OIL SHALE – A RESOURCE IMPORTANT TO AMERICANS
Oil shale is an important domestic energy resource because:
1. Oil shale is a huge untapped domestic resource that can assist the nation in becoming less reliant upon foreign sources of petroleum and reduce the price we pay at the pump over the long term.
2. There are looming oil shortages, higher gasoline prices and political instability resulting from importing so much petroleum.
3. Both the military and public will benefit through the stabilization of gasoline prices, the reduction in the trade deficit, the creation of jobs here at home, the tax and royalty income for local communities, and a more secure future for our children and grandchildren.
4. Thus, a U.S. government policy is needed that supports the development of all domestic energy resources, including oil shale.
Oil shale can become a sustainable industry after decades of setbacks, because:
1. Knowledge about oil shale processing has improved here in the United States, and from the experience of foreign firms.
2. Despite reports to the contrary, a wealth of information is available to the public and decision makers on water usage, environmental impacts, energy efficiency, socioeconomic impacts and benefits, and climate change implications.
3. Lessons were learned from the past attempts to commercialize oil shale. Today, there are no government mandates and financial incentive for quick production as there were in an earlier boom and bust era.
4. Current research and development projects are taking a methodical and deliberate approach to obtain the detailed technical, economic and environmental answers before proceeding.
OIL SHALE RESOURCE
Oil Shale is a natural resource that produces fuel for automobiles, jet planes, trains and trucks. It is a rock that contains a solid hydrocarbon called kerogen. The composition of the rock varies depending upon the geologic origin. While oil shale is found in many regions of the world, the largest deposits of rich oil shale occur in the United States. There are oil shale deposits in the eastern United States but the thickest and richest oil shale deposits are those in Colorado, Utah and Wyoming as can be seen on the following map.
Water is a precious commodity, particularly in the west where most of the U.S. oil shale deposits are located. There are competing water demands in the oil shale region, including the needs of municipal, agricultural, recreational and industrial interests. Water is necessary for producing shale oil. Compared to many other energy sources, the production of shale oil is not one of the largest consumers of water (see chart below from the U.S. Department of Energy). Ethanol from irrigated corn uses 100 times the water required to produce gasoline from shale oil.
Many oil shale developers have already acquired water rights that will enable them to satisfy the requirements of their projects. Water pipelines, storage and treatment facilities will be required to provide uninterrupted and reliable supplies of water to commercial oil shale projects. Due to the arid nature of the west, storage of water during the snow melt period is required to assure a supply during the dry period of the year. Many water experts believe that more multiple use public/private water storage reservoirs are needed, especially in light of some current climate change projections.
With proper management of the water resources, development of water saving technologies, and the development of water storage and diversion projects, there can be sufficient water in the future for all users. The amount of water required for oil shale projects is well known even though it varies with the technology employed and the water content of the resource. Current research, development and demonstration projects will further refine the overall needs for water for each technology.
Water is not the issue that will make or break oil shale development, but misleading information from some groups is leading the public to think it is. Water will be used sparingly, and alternate supplies can be used to reduce the required amount. Water used for oil shale development is a beneficial use that will create jobs, spur economic development, and enhance U.S. energy security.
PROCESSING OIL SHALE
Unlike conventional petroleum, shale oil cannot be pumped directly from the ground. It must be processed by a technique known as retorting, wherein the rock is heated to release crude shale oil, shale gas and water. Processing can be accomplished by mining the oil shale and retorting it on the surface, called ex-situ processing; by using underground methods known as in-situ recovery; or by a combination of the two methods. Crude shale oil is upgraded to remove certain impurities, such as sulfur and nitrogen, and then further processed in an oil refinery to produce gasoline, clean diesel fuel, jet fuel and other petroleum based products. Ex-situ Processing Ex-situ processing of oil shale has been practiced for over a century in various parts of the world. Projects based upon this approach have been operating for decades in China, Estonia and Brazil. These processing facilities look much like any modern industrial complex.
