Queensland Shale Oil Billions in The Balance ?

Cross-posted from Peak Energy

The Australian Financial Review today has a report on a plan by the Ziff brothers to revive Queensland's defunct shale oil industry (subscription required) - "a mining project worth as much as $14 billion near the Great Barrier Reef Marine Park". The report predicts the development would bring 16,000 new residents to the Whitsundays region and is already facing opposition from local groups like "Save Our Foreshore" concerned about damage to the environment and the tourism industry.

Bloomberg has a much smaller version of the story - "Ziff Seeks to Develop Australian Oil-Shale Project, Review Says".

Queensland Energy Resources Ltd., a closely held company backed by Ziff Brothers Investments, is seeking to develop an Australian oil-shale project valued at A$14 billion ($12 billion), the Australian Financial Review reported.

Consultants from New-York based Ziff recently met the Queensland government to discuss development of the project, which would require the relocation of a nearby airport, the paper said, citing government documents. The project, located in Queensland state near the Great Barrier Reef Marine Park, may contain as much as 9.7 billion barrels of oil resources, the Review said, citing a document lodged with the state's government.

Queensland Energy is scheduled to complete an initial study into possible development of the project within six months, the Review said, citing Simon Eldridge, the company's director of corporate affairs. The company acquired the project from Southern Pacific Minerals NL in 2004, the report said.

The original Stuart shale oil development in the area was done by Southern Pacific Petroleum.

Gareth Walton at Online Opinion made the following comments about the project before it collapsed for economic and environmental reasons after a Greenpeace campaign against the plant:

The Stuart Project, operated by Southern Pacific Petroleum (SPP), is an experimental attempt to produce oil from shale rock. The plant has significant environmental problems, such as releasing highly toxic dioxins and making local people sick with noxious fumes.

Greenhouse pollution from the production of shale oil is nearly four times higher than from normal oil and SPP refuses to publicly release any evidence to prove its claim that it can reduce shale oil's greenhouse pollution to 5 per cent below normal oil. Even if SPP could reduce shale oil's greenhouse pollution to the level it claims, if SPP developed all of its shale oil deposits in Australia, as it wants to do, it would at least double Australia's greenhouse emissions.

Another company that seems to be in the Queensland shale oil game is the soon-to-list Blue Ensign Technologies - though there seems to be some controversy about one of the individuals involved.

Blue Ensign Technologies Ltd., the company that said it's found a way to extract oil from Australia's outback, filed an amended prospectus today to disclose the checkered past of the inventor of the process.

John Rendall, developer of the technology Blue Ensign plans to use to produce oil from shale, misled investors in Solv-Ex Corp. from 1995 to 1997 with claims that he had devised a method to exploit Alberta's oilsands, Double Bay, Australia- based Blue Ensign said in today's filing with the Australian Securities & Investment Commission.

Rendall, 73, and Herbert Campbell, his general counsel at Solv-Ex, were sued by the U.S. Securities and Exchange Commission in 1998 for lying to shareholders about their efforts to extract oil from tar-soaked sand in Alberta.

In his book"The Control Of Oil", John Blair was very optimistic that significant amounts of shale oil could be economically produced in the western US once the price of oil reached a certain level.

As a result, I had a look into this several years ago but decided that shale oil was probably better renamed snake oil - the prospects of producing large amounts of oil from shale seem to be bleak (or pleasingly low, if you are more concerned about global warming) - the extraction processes are energy intensive, and there are huge problems with water availability and waste disposal to overcome.

Green Car Congress had an explanation of why Shell abandoned some of its shale mining permits in Colorado a little while back, which demonstrates just how energy intensive the extraction process is.

Shell has withdrawn an application for a mining permit on one of its three oil-shale research and demonstration leases for economic reasons. Shell has been working on its In-Situ Conversion Process (ICP) for oil shale for more than two decades—ever since the collapse of the first run at oil shale in the 1980s.

Under the in-situ process, Shell drills holes into the resource, inserts electric resistance heaters, and heats the subsurface to around 343º C (650º F) over a 3- to 4-year period. During this time, very dense oil and gas is expelled from the kerogen and undergoes a series of changes, including the shearing of lighter components from the dense carbon compounds, the concentration of available hydrogen into these lighter compounds, and the changing of phase of those lighter more hydrogen rich compounds from liquid to gas.

To keep groundwater away from the process (which would affect the heating), and to keep byproducts of the process away from the groundwater flow, Shell proposes to freeze the groundwater to create a subsurface ice barrier. (The creation of subsurface ice barriers to prevent water flow is a mining technique).

Shell spokeswoman Jill Davis said the withdrawal of a permit on one of its three oil-shale research and demonstration leases was done for economic reasons: Costs for building an underground wall of frozen water to contain melted shale have “significantly escalated.” ...

Dan Denning at The Daily Reckoning also had a look at the economics of this process and some of the companies active in the region.

The Bureau of Land Management recently received ten applications (by eight companies) for a pilot program to develop Colorado's shale reserves. The program allows the companies access to public lands for the purpose of testing shale-extraction technologies. You see below an interesting mix of large, publicly traded oil giants and small, privately held innovators.

* Natural Soda, Inc. of Rifle, Colorado.
* EGL Resources Inc. of Midland, Texas.
* Salt Lake City-based Kennecott Exploration Company.
* Independent Energy Partners of Denver, Colorado
* Denver-based Phoenix Wyoming, Inc.
* Chevron Shale Oil Company.
* Exxon Mobil Corporation.
* Shell Frontier Oil and Gas Inc

There is dispute within the industry over how long, if ever, demonstration extraction technologies can become commercially viable. I've spoken with some of the smaller companies that have applied for leases from the BLM. Some of them will have to raise money to conduct the project. And some of them have been less than forthcoming about how exactly their extraction technology is different or better than previous methods.

