country's
oil shale potential.

So after months of negotiations, Shell and Vinegar agreed to give FORTUNE an exclusive look
at a new technology - inelegantly dubbed the In Situ Conversion Process, or ICP - that could vindicate Shell's 28-year, $200 million (at least) bet on oil shale research.

Read the whole story: http://money.cnn.com/2007/10/30/magazines/fortune/Oil_from_stone.fortune/index.htm

Tysonboss1 · 30 July 2008

USA Oil shale production of 5million Barrels / day by 2040 is not really anything to boast about.

rederob · 30 July 2008

Tysonboss1 said:
USA Oil shale production of 5million Barrels / day by 2040 is not really anything to boast about.

True.
Furthermore, the "secret" process is energy intensive.
It's quite amusing that proponents of these wondrous schemes keep forgetting that the cost of energy inputs has market impact on margins. More simply put, the more expensive oil gets, the more expensive it will be to get anything - including shale oil - out of the ground.

Oil Shale - an economic alternative?

ColB

Tysonboss1

Salamander

Salamander

sam76

rederob

So_Cynical

The Contrarian Averager

nioka

Smurf1976

grace

rederob

So_Cynical

The Contrarian Averager

rederob

So_Cynical

The Contrarian Averager

rederob

Salamander

Salamander

So_Cynical

The Contrarian Averager

Tysonboss1

rederob

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