First the oil shale is mined by underground or surface mining methods. In Colorado and Utah underground room and pillar mines were opened decades ago and are still in stable condition. Because of the strength of the oil shale beds, large stable rooms can be created supported only by pillars of oil shale and rock bolts placed in the ceiling. This contributed to the excellent safety record for these mines. This is very different than many underground coal mines that have small openings in relatively weak rock. Underground oil shale mines are more like subterranean quarries, and consequently large trucks, loaders and drilling equipment can be used in them to keep costs low. After oil shale is mined, it is reduced in size in machines called crushers, conveyed to the retorting plant, and converted into crude shale oil, water and shale gas. A number of well – tested ex-situ retorting technologies are candidates for commercial projects, but none are operating at commercial scale in the United States.The waste rock that results from retorting is known as spent shale. It constitutes about 70 – 80% by weight of the mined oil shale, and expands somewhat as a result of size reduction in mining and crushin g of the mined rock. After cooling and conditioning, the spent shale is conveyed to a surface disposal area or back into the mine. At the disposal area spent shale is compacted to assure its stability, covered with top soil and vegetated. Large spent shale embankments created in the U.S. over two decades ago are stable, support vegetation and have not contaminated water supplies. Some amounts of spent shale may find applications in construction materials such as bricks and cement.
PROCESSING OIL SHALE
Unlike conventional petroleum, shale oil cannot be pumped directly from the ground. It must be processed by a technique known as retorting, wherein the rock is heated to release crude shale oil, shale gas and water. Processing can be accomplished by mining the oil shale and retorting it on the surface, called ex-situ processing; by using underground methods known as in-situ recovery; or by a combination of the two methods. Crude shale oil is upgraded to remove certain impurities, such as sulfur and nitrogen, and then further processed in an oil refinery to produce gasoline, clean diesel fuel, jet fuel and other petroleum based products.
Ex-situ processing of oil shale has been practiced for over a century in various parts of the world. Projects based upon this approach have been operating for decades in China, Estonia and Brazil. These processing facilities look much like any modern industrial complex. First the oil shale is mined by underground or surface mining methods. In Colorado and Utah underground room and pillar mines were opened decades ago and are still in stable condition. Because of the strength of the oil shale beds, large stable rooms can be created supported only by pillars of oil shale and rock bolts placed in the ceiling. This contributed to the excellent safety record for these mines. This is very different than many underground coal mines that have small openings in relatively weak rock. Underground oil shale mines are more like subterranean quarries, and consequently large trucks, loaders and drilling equipment can be used in them to keep costs low. After oil shale is mined, it is reduced in size in machines called crushers, conveyed to the retorting plant, and converted into crude shale oil, water and shale gas. A number of well – tested ex-situ retorting technologies are candidates for commercial projects, but none are operating at commercial scale in the United States. The waste rock that results from retorting is known as spent shale. It constitutes about 70 – 80% by weight of the mined oil shale, and expands somewhat as a result of size reduction in mining and crushing of the mined rock. After cooling and conditioning, the spent shale is conveyed to a surface disposal area or back into the mine. At the disposal area spent shale is compacted to assure its stability, covered with top soil and vegetated. Large spent shale embankments created in the U.S. over two decades ago are stable, support vegetation and have not contaminated water supplies. Some amounts of spent shale may find applications in construction materials such as bricks and cement.