How will it all unfold? Well, for starters, it could all utterly fail. To me, Shell's in-situ process looks the most promising. It also makes the most sense economically. There may be a better, less energy-intensive way to heat up the ground than what Shell has come up with. But Shell, Chevron, and Exxon Mobil clearly have the resources to scoop up any private or small firm that makes a breakthrough.

A more recent report from Fortune (which is both optimistic and the most comprehensive news article I've come across on the subject) indicates that some alchemists from Shell are still dreaming about turning this shale oil into gold (The Oil Drum's Gail the Actuary also reported on Shell's enthusiasm during her recent visit to one of their offshore oil platforms).

Haold Vinegar is the energy industry's leading expert on the complex petroscience of transforming solid oil shale into synthetic crude - a liquid fuel that can be refined into diesel and gasoline. The breakthroughs this 58-year-old physicist has achieved could turn out to be the biggest game changer the American oil industry has seen since crude was discovered near Alaska's Prudhoe Bay in 1968.

If that sounds like hyperbole, then consider this: Several hundred feet below where Vinegar is strolling lies the Green River Formation, arguably the largest unconventional oil reserve on the planet. ("Unconventional oil" encompasses oil shale, Canadian tar sands, and the extra-heavy oils of Venezuela - essentially, anything that is not just pumped to the surface.)

Spanning some 17,000 square miles across parts of Colorado, Utah and Wyoming, this underground lakebed holds at least 800 billion barrels of recoverable oil. That's triple the reserves of Saudi Arabia.

The reason you probably haven't heard about the Green River Formation is that most of the methods tried for turning oil shale into oil have been deeply flawed - economically, environmentally or usually both. Because there have been so many false starts, oil shale tends to get lumped with cold fusion, zero-point energy, and other "miracle" fuels perpetually just over the horizon.

"A lot of other companies have bent their spears trying to do what we're now doing," Vinegar says of his 28-year quest to turn oil shale into a commercial energy source. "We're talking about the Holy Grail."

Unlike the Grail, though, 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 that oil is approaching $90, the odds on Shell's speculative bet are beginning to look awfully good.

Shell declines to get too specific about how much oil it thinks it can pump at peak production levels, but one DOE study contends that the region can sustain two million barrels a day by 2020 and three million by 2040. Other government estimates have posited an upper range of five million. At that level, Western oil shale would rival the largest oilfields in the world.

Of course, considering the U.S. uses almost 21 million barrels a day and imports about ten million (and rising), even the most optimistic projections do not get the country to the nirvana of "energy independence." What oil shale could do, though, is reduce the risk premium built into oil prices because energy traders could rest easy knowing that the flow of oil from Colorado or Utah won't ever be cut off by Venezuelan dictators, Nigerian gunmen or strife in the Middle East. In a broader sense, U.S. energy security lies in diversity of supply, so enhancing domestic sources is appealing.

Oil shale has one other big appeal: It's not vulnerable to the steep depletion rates that have afflicted other big oilfields. Alaskan oil production is now 775,000 barrels a day, down from its peak of two million in 1988. In contrast, there's enough oil shale to maintain high production levels for hundreds of years. "Companies just aren't discovering new Prudhoe Bays anymore," says Bear Stearns oil analyst Nicole Decker, who thinks Shell has hit on a breakthrough technology. "This could be very significant - certainly bigger, to our knowledge, than any new discoveries that might be available globally." ...

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.

In a nutshell, ICP works like this: Shell drills 1,800-foot wells and into them inserts heating rods that raise the temperature of the oil shale to 650 degrees Fahrenheit. To keep the oil from escaping into the ground water, the heater wells are ringed by freeze walls created by coolant piped deep into the ground; this freezes the rock and water on the perimeter of the drill site. Eventually the heat begins to transform the kerogen (the fossil fuel embedded in the shale) into oil and natural gas. After the natural gas is separated, the oil is piped to a refinery to be converted into gasoline and other products. ...

Attempts to commercialize oil shale began in the early 20th century and accelerated during the 1970s Middle East oil crisis, when the Carter administration began pouring big money into synthetic fuels. Problem was, the prevailing production process - known as surface retorting - was dirty and inefficient. Federal subsidies masked the problems, encouraging companies to build businesses they never would have created on shareholders' dimes. When oil prices collapsed, so did the economic rationale for shale oil. The day Exxon left town in 1982, turning some communities into ghost towns, is still remembered in northwestern Colorado as "Black Sunday."

The basic problem with surface retorting was that shale had to be mined, transported, crushed and then cooked at 1,000 degrees Fahrenheit. Not only were there toxic waste byproducts, but the oil thus produced had to be purified and infused with hydrogen before it could be refined into gasoline and other products. Vinegar may be a physicist by training, but he thinks like an MBA, and to him such a labor- and energy-intensive process reeked of bad economics.

Wouldn't it be better, he thought, if Shell could extract a liquid that could be pumped and pipelined instead of a solid that had to be mined and trucked? Upon visiting a Shell surface-retorting site for the first time in 1979, he came to a quick, life-changing conclusion: "Wow, we're going to have to do this in situ." ...

