October 2008

Shell's 'in situ' shale oil process avoids mining waste 

The oil shale that spreads across Colorado, Utah, and Wyoming holds 800 billion barrels of crude. That is triple the reserves of Saudi Arabia.

There are several very good reasons why there is not much chance that oil will ever flow and arrive at a refinery. First, the deposit sits on or under federal land. Getting the rights to mine the resource would be a political nightmare and environmental battle. Secondly, the technical and logistical expertise may not exist yet to actually make extraction viable in an economic sense.

Thirdly, and an extension of the economic angle of harvesting the oil, is competing alternative sources of energy are maturing rapidly and the question exists that alternative energy's price will fall with time and will oil even be able to compete on price?

The Wall Street Journal reported companies have tried bringing the rock to the surface to heat it, but that has proved too costly.

Royal Dutch Shell has been working for more than 25 years on a novel technology that heats the shale in the ground.

Such an "in situ" process would not involve an expensive and environmentally troublesome mining operation and would not create thousands of tons of waste in the form of spent shale, as the mining method does.

Shell's process is complicated.

The company plans to insert electric heaters hundreds of feet into the ground to heat the oil shale to between 650 degrees and 700 degrees for more than two years.

In order to prevent groundwater from flowing into its production area raising pollution concerns and dissipating the heat Shell plans to create an underground wall around its site by freezing surrounding groundwater, down to 2,000 feet deep.

Shell has tested the steps individually, but never all together. The company will not decide whether its project is commercially viable until some years in the future.

shell

Other companies are trying different techniques. American Shale Oil Corp., a company controlled by telephone company IDT Corp., is preparing to test heating the oil shale in Colorado by injecting steam into the ground through U-shaped pipes.

Daniel Elcan, managing partner of Oil Shale Exploration Co., said the older method of producing oil from shale, mining, and heating on the surface, is being used around the world.

"A lot of people say it doesn't work. That's just not true," said Elcan. In Brazil, he adds, "I can show you a process that's been working for 30 years."

His company plans to use Brazilian technology for cooking shale above ground. At a pilot project, using an existing Utah mine, the company will produce 4,000 barrels of oil a day, Elcan said. He said he hopes to be producing 50,000 barrels a day in the state by 2013.

While several countries have oil-shale industries, large-scale production is rare. Brazil's 4,600 barrels of daily oil-shale production amounts to about 19 seconds worth of U.S. consumption.

Most oil-shale production has taken place in countries with relatively few environmental restrictions, such as Estonia and China.

Democrats in Congress have blocked the U.S. Bureau of Land Management from opening more land to oil-shale production, arguing it could disturb pristine wilderness lands, contaminate or deplete groundwater reserves, and pollute the air.

The political and scientific challenges are not easily separated. The oil companies argue they can only justify spending millions on experimental technologies if they know they will get access to the land.

Moreover, industry advocates argue, the clock is ticking. They point to Canada, where production of oil from tar sands, which is in many ways a similar process, has taken decades to develop but now exceeds one million barrels of oil a day.