In-situ processing employs techniques similar to the drilling and production of conventional petroleum. In this approach, wells are drilled into the oil shale strata, and retorting is conducted in the ground without mining. Other wells are drilled into the same area for production of crude shale oil liberated by underground heating. The method of supplying heat to the underground oil shale varies by technology. A number of research and development projects have been conducted using various in-situ tech niques, but none have yet reached a commercial level of production in the U.S. In-situ processing was successfully conducted in Sweden between 1941 and 1960, and experiments were conducted in the United States beginning in the 1970’s (e.g. Equity Oil Shale project in Colorado). There are a number of active in-situ R,D&D projects including the American Shale Oil project in Colorado. In-situ technologies are most applicable to thick oil shale deposits where mining is more difficult, such as the center of the Piceance Basin of Colorado where oil shale deposits are about 1000 – feet thick and buried under 1000 – feet of overburden. Crude shale oil, shale gas and water are produced from in-situ retorts. The crude shale oil produced is a quality that requires less upgrading than oil from most ex-situ processes, but recoveries are somewhat less . Studies indicate that the shale gas produced is sufficient to supply a large portion of the heat needed for oil shale retorting. Alternatively, the shale gas may be processed and sold as natural gas. Produced water may be used internally by the project or cleaned and returned to the subsurface. The spent shale resulting from in-situ processing is left underground and need not be reclaimed in the conventional sense. However, ground water in the processing area may be impacted by the spent shale and hydrocarbons left behind if mitigation measures are not taken. Concepts for excluding ground water and mitigating potential impacts to ground water are being developed.
Other Processing Methods
Modified in-situ is an approach that uses a combination of ex-situ and in-situ techniques. In one case some of the oil shale is mined underground to create a cavity for subsequent in-situ retorting. In this approach an underground void is created into which an adjoining mass of oil shale is made into rubble through explosive fracturing conducted in preparation for subsurface retorting. In another approach, the EcoShale technology, oil shale is mined, crushed, and placed into a lined and covered pit equipped with piping for in-situ retorting. Both approaches have been demonstrated at pilot scale in the field. During World War II Germany used a modified in-situ process. Oil shale was mined and placed in excavated tunnels where it was retorted using in-situ techniques to avoid bomb damage to retorts on the surface. Thousands of patents have been issued for oil shale extraction technologies. They include the retorting methods described above and other concepts that do not use heat as the principal method of extraction (e.g. extraction of kerogen by methods like flotation, gravity separation, or chemical methods such as dissolution of the oil shale rock matrix). The use of electromagnetic stimulation, electrical conduction, fuel cells, carbon dioxide injection, and biological digestion have also been explored, but none have been
tested at large scale.
Initial oil shale development activities within the United States will most likely occur in Colorado, Utah or Wyoming, because these states contain the thickest and richest oil shale deposits in the nation. Each of these states have large, uninhabited areas where oil shale projects could be constructed, such as the center of the Piceance Creek Basin in Colorado shown below.
While this would appear ideal for this new industry, these same areas may be attractive for recreation and sporting activities or they may be environmentally sensitive for any number of reasons. In order to address all of these concerns, proposed oil shale development projects will need to comply with a large number of permitting requirements, and meet public expectations, before any construction is authorized by federal, state and local government agencies.
An oil shale project cannot be built without receiving the required environmental, construction and operating permits. This is true even if the project is built on private land, although the process and the number and type of permits will be somewhat different on public and private land. Existing Federal and state environmental laws assure that projects comply with strict regulations. Federal environmental laws include: the Clean Air Act; the Clean Water Act; the Safe Drinking Water Act; the National Environmental Policy Act (NEPA); National Historic Preservation Act; and the Resource Conservation and Recovery Act, among others.
Each state has its own rules, regulations and permits. These include the following: ground water discharge permit; dam safety permit; stream alteration permit; water rights permit; drinking water permit; and the permit to mine. On a local level, counties require that projects secure construction permits, which assure the project complies with local ordinances and building codes. The county may require a project to mitigate environmental or socioeconomic impacts as conditions for issuing permits.
Many of the federal, state and local permits require public hearings and allow for a public comment period. This allows the public to voice concerns, which must then be considered by the agencies. The public input may require that the permits contain special stipulations that address issues raised. So, while an oil shale project will necessarily have environmental impacts on a region, the multiple levels of rules and regulations assure that every project must comply with the environmental laws and employ best practices and technologies to minimize or mitigate those impacts.