"Shell continued doing research, even in the 1980s when most everyone else quit," says Glenn Vawter admiringly. Vawter, a veteran of Exxon's failed oil shale operation, is now an executive with an oil shale startup, EGL Resources. In 1998 - when the price for West Texas crude crashed to less than $15 a barrel - Shell spent $799 million on R&D; by comparison, the larger Exxon Mobil spent $549 million.

In 2006, Shell spent $855 million on R&D to Exxon's $733 million. Both Vinegar and Shell Vice President for Unconventional Production John Barry confirm that oil shale is now the biggest piece of the company's R&D budget, though neither will specify exactly how much has been spent. One source briefed by Shell officials puts the total oil shale R&D investment at north of $200 million.

Shell has long been known for its science. It invented the first semi-submersible offshore drilling rig and pioneered the use of steam flooding to maximize oil well production; it's also the industry leader in natural-gas-to-liquids (GTL) technology. Much of its research originates at its Bellaire Research Center in Houston, where Vinegar has spent most of his career.

The lab's most famous alumnus is the late M. King Hubbert, of Hubbert's Peak fame. Hubbert was the first geologist to understand the mechanics of oilfield depletion and the first to make a reasonably accurate assessment of recoverable oil reserves - initially for the U.S. and later for the world. The founding father of peak-oil theory, Hubbert predicted that U.S. production of conventional oil would peak around 1970 (he was right) and that global oil production would taper off after 2000 (he was wrong, though by how much is the topic of heated debate).

Neither Vinegar nor Barry wants to get drawn into a discussion of peak-oil theory. They simply state that the rapid growth in worldwide oil demand necessitates the development of unconventional oils. (Shell has also invested in biofuels and solar power.)

That said, it's no coincidence the oil company Hubbert once called home is the one now making the biggest bet on unconventional oil - not only oil shale but GTL and Canadian tar sands too. Jim Spehar, a former Colorado community-relations consultant for Shell, remembers company scientists and executives talking at length about peak oil - and about oil shale as a potential "bridge" between conventional oil and renewable energy - when he worked for Shell in the late 1990s.

"They definitely believed that the conventional stuff being pumped out of the ground was a declining resource," Spehar says.

Vinegar and the Shell team of chemists, engineers and physicists eventually figured out why the oil they collected early in that 1981 field test was so light and clean and the later samples so dark and dirty. They found that a slower, lower-temperature process - 650 degrees Fahrenheit, versus the 1,000 degrees required in the retorting process - allows more of the hydrogen molecules that are liberated from the kerogen during heating to react with carbon compounds and form a better oil.

This was a crucial discovery, because one of the hallmarks of a light oil - the most valuable kind because it costs less to refine - is its elevated hydrogen content.

Best of all, Shell was able to replicate the lab results in several field tests; the most recent one, in 2005, yielded 1,700 barrels of light oil. In that test, carefully engineered heating rods were inserted several hundred feet into the ground in order to gradually raise the temperature of the oil shale to 650 degrees Fahrenheit. Now Shell had a proven technology that it believed could produce a barrel of oil for $30. ...

Because there's no mining and because most of the action occurs underground, ICP is more environmentally benign than surface retorting or even tar sands production in Canada. But one big challenge is preventing the oil from leaching into ground water. Vinegar's solution was to create an impenetrable "freeze wall" of frozen rock and ice around the perimeter of the heating and production wells.

On a football-field-sized parcel of its own land, Shell is spending an estimated $30 million on a test that involves drilling 150 well bores and filling them with coolant in order to freeze surrounding rock and water to a temperature of minus-60 degrees Fahrenheit. "I do realize," says Vinegar, "that the whole idea of heating an area [to 650 degrees Fahrenheit] and simultaneously freezing around the circumference to keep the water out sounds almost like science fiction." Regardless, the freeze wall passed a smaller-scale test in 2004, and Vinegar says everything is proceeding as expected with the latest one.

All this cooling and heating, of course, consumes energy. Can it possibly be worth it? Yes, says Vinegar, who estimates ICP's ratio of energy produced to energy consumed will range from 3-to-1 to 7-to-1, depending upon the scale of the project. Moreover, the power needed to perform the heating and cooling will be generated entirely from natural gas produced onsite by the ICP process. Shell plans on building its own large power plant and is exploring ways to sequester any CO2 produced. ...

Shell insists that it has no beef with Governor Ritter's desire to proceed slowly. Even so, it's not leaving anything to chance. Shell has a public relations team devoted to oil shale and, in a shrewd move, the company has hired former U.S. Secretary of the Interior Gale Norton as an in-house lawyer. The stakes are huge. Assuming only $20 in profit for each barrel produced (at today's inflated oil prices, it would be more like $50), 300,000 barrels per day would add $2.2 billion to Shell's annual pretax profits. And three million barrels a day would be worth $22 billion.

It could be decades before Shell hits the really big numbers, if it happens at all. The logistics are daunting. It has taken the tar sands industry of Canada almost 30 years to reach its current production of about a million barrels a day (although it could be double that by 2010). ...

While it waits for its latest freeze wall to freeze and for the BLM to grind its way toward some sort of commercial leasing program, Shell is exploring other applications for ICP. It is negotiating with Jordan to test it on that country's oil shale reserves and investigating whether ICP can produce oil from Canadian tar sands - in which Shell also has major investments - more efficiently than current methods.

The Aspen Daily News has a report on some of the local politics revolving around the amount of water required for the shale oil industry, as does the Glennwood Springs Post Independent.

