Energy Sources

Shale Oil

Facts

Shale oil is a sedimentary rock found underground that produces petroleum when heated. Although exploiting shale oil can create jobs, spur economic development and lead to greater energy security, development of the industry is politically sensitive due to past experience. Extraction techniques carry significant ecological and land use implications and shale oil surface mining can lead to regional air quality problems and increased greenhouse gas emissions. Shale oil can be extracted through mining, followed by heating and converting to oil above ground or by heating Shale oil underground and extracting it in a process called in-situ retorting.

Source: "Gauging the Prospects of a US Shale Oil Industry," Rand Corporation, 2005

Overview

As conventional oil becomes more expensive to recover and technologies for recovering shale oil mature, shale oil could become an increasingly attractive energy source. Total world shale oil in place is conservatively estimated at 2.8 trillion barrels of recoverable oil, including over 1.8 trillion barrels in the United States. The IEA estimates that there are over 3.5 trillion barrels of conventional crude oil globally, but that only 1.2 trillion are currently technically recoverable.

Source: World Energy Council; “2007 Survey of Energy Sources;”

Source: Department of Energy; available: www.fossil.energy.gov/.../reserves/.../Oil_Shale_Resource_Fact_Sheet.pdf

Source: “World Energy Outlook 2010.” International Energy Agency

Based on current technologies, a shale oil facility is unlikely to be profitable unless real crude oil prices average around U.S.$60 per barrel (in 2007 dollars) over the operating life of the plant, It is possible for plants in some countries, such as China, to be profitable at lower crude oil prices.

“Annual Energy Outlook 2010”; Energy Information Administration

Source: “World Energy Outlook 2010.” International Energy Agency

An increase in the fuel efficiency of the US automobile fleet by just one mile per gallon (0.43 km/liter) would save 400,000 barrels of oil per day, more than shale oil is likely to produce in the next two decades.

Source: US Senate Committee on Energy and Natural Resources: Presentation by Steve Smith, Assistant Regional Director, The Wilderness Society

Source: “Annual Energy Outlook 2009”; Energy Information Administration

There may be the equivalent of more than 5 trillion barrels of oil in place in shale oils around the world (including deeper shales), of which more than 1 trillion barrels may be technically recoverable. However, the exact amount that may be economically recoverable is not known. The Green River area in the United States is thought to contain the vast majority of all recoverable shale oil resources in the world, around 800 billion barrels.

Source: “World Energy Outlook 2010.” International Energy Agency

As a result of the large energy needs of shale oil production, CO2 emissions are substantial. However, if the required energy can be provided by renewable sources or the CO2 can be captured and stored, the emissions from production will be tempered. Technologically, development of shale oil is still in its infancy, so some reductions in emissions can be expected in the future. Nevertheless, the very nature of the process means that shale oil is likely to continue to be more carbon intensive than conventional petroleum production.

Source: “World Energy Outlook 2010.” International Energy Agency

Companies are currently testing “in situ” methods, which require heating shale oil deposits below the surface to extract the oil. This could reduce the ecological impact of existing extraction methods.

Source: Institute of Electric and Electrical Engineers; available: http://www.spectrum.ieee.org/energy/fossil-fuels/the-price-is-wrong-for-oil-shale-and-tar-sand-tech

The development of an shale oil industry could, along with other fuel sources, help mitigate rising prices of petroleum in the coming decades.

Source: US Department of Energy

Government policies intended to help boost energy security may encourage faster exploitation of shale oil in the United States. However, even a massive government program is unlikely to lift production above 1 million barrels per day by 2035, when the U.S. is projected to import nearly 8 million barrels of oil per day. China could see faster development of its oil-shale industry, but currently planned projects are all on a small scale, suggesting that slow growth is likely there as well.

Source: “World Energy Outlook 2010.” International Energy Agency

Shale Oil: Opportunity

Abundant petroleum supply.

Shale oil is a sedimentary rock that produces petroleum when heated. Most of the world's shale oil is found in the western hemisphere—in the US, Canada and Latin America.

Shale Oil: Challenge

Because shale oil production is so energy intensive currently, it will add to greenhouse gas emissions unless carbon capture and storage technologies are employed. Critics claim emissions are four times greater than those from conventional oil processing. Some production techniques are also very water intensive.