Studies Misrepresent Future Oil Shale Impacts
National Oil Shale Association
There have been studies released by Colorado entities that misrepresent the potential impacts of future oil shale development. While the path of oil shale development is unclear, the studies referenced below portray large-scale growth scenarios that are based on overstated assumptions, and yet have been used by state officials and others to create misleading perceptions about the impacts from future oil shale development.
1) Northwest Colorado Socioeconomic Analysis and Forecasts, Associated Governments of Northwest Colorado (AGNC), April 2008, prepared by BBC.
This report forecasts two growth scenarios in northwestern Colorado. The base case projects growth associated with the current level of natural gas drilling and development, and the second scenario is the base case plus oil shale development.
In their formal presentation, BBC stated, “oil shale breaks our model”, meaning that there are not enough specifics known about future oil shale development in Colorado to use their model for predictions. So they simply assume that the population growth occurring with oil shale development will be the same as the growth that occurred in the remote area of Fort McMurray, Alberta, Canada as the tar sands were being developed.
There is no basis to assume that the BBC projections would accurately portray the growth patterns that might occur in Colorado, or that oil shale development will require the same levels of employment as tar sands development.
Oil shale will develop incrementally and will have to meet all regulatory requirements as production levels increase over time. There is no assurance today that any significant shale oil production will be achieved, but studies such as this one tend to create public fear and may stymie the current efforts by industry to perfect technologies that can meet regulatory, economic and public expectations.
2) Water on the Rocks – Oil Shale Water Rights in Colorado, Western Resource Advocates, March 2009
Western Resource Advocates (WRA) is a nonprofit environmental law firm. The theme of this report is that the diversion of water to Colorado’s front-range communities is a better use than using western slope water for oil shale development.
In WRA’s inventory of water rights held by energy companies, they overstate the amount of water held by “oil shale interests” by adding in the entire water right holdings of the Colorado River Water Conservation District and the Yellow Jacket Water Conservancy District. The report states that because some part of their holdings could conceivably be used for oil shale purposes, it is justified to add the entire holdings of both Districts to the inventory. In reality, none of these holdings are specifically intended or designated for oil shale development. WRA also includes numerous water rights in their total inventory that they acknowledge have been abandoned.
Because of these faulty assumptions, the report overstates the actual amount of rights held by energy companies by 74% in terms of flow, and by 187% in terms of reservoir storage capacity. This study also over projects water consumption, in barrels of water per barrel of shale oil, by citing the URS Phase I report.
None of these reports assess the anticipated benefits of oil shale development, such as revenue distribution of royalties and taxes, economic development opportunities, and sustainable employment opportunities (including potentially filling the employment gap when gas drilling is completed).
While it is acknowledged that the future levels of shale oil production are not clear, the mischaracterization of oil shale’s potential impacts only serves to unnecessarily heighten public anxiety. Realistically, this enormous domestic energy resource can play a role in reducing our reliance on foreign supplies of petroleum.
Summary of Mischaracterizing Studies 2013 – Printable .pdf
SOCIAL AND ECONOMIC BENEFITS
According to the Department of Energy (2004) “The national and public benefits resulting from commercialization of a domestic oil shale industry include:
- Reducing GDP impacts of higher oil prices by $800 billion by 2020.
- Reduced balance-of-payments deficit, due to increased domestic fuel production, reduced imports, and lower world prices for crude oil and price of gasoline at the pump.
- Increasing direct federal and state revenues from taxes and royalties.
- Creation of tens of thousands of new jobs and associated economic growth.
The social benefits of an oil shale industry can be significant, and include the following:
- Economic expansion and diversification for the region.
- Educational growth, skill development, and opportunities to educate and train a sustainable workforce.
- Increased opportunities for existing local businesses and growth of opportunity for new business development.
- Fiscal support for public sector infrastructure including enhancements.
- Long-term employment opportunities including high paying jobs in the oil shale and supporting industries
Achieving a balance between the social benefits and social impacts of oil shale development is a key objective for industry, government and all stakeholders.
ENERGY AND NATIONAL SECURITY ENHANCEMENT
There are two important concerns related to energy and national security that stem from the nation’s over-reliance on imported petroleum.