Battling viewpoints on oil shale were presented on Friday at a water seminar sponsored by the Colorado River District. The theme of the conference was "Water: Fueling the Future?" and much of that question pertains to how much water it might take to extract oil from the vast oil shale deposits in Western Colorado, eastern Utah and southeastern Wyoming. "Half of the world's oil shale is within 100 miles of this room," Randy Udall of the Community Office for Resource Efficiency told the audience at the Two Rivers Convention Center in Grand Junction.

And he thinks the oil shale should stay in the ground. "We have one energy boom in our region and that's plenty," he said. He said that oil shale has low energy content and it is not worth the environmental degradation, water use, and intense electricity use that would go along with intense oil shale production.

Udall believes that pursuing energy efficiency measures makes far more sense than developing elaborate and technically complex schemes to heat the oil shale in the ground as part of the process of turning it into fuel. "I do think there are better ways to address our energy needs than oil shale," he said. "The way we are using petroleum right now in the United States today is a tragedy and it's kind of a bad joke and we will not use it this stupidly and this wastefully in the future. So oil shale will have to compete with all kinds of ways to save this precious fluid we call oil or 'black magic.'"

But Tony Dammer, the director of the Office of Naval Petroleum and Oil Shale Reserves with U.S. Department of Energy, said the federal government is bullish on oil shale development and that the potential exists for 2 trillion barrels of oil to be extracted from the oil shale in the Green River Basin region.

The Wikipedia article on shale oil notes that the oil produced is high in sulphur content and thus not a direct substitute for crude oil in some applications. It also notes that some countries (notably Estonia) use shale for power generation, much like coal (presumably with even worse emissions characteristics). The article also makes the following comments on the economics of shale oil production, considering both cost and EROEI.

The various attempts to develop the world's oil shale deposits, over a period of over 150 years, have experienced successes when the cost of shale oil production in a given region was less than the price of crude oil or its other substitutes. According to a survey conducted by the RAND Corporation, a surface retorting complex (comprising a mine, retorting plant, upgrading plant, supporting utilities, and spent shale reclamation) is unlikely to be profitable in the United States until crude oil prices range between US$70 to US$95 per barrel (in 2005 dollars). Once commercial plants are in operation and experience-based learning takes place, costs are expected to decline in 12 years to US$35–US$48 per barrel. After production of 1,000 million barrels, costs are estimated to decline further to US$30 – US$40 per barrel. Royal Dutch Shell has announced that its in-situ extraction technology in Colorado could be competitive at prices over US$30 per barrel, while other technologies at full-scale production assert profitability at oil prices even lower than US$20 per barrel. To increase the efficiency of oil shale retorting, several co-pyrolysis processes have been proposed and tested.

A critical measure of the viability of oil shale as an energy source is the ratio of the energy produced by the shale to the energy used in its mining and processing, a ratio known as "Energy Returned on Energy Invested" (EROEI). A 1984 study estimated the EROEI of the various known oil shale deposits as varying between 0.7-13.3. Royal Dutch Shell has reported an EROEI of three to four on its in-situ development, Mahogany Research Project. An additional economic consideration is the water needed in the oil shale retorting process, which may pose a problem in areas with water scarcity.

An alternative method to the underground heaters combined with frozen container walls is a magical microwave device that cooks the oil straight out of the ground, currently being pursued by a company called Global Resource,

I’m not sure if I’m watching a magic trick, or an invention that will make the cigar-chomping 64-year-old next to me the richest man on the planet. Everything that goes into Frank Pringle’s recycling machine—a piece of tire, a rock, a plastic cup—turns to oil and natural gas seconds later. “I’ve been told the oil companies might try to assassinate me,” Pringle says without sarcasm.

The machine is a microwave emitter that extracts the petroleum and gas hidden inside everyday objects—or at least anything made with hydrocarbons, which, it turns out, is most of what’s around you. Every hour, the first commercial version will turn 10 tons of auto waste—tires, plastic, vinyl—into enough natural gas to produce 17 million BTUs of energy (it will use 956,000 of those BTUs to keep itself running).

Pringle created the machine about 10 years ago after he drove by a massive tire fire and thought about the energy being released. He went home and threw bits of a tire in a microwave emitter he’d been working with for another project. It turned to what looked like ash, but a few hours later, he returned and found a black puddle on the floor of the unheated workshop. Somehow, he’d struck oil.

Or rather, he had extracted it. Petroleum is composed of strings of hydrocarbon molecules. When microwaves hit the tire, they crack the molecular chains and break it into its component parts: carbon black (an ash-like raw material) and hydrocarbon gases, which can be burned or condensed into liquid fuel. Pringle figured that some gases from his microwaved tire had lingered, and the cold air in the shop had condensed them into diesel. If the process worked on tires, he thought, it should work on anything with hydrocarbons. The trick was in finding the optimum microwave frequency for each material—out of 10 million possibilities.

Pringle has spent 10 years and $1 million homing in on frequencies for hundreds of materials. In 2004 he teamed up with engineer pal Hawk Hogan to take the machine commercial.

Their first order is under construction in Rockford, Illinois. It’s a $5.1-million microwave machine the size of small bus called the Hawk, bound for an auto-recycler in Long Island, New York. More deals loom: The U.S. military may use Hawks in Iraq on waste such as water bottles and food containers. Oil companies are looking to the machines to gasify petroleum trapped in shale.

Once again, I think the final word should belong to the prophet of peak oil, King Hubbert, who noted (from Mobjectivist's "Our Petroleum Predicament" post) the following about the original retorting process for extracting oil from shale :

You read about "oil from shale", right? You heard about 1,000 billion barrels of oil out west? Don't get excited, it's going to stay there. Dr. Hubbert told the Senate Committee on Interior and Insular Affairs it wouldn't work, three years ago this month.

