With more than 10 Tbbl of oil shale resources in place and advancing conversion technologies present, the outlook for development of this unconventional resource appears good, according to Khosrow Biglarbigi. There is a caveat that rises above the rest, however: the price of oil.

Speaking during an SPE webinar Nov. 11, Biglarbigi, the president and director of petroleum engineering for INTEK Inc., said that for any project to work the economics must fall into place.

Oil shale is a carbonate rock containing kerogen. If the rock is heated to between 371 C and 426.7 C (700 F and 800 F), it goes through a chemical decomposition process called pyrolysis—in the absence of oxygen—and a vapor is formed, he explained. With upgrading, the vapor is condensed into liquid and then upgraded to synthetic crude.

“For this resource to be developed, it must compete with the other conventional and unconventional oil and gas resources at prevailing market conditions. The key driver to all of this is the oil price,” Biglarbigi said. The minimum economic price for oil shale to yield a rate of return of 15%—not profit but to cover the risks—varies depending on the type of technology.

“For those deposits that are at or near the surface, the process involves mining, taking the shale to surface equipment for retorting and then upgrading before it’s sent to the refinery,” he said. “For the deeply seeded oil shale it involves drilling the wells pretty much like what we do for the conventional oil, heating the shale in situ, then recovering the vapor and condensing it to liquid and upgrading it before it is sent to the refinery. … The choke point in the system is the retort and the pyrolysis.”

For true in situ projects, Biglarbigi said the economic price is about $50/bbl. For hybrid technology, it’s about $60/bbl, compared to about $62 for surface mining and $75/bbl for underground mining. He noted that the costs are for first-generation plants.

Biglarbigi said he doesn’t see any challenges to developing oil shale that cannot be fixed if the economics are right.

“For surface retorting, the scalability is a major issue,” he said, noting that plants that are producing are not yet doing so on a commercial scale. “That’s concerning. Hopefully, with some of the hybrid technology and in situ technology we can work around the scaling issue.”

Additional challenges include water rights, water runoff, groundwater protection and water availability; between 1 bbl and 3 bbl of water are needed per 1 bbl of oil shale.

The other challenge has to do with the market, he said, using the U.S. as an example. America’s oil shale deposits are heavily concentrated in Utah, Colorado and Wyoming, which are believed to have 2 Tbbl of the 6 Tbbl of oil shale in the U.S. But attention is now focused on shale oil and shale gas, he said.

In other parts of the world, oil shale is really the only hydrocarbon resource with development potential. These areas include Jordan, which has 90 Bbbl of oil shale resources, and Morocco, with 53 Bbbl of oil shale resources.

He believes the outlook for oil shale development is good worldwide but will be delayed in the U.S., mainly due to competing resources. There is an abundance of oil shale resources. Based on his presentation, Canada has about 15 Bbbl, of which 12 Bbbl are in Ontario; Europe has 120 Bbbl, 73 Bbbl of which are in Italy; and Asia has 292 Bbbl, with 248 Bbbl in the Russian Federation and 16 Bbbl in China. The Middle East/North Africa region has about 150 Bbbl of oil shale resources, mainly in Jordan and Morocco; while Africa has about 100 Bbbl, nearly all in the Congo, and Australia has about 32 Bbbl.

“Technology development will continue in the U.S.,” Biglarbigi continued, highlighting Red Leaf Resource’s EcoShale technology being tested in Utah.

Red Leaf aims to produce about 400 MMbbl of oil during the next 20 years, according to the company’s website.

“In very simple terms, EcoShale involves surface mining oil shale, placing it into a clay-lined excavation, covering the shale with layers of impermeable clay and soil, and then heating the shale with natural gas via steel pipes to the point at which pyrolysis occurs and oil, condensate and natural gas are produced,” Red Leaf said. “The EcoShale process uses very little water—primarily for dust remediation and saturating the bentonite amended soil lining for the capsule—and reclaims the land with each capsule that is built. Reclamation begins as the capsule is heated.”

Biglarbigi said the shale is roasted at a temperature between 393 C and 415.6 C (740 F and 780 F) for six months to a year.

Shell is testing its in situ conversion process, which retorts oil belowground, in Jordan. Considering that shale is a poor conductor of heat, wells are drilled every 7.6 m (25 ft), and heaters are placed inside each well to heat the shale for up to two years, Biglarbigi explained. With time, the vapor migrates toward the producing well, where it is recovered, condensed and sent to a refinery.

Other methods of retorting oil are used aboveground, such as the Alberta Taciuk Processor where retort occurs at about 500 C (932 F) with the wall-to-wall travel time through the vapor tube vessel—which travels from a combustion zone at 750 C (1,382 F) to retort to preheat tubes and down to 250 C (482 F) to a cooling zone—for shale at less than two hours.

In Brazil, China and Estonia, the gas combustion/heating retort method has been used to yield between 4,000 bbl/d and 6,000 bbl/d.

In terms of commercial activity, Biglarbigi predicts oil shale development will expand in China, followed by Jordan where deals have been signed already, and Morocco or Mongolia. “But don’t look for any oil shale development in the U.S. over the next two to three or five years,” he said.

Biglarbigi spoke favorably of oil shale’s quality, which he said has gravities between 29°API and 36°API. But he cautioned that developers must understand the composition of the rock to properly design retorts, as marine-deposited oil shale differs from lake-deposited oil shale.

“At the end of the day, it’s a big mining operation if you look at the surface technologies, and at some point, you will have constraint on how much you can really mine,” he said.

Contact the author, Velda Addison, at vaddison@hartenergy.com.