- First, importing so much petroleum has made the United States vulnerable to geopolitical pressures, including the need to station military forces in hostile areas of the world.
- Second, the military requires a secure supply of petroleum products to fuel its ships, vehicles and planes.
The production of shale oil and other sources of domestic transportation fuels here in the United States can help to reduce the impacts of both energy and national security concerns.
Until about 50 years ago, the United States was self-sufficient in its supply of petroleum, and the price of the gasoline produced from it was stable year after year. However, as domestic supplies of conventional petroleum could no longer meet demand, the nation began to import petroleum from abroad. In the 1970’s, the Organization of Petroleum Exporting Countries (OPEC) cut off petroleum supplies to the United States. It resulted in gasoline shortages and long lines at gas stations. In recent years there have been dramatic swings in fuel prices when petroleum ranged from $30 to $140 per barrel and gasoline cost over $5 per gallon in some parts of the U.S. Price volatility has become a constant factor in crude oil markets. The United States imports more than 50% of its petroleum. Around 20% comes from the OPEC, half of which comes from the Middle East.
Defense Readiness Concerns include:
- Dependence on foreign oil
- Dependence on foreign refined fuels
- Higher fuel costs
Many military operations have a mission of maintaining political stability in oil producing regions of the world or along the shipping lanes used by oil tankers headed to the U.S. The DOD has long recognized the vulnerability of the oil supplies, which, in reality, represent the lifeblood of both the U.S. military strength and the U.S. economy.
Deposits of oil shale, coal and tar sands are large enough to produce unconventional fuels in quantities sufficient to meet the needs of DOD and reduce the nation’s reliance on imported oil or decades into the future..
BOOMS AND BUSTS – A DIFFERENT PERSPECTIVE
From many recent press accounts, a reader would be led to believe that all of the impacts from past oil shale development were negative. That is not the case. In the 1970s, over $100 million from the Oil Shale Trust Fund was distributed to local communities to improve infrastructure and services. During this same period, the town of Battlement Mesa was built with private oil shale industry funds (picture below). Battlement Mesa is now a thriving and diverse community in Western Colorado.
Citizens in the region are still enjoying the benefits derived from that oil shale era. It was a period when the Federal government was pushing for energy independence and offered financial incentives to build large synfuel plants. The communities in the oil shale region were not prepared for the influx of population that was projected to occur. A steep decline in oil prices and change in government policy resulted in the cancellation of most oil shale projects in the 1980s. Today the population in the region has grown, a robust energy business has evolved, and services and infrastructure have kept pace.
The area is much better prepared for an oil shale industry than it was 30 years ago. Nonetheless, funds will become available to communities from oil shale severance taxes, property taxes, and Federal lease bonus payments and royalties to improve infrastructure and services. Government policies should be put in place to ensure that these funds are made available to local communities in a timely manner.
OIL SHALE FACTS AND FICTION
The following is presented to clarify some misconceptions about oil shale.
FICTION: We don’t need oil shale. We can just use renewables and non-fossil fuel alternatives to meet our future energy needs.
FACT: During the next 50 to 100+ years the United States will need a secure domestic supply of hydrocarbon fuels especially for airline travel and ground transportation. The demand for gasoline, diesel and jet fuels will continue to increase and domestic supplies of conventional petroleum are declining. Even with increased conservation and fuel substitution, the percentage of petroleum imported from outside our borders will not decline appreciably. Growing worldwide demand will result in higher fuel prices, shortages of world supplies and political instability. Oil shale is one of the domestic bridge fuel supplies that can see the nation through to a society less dependent upon foreign fossil fuels.
FICTION: Oil shale development is moving ahead too quickly. It must be slowed down by stopping work on the commercial leasing. Regulations are not needed because a commercial industry will not emerge for many years.