It really sounds simple. You "simply" dig up such enormous quantities of shale (1.88 million tons a day,) that it's equal to digging a Panama Canal every week. You crush it fine and heat to 1,100 degrees in a retort to boil off the oil locked in the rock. Then you get rid of the rock. Only now it's turned caustic and has increased in bulk by 20% to 33%. So you back-fill the leftovers, called tailings, into the hole you dug it out of. Since you still have a lot left over, you dump it into the empty scenic canyons of the west. To do this you need to grab off 89% of the undeveloped water of Colorado and Utah and half of Wyoming's. Oh yes, and you turn the Colorado River system into alkaline salts which means you wreck the agriculture in Colorado, Arizona and southern California. What will this get you? 1-1/2 million barrels of oil a day out of the 17 million per day that the U.S. is using!

A news item in the Milwaukee Journal of August 29, 1976,25 says that the last of the oil shale development companies, Standard Oil, Gulf, Shell and Ashland, have walked away from the projects in Colorado and Utah, asking the Department of the Interior to release them from paying any more on their leases. Standard and Gulf have already paid $126 million of the $210 million they bid, and Shell and Ashland have paid about $70 million of the $117.8 million they bid. You have to admit they tried, really tried and they spent a big buck to make it work, but it won't.

If oil from shale works peak oil is not avoided, just ameliorated for a time, and we are toasted browner by climate change.

If oil from shale does not work peak oil powerdown hits harder, but we are toasted less brown by climate change.

Any prefs?

Well - I'd go for a third option myself.

I'm not in any way a fan of shale oil but there is no point pretending it doesn't exist if it does turn out to be practical.

At some point, if it does get up, it will have to be killed off with carbon taxes otherwise we will be toast - but that will be a hard battle to fight in light of peak (regular crude) oil unless we manage to get some momentum behind a shift to electric transport and renewables (or nuclear).

Yes, I think unless we have some killer carbon tax we'll get fuel from tar sands, shale, gas to liquid, coal to liquid just to keep the motorists happy.

I've resigned from my state Automobile Association because of their outrageous and relentless promotion of the car culture with more travel, more holidays, more roads, lower fuel taxes etc.

They even had ads at bus stops with the theme "Wouldn't you rather be driving?"

I too am open minded about nuclear. If the choice is to be certain toast and complete breakdown of civilisation or risk nuclear I would risk nuclear.

Thousands more people have been killed by hydro accidents than nuclear.

Actually I'm not open minded about nuclear at all - I think building nuclear plants would be a foolish waste of money.

But that doesn't make it any less likely to happen than producing oil from shale...

No, this is the perfect solution, really! Think about. processing the shale in Australia is good for the environment.
The alkaline salts could be dumped on the Great Barrier Reef and would serve to reduce CO2 induced acidity. The left over tailings could be used to as a substrate to grow more reef. Or you could just go out and start dynamiting the whole reef and get the process of destruction over with once and for all and then you wouldn't have to worry about it at all. It might be good to revisit Dr. Bartlett's lecture about Arithmetic, Population and Energy http://globalpublicmedia.com/lectures/461
to get a little perspective about these pie in the sky schemes.

The alkaline salts are made by liberating the CO2 that was present before.
It was Na2CO3 and CH2 as a rock. You liberate the CO2 and the CH2 and are left with Na2O as a remainder or byproduct. So you don't get net basic, but net acid when the CH2 is burned in your car.

Ehem, I was making an obviously poor attempt at being somewhat sarcastic ;-)

It's hard to convey tone of voice in text, but you can do it with capitalization and punctuation if you try.  E.g.:

No, this is the PERFECT SOLUTION! REALLY!!!! Think about it! Processing the shale in Australia is GOOD FOR THE ENVIRONMENT!!!!!

Nobody's going to take that seriously.

Whether it be sarcasm, irony or joke (humour), surely we need only the application of intelligence, not CAPITALS, or emoticons, to work out what is going on? I am reluctant to use stereotypes, but it does seem that that the non-US (I exclude Canadians)respondents on TOD seem to be much more alert to the linguistic nuances in postings on this site.

Imagine how the text of Shakespeare would look if it were deemed necessary to signal irony with capitals or italics!
Other observers have noticed a tendency towards literalism (not to mention its kin, fundamentalism) in American readers, so if this is a congenital defect that contemporay American individuals cannot be held responsible for I apologise.

"local groups like "Save Our Foreshore" concerned about damage to the environment and the tourism industry"

We get this with every conceivable energy project, regardless of the energy source - wind, hydro, oil shale, coal, you name it. But if we don't have intense energy sources, we wind up back in the horse-and-buggy days, trying to eke out mere survival from erratic, ultra-low-efficiency plant photosynthesis. And if there is a Big Enough Dry under such conditions, we starve to death.

So I see a bit of a dilemma. I wonder how the mass tourism industry proposes even to survive if they have their own way. How many ultra-high-profit nearly-unpaid dimwit jobs changing bedsheets in hotels will remain available, if the tourists fail to arrive because they can no longer travel quickly and inexpensively? Maybe some bits of the tourism industry will be needing to make other arrangements to earn their living.

We get this with every conceivable energy project, regardless of the energy source - wind, hydro, oil shale, coal, you name it.

what's the objection to the wind in middle of the oceans?

I guess the importance of the biodiversity of the greatest coral reef on the planet does pale in comparison with jobs that tourism may or may not bring in. Talk about myopic! "Maybe some bits of the tourism industry will be needing to make other arrangements to earn their living." Yeah, like learning to be stewards of those natural resources that are fundamental to the viability to our real natural resources such as a healthy marine environment, would you be willing to venture a guess as to the economic and survival value of something like that?! Who gives a F**K about tourism if you don't have that.

Slightly off topic, but germane to the problem of accessing cheaply deposits that were once thought too expensive, has any one here looked at the Thai system developed at the University of Bath for recovering heavy oil? Thai: To-to-Heel-Injection.

THAI™ uses a system where air is injected into the oil deposit down a vertical well and is ignited. The heat generated in the reservoir reduces the viscosity of the heavy oil, allowing it to drain into a second, horizontal well from where it rises to the surface.

THAI™ is very efficient, recovering about 70 to 80 per cent of the oil, compared to only 10 to 40 per cent using other technologies.


I'm suspecting that a problem with this process is its only draining the local region. Traditional oil wells drain a fairly large region around the well. This means drilling wells till it looks like swiss cheese. If these wells are producing less that a million barrels of oil before a new one has to be drilled the the process is not competitive with extracting small pools of oil. Which is not going to help us much. Producing small pools or extracting from a small region of a large non-traditional deposit gives the same end result a little bit of very expensive oil.

If we were able to use cheap solar thermal for the underground heating process, what effect does that have on the economic and environmental costs? It might well be that the intermittency of supply might not be a problem for such applications. Perhaps some strange combination of green and brown technologies will be used?

Shale oil is a false hope. EROI figures continue to prove that shale oil is so difficult, wasteful and polluting to extract that it cannot be seen as a viable alternative to oil. Coal to petrol is similar. Never will oil flow from shale oil deposits like the oil does in places like say Iraq, or for that matter like it used to do in places like Texas USA. If Australia was the "clever country' we would have been working to secure our own liquid fuel independance as soon as the figures showing Australian oil had peaked well over a decade ago. But no-one said anything and all the while China has been honing in to take OUR gas from us, with the help of the corrupted, pork barrelling governments of Australia. Now the gas is signed over and the Chinese WILL ensure they get our LNG. To be honest I find it disturbing that on a site such as this we are still debating rubbish like Shale - to - oil to feed our manic obsession with an "easy driving" lifestyle.

If we were to develop cheap solar thermal then would it not be better to use it at 80% efficiency in battery electric cars rather than extract oil (lose about 80%) and then burn it at 15% efficiency in an IC car????


The idea of using microwaves on organic matter to produce oil is interesting.

What is the production like on tree and farm residues?

Rubber tires are made of rubber+carbon black+oil so you will get oil from tires!

Shale oil is a false hope. EROI figures continue to prove that shale oil is so difficult, wasteful and polluting to extract that it cannot be seen as a viable alternative to oil. Coal to petrol is similar.

Here in the US A LOT of diesel is used to mine and transport coal. And lots of natural gas is used to produce diesel.

Here's some Powder River coal mining photos and EROEI thoughts.


If you scroll down, coal transportation photos and rough computations of diesel used to transport coal have been posted.



Thanks for the interesting photos. Gives good feel for NM and the people's concern about energy. I like trains too.

The World Energy Council writes (2003): "One project is now being undertaken in north-eastern Australia, but it seems unlikely that shale oil recovery operations can be expanded to the point where they could make a major contribution toward replacing the daily consumption of 73 million barrels [85 million barrel in 2007] of oil worldwide." http://www.ecology.com/archived-links/oil-shale/index.html

The U.S. General Accountability Office writes (2007) "it is possible that in 10 years from now, the oil shale resource could produce 0.5 million to 1.0 million barrels per day.” But the GAO noted that the development of oil shale faces key challenges, including: “(1) controlling and monitoring groundwater, (2) permitting and emissions concerns associated with new power generation facilities, (3) reducing overall operating costs, (4) water consumption, and (5) land disturbance and reclamation.”

Walter Youngquist of the Colorado School of Mines provides a detailed history and analysis of Colorado’s oil shale. After spending billions of dollars, industry has terminated oil shale operations due to a low net energy recovery and a lack of necessary water resources. http://hubbert.mines.edu/news/Youngquist_98-4.pdf

Oil shale is a false hope first, because the EROI is very low, second the water is not there to do the job, third, the pollution and CO2 are horrendous, and fourth, the capital costs and energy costs will escalate very soon as we descend off the plateau toward terminal oil depletion.

In the list of alternatives, oil shale ranks down there with beaming down solar energy from outer space.

My comment, that it *might* be possible to utilize renewable energy to produce unconventional oil, should not be taken as an endorsement of the continuation of our current wasteful methods. Once the combination of scarcity/cost forces us to quit burning oil, we will still find it to be a very useful feedstock for all sorts of chemicals and plastics. People of the future will look in their history books and be shocked that we would burn such a valuable resource for fuel. With those sorts of economics, using renewable energy to produce oil may not be farfetched.

I don't get this shale thing at all

if 100% of the energy pumped into the rock is turned into hydrocarbon bonds from converted kerogen.. then that means our net gain is the energy in the kerogen.. true or false?

and given that each ton of shale is roughly equivalent to a ton of baked spuds then the following back of envelope reasoning must be true

Does a ton of baked potatoes contain enough energy to cook a ton of shale at 650 degrees for 3 to 4 years?

if not then the whole thing is utter nonsense OR am I wrong for some stupid reason my feeble brain can not fathom?


In James Hansen's CO2 emissions calculations there is no room whatsover for unconventional fuels. This shale oil may be useful, however, in small quantities, to grease the turbines of our windfarms.

The amounts of fossil fuel "proven" and potential reserves are uncertain and debated. Regardless of the true values, society has flexibility in the degree to which it chooses to exploit these reserves, especially unconventional fossil fuels and those located in extreme or pristine environments. If conventional oil production peaks within the next few decades, it may have a large effect on future atmospheric CO2 and climate change, depending upon subsequent energy choices. Assuming that proven oil and gas reserves do not greatly exceed estimates of the Energy Information Administration, and recent trends are toward lower estimates, we show that it is feasible to keep atmospheric CO2 from exceeding about 450 ppm by 2100, provided that emissions from coal and unconventional fossil fuels are constrained. Coal-fired power plants without sequestration must be phased out before mid-century to achieve this CO2 limit. It is also important to "stretch" conventional oil reserves via energy conservation and efficiency, thus averting strong pressures to extract liquid fuels from coal or unconventional fossil fuels while clean technologies are being developed for the era "beyond fossil fuels". We argue that a rising price on carbon emissions is needed to discourage conversion of the vast fossil resources into usable reserves, and to keep CO2 beneath the 450 ppm ceiling.


Kerogen is a hydrogen deficient hydrocarbon, even more hydrogen deficient than oil-sands. What Shell is proposing is a "slow motion" low-temperature, in-situ coking (carbon rejection) process, using electricity to heat up not only the hydrocarbon to 650 F, but the rock in which it is contained. In normal coking processes, the incoming liquid stream is pre-heated by the outgoing liquids. Here, this is not the case.

Coking processes try to minimize methane formation because it carries hydrogen that would otherwise remain in the more desireable liquid product. Shell says that the production of methane is "good" and enough to power the whole process, including providing enough electricity for the refrigeration requirements. I don't think so.

All liquid coker products are hydrogen deficient, and so would have to be treated with an average of about 1500 SCF H2/bbl to become transportation fuels. This hydrogen, like in the Alberta Tar Sands projects, would have to come out of the domestic suppy, which is on the wane. Less electricity production from natural gas will be available as time progresses.

Here is where Shell people should listen-up. If you want to develop your process you're going to need mammoth amounts of low-cost, carbon-free electricity. Thinking of going Nuclear??--give me a break!!

The only technology that has enough potential to produce the required amount of electricity in that location is the Atmospheric Vortex Engine (AVE).


Without it, you might as well stop throwing good money after bad, and just close your project down.


Kerogen and shale oil are not as hydrogen deficient as you think. Atomic C:H ratio of diesel is around 0.5. The C:H ratios of kerogen and shale oil are 0.65 and 0.62, respectively. For comparison, Athabasca bitumen is 0.67, lignite is 1.1 and subbitumonous coal is 1.7.
Ref. Synthetic Fuels Handbook, Cameron Engineers, Inc., 1975

Welcome ShaleOilGuy!

It's nice to have someone knowledgeable in the subject material to joint us and help us do some of the math.

You've provided us with only a piece of the puzzle. Why not also provide us with the density of the shale oil, its content of heteroatoms and how much hydrogen would be required (SCF/bbl) to get us up to current diesel oil specifications of 15 ppm S and the operating pressure of the HDS unit required to accomplish this.

While you're at it, please also tell us what the yield of the shale oil is based both on the original Kerogen in-situ and the rock matrix from which it is extracted. Please estimate and also include the Btu's of electricity required to heat it up to reaction temperature as well as any additional heat that would be required to drive the reaction.

Finally we would be interested in knowing what happens to the land after the area is depeleted of extractable shale oil. Does it just sit there cooking at 650 F until the end of time?


Thanks for the welcome HvyOilGuy.

"You've provided us with only a piece of the puzzle. Why not also provide us with the density of the shale oil, its content of heteroatoms and how much hydrogen would be required (SCF/bbl) to get us up to current diesel oil specifications of 15 ppm S and the operating pressure of the HDS unit required to accomplish this."

For Green River shale oil from the standard Fischer Assay test, the density is about 0.93 sg (21 API) and the heteroatoms are about 1% O, 1% S and 2% N. (You might extract the economic N-compounds before hydrogenation.) I’m not ShellInSituShaleOilGuy, but from presentations by Shell, the density of in-situ derived shale oil is lower (30% naphtha, 30% kerosene, 30% diesel). Sorry I don’t have hydrogen consumption or upgrader pressures, but I think you would agree that except for nitrogen, shale oil is likely to require less H2 than most heavy oils.

”While you're at it, please also tell us what the yield of the shale oil is based both on the original Kerogen in-situ and the rock matrix from which it is extracted. Please estimate and also include the Btu's of electricity required to heat it up to reaction temperature as well as any additional heat that would be required to drive the reaction.”

Average grade Green River oil shale is about 25 gal/ton by Fischer Assay. From what I have seen from Shell, the in situ derived oil is lighter but the yield is only maybe 70% of Fischer Assay or 50% of the kerogen. The in situ gas yield is significantly higher than surface retorting, thus the claim about sufficient gas to generate all the necessary electricity for extraction is probably correct.

"Finally we would be interested in knowing what happens to the land after the area is depeleted of extractable shale oil. Does it just sit there cooking at 650 F until the end of time?"

Like I said, I am not ShellInSituShaleOilGuy, but a volume of hot rock with lots of pre-drilled holes to the surface sounds like a good candidate for a geothermal project.


I appreciate your effort to provide us with the information. As is usually the case on the internet, one cannot draw conclusions based on this, partly due to a problem of definition. What I am looking for is a complete mass and energy balance, which is necessary to understand what's going on, even if some of the numbers are only estimates.

For example, the feed (its called feed even if it goes nowhere) is one ton (2000 lbs) of shale "in-situ". It may be broken down into mother rock and kerogen by wt pct and the kerogen fraction should be broken down by elements (C, H, O, S, N etc.). You can provide the gravity if somehow that can be determined.

The feed is transformed by adding energy (KWh/ton) which heats it up and causes the reactions to occur.

Then we have a second table which we call "products" which can be broken down by wt% into gas (C4-), naphtha (C5-350F), kerosene (350-500F, diesel (500-650 F) and the 650F+ fraction. Each liquid fraction can be assigned a gravity, an elemental analysis (always required for heteroatoms) a MABP and/or a (Watson) characterization factor. We would also benefit from a P/O/N/A analysis which tells us how much hydrogen is needed, for exapmple to reduce the kerosene fraction to 20% or less aromatics. Obviously, some of these properties are correlated with others.

The solid fractions would be the "coke" with analysis and the mother rock matrix with any transformation it may have undergone. Overall, we should be able to equate the mass (elements) and energy in with the mass (elements) and energy out.

This sounds tedious, and it is. But oil companies, in particular know very well how to give just the type of information that sounds good (amount of distillates) without saying how bad the quality is (high in aromatics). High aromatics require hydrogen to be compressed to high pressures to saturate them, another big energy consumer, since the hydrogen must be made from natural gas.

The hydrogen mfg and distribution is described by yet another mass (elemental) balance on the various fractions treated. Hard work, huh?

After the process analysis, it will be neat to see how the heat can be recovered from the initial ton of shale, still sitting several thousand feet below the surface.


All the information you are asking for is available in scientific journals and conference proceedings. The results can vary greatly depending on the type of oil shale and the process used to produce the shale oil. I am sure that Shell has all this data for their project and have done the mass and energy balance projections. It must look favourable and that is why they continue to spend more millions on it.

I agree that it is easy for a promoter of oil shale to pick out the positives like low sulphur and low density, just as an opponent can pick out the negatives such as high aromatic and nitrogen. Knowing the details and doing the calculations will lead to better decisions.

However, my original reason for replying was that the post by BigGav and most of the comments that follow are an example of the amount of misinformation there is about oil shale and how people will form opinions and make-up more misinformation. Even an oil upgrading person such as yourself will state something as fact (ie. hydrogen deficiency of kerogen) based on his logic when it simply isn't true.

So who decides whether shale oil is good or bad?

It's not a "who" that decides whether shale oil is viable or not, it's a "what"--specifically, the "net energy" of the project. In the case of shale oil, that would mainly be the electricity required to do the following: 1)get a specified amount of it out of the ground, 2) run the refrigeration units that "contain" the process and prevent contamination of the groundwater, and 3) run the refinery (mostly spent on hydrogenation units) necessary to upgrade the raw shale up to road-quality products.

In addition, natural gas must be imported as hydrogen plant fuel and feed, since I really doubt the co-product gas will be enough. It never was enough for heavy oil upgrading.

Since you'll be using electricity (the highest quality form of energy) for heating, it's doubtful it would ever become economic if it were to cost, say $0.10/kwh. On the other hand, and this was my original point, if it were to cost less than $.02/kwh, with no GHG emissions, as would be possible with the AVE (at least in the summer time), shale oil development might indeed have a future.

First, however, we need a number for the total electricity consumption/bbl of product if we are even to make a preliminary judgement about its potential. So far, I haven't seen that number.



Here is a link to an independent estimate of some of the results I think you would like to see.

Shell in situ conversion process: energy inputs and greenhouse gas emissions

For GHG emissions per unit of final product, the prediction is that Shell's ICP is similar to Alberta Tar Sands.

The report gives energy input/output ratio as 0.45 to 0.7. The distribution of energy input to refining, retorting, freeze wall, etc is also given. I don't have similar numbers for extraction and upgrading of heavy oil but I suspect that the numbers would be comparable.

In the end though, it will be the cost of production that will determine whether oil from oil shale has a future. Like heavy oil and tar sand, techniques will improve and it will eventually become profitable. Availability of skilled lablour, water and other resourses will determine the rate of expansion, just as they do in the heavy and oil sands industry now.

Thanks for the report, ShaleOilGuy. While it would be impossible for me to verify the numbers in any reasonable period of time--I am at least comforted that the "approach" that was taken seemed to be reasonably comprehensive.

I was a little bit surprised at the "heat capacity" number given, used to determine the total "energy of retorting" which seemed to indicate it only to be about one-fourth that of water on a wt basis.

I could see that there was an "allocation" made for additional energy required in refining, although I could not verify if it represented an adequate amount of hydrogen production.

I think that if it does turn out to be feasible, the Colorado grid could not possibly supply enough electricity to get things rollling. My advice to Shell if they wanted to enhance the likelihood it will beccome economic and indeed, permitted, in a reasonable time frame would still be to enter into an agreement with AVEtec in order to establish the non-polluting Atmospheric Vortex Engine as the key driving force for this "Weather to Liquids" (WTL) project. Eventually, the residual heat from one project could be harvested and amplified via the AVE to provide electricity for the next in a cascading fashion.


I recall seeing a suggestion that the gas from this process be cleaned up and used to run solid-oxide fuel cells downhole.  That would turn the project into a net electricity producer, and recycle the waste heat from the conversion.

IMHO, this bears looking into.