FACT: Oil shale development is moving at a slow and deliberate pace and not rushing to commercialization. Current research, development and demonstration programs are focused on answering important questions:
1. Will the technologies perform as expected,
2. Can commercial projects be profitable,
3. Can projects meet environmental regulations and perform in a responsible manner, and
4. How will socioeconomic concerns be solved? Projects are moving at different rates depending upon the status of the technology being employed and the technical and economic risks involved, but all are indicating that large scale commercial plants will not go into operation for at least a decade. However, today developers need to know the requirements for leasing federal oil shale resources in order to make informed investment decisions.
—————————————————————————————————————————– FICTION: Oil shale processing uses more energy than it produces. It would be better to process pop tarts or potatoes.
FACT: Net energy is created though the retorting of oil shale. Depending upon the technology employed and the richness of the resource, estimates range from a ratio of 3:1 to 6:1. The size, concentration and quality of the oil shale resource in the Western U.S. make it an ideal domestic source of gasoline, diesel and jet fuels.
FICTION: Oil shale development has too many health, wildlife and environmental unknowns, and it is too risky and dangerous, so commercial development must await completion of all research, development and demonstration.
FACT: The basic methods of producing oil and gas from oil shale are well known. Commercial oil shale projects have been in operation in Brazil, China, Estonia and other parts of the word for decades. Large-scale semi-commercial plants were operated in the United States in the 1960-80’s. It is only the newer techniques under development that still need to be demonstrated. There is a wealth of knowledge that can be drawn upon by engineers and scientist. The ranges of technical, socioeconomic and environmental factors can also be established so the public and government officials can judge the impacts and benefits of development.
FICTION: There is not enough water available to support oil shale development in Colorado, Utah and Wyoming. Stream fisheries will be eliminated. Water will become too dangerous to drink because of contamination by elements like arsenic, boron and selenium.
FACT: Water is needed for oil shale processing. The amount varies with technology but is in the range of 3 barrels of water per barrel of upgraded shale oil produced. Water is currently available within the upper Colorado River Basin to support a commercial industry, and many developers already have rights to use that water. However, a commercial oil shale industry would use only a small percentage of the water in the Basin. It would not dry up rivers or endanger fisheries as water use is strictly regulated by appropriate agencies. Water will be stored in reservoirs during the spring runoff for use during dry periods of the year. A no-discharge strategy will be employed wherein contaminated water will be treated and used internally, and contaminated water will not be returned to local water sheds.
FICTION: Shale oil is a dirty, inferior hydrocarbon fuel.
FACT: Oil shale deposits in the Western United States are the most concentrated hydrocarbon resource in the world. One ton of oil shale will produce 25 gallons or more of shale oil that can be refined into excellent gasoline, jet fuel, diesel and other petroleum products. The shale oil content in a ton of oil shale is greater than the oil contained in a ton of rock from a conventional oil reservoir. Production of shale oil can be conducted in a manner that meets or exceeds all environmental regulations.
FICTION: All the impacts of oil shale development are negative and so significant that it should not be allowed to develop.
FACT: An oil shale industry will provide numerous benefits to local communities, states, the Federal government and the general public. These benefits are realized through public sector revenue distribution (e.g. tax, royalty, use and license fee revenues for affected units of government); economic expansion and diversification (e.g. increased opportunities for local small businesses); long-term employment opportunities (e.g. high paying full time jobs in a sustainable industry); education and skill development; and fiscal support for infrastructure improvements (e.g. schools, hospitals, transportation and public services).
FICTION: There is no need to lease Federal oil shale lands since there are plenty of private oil shale lands.
FACT: Much of the highest quality oil shale resource in the world is under U.S. Federal ownership. It is this resource that has the best chance of supporting a first generation oil shale industry that is economic and sustainable. Therefore, it is in the interest of the nation to make this resource available to industry. The oil shale lands in private hands are either small tracts not amenable to commercial development or geologically less attractive for processing using the newer technologies now under development.
FICTION: There is no solution to dealing with greenhouse gases (GHG) produced from oil shale processing. Giant coal fired power plants required to support an oil shale industry will be large sources of GHG.
FACT: Greenhouse gases produced from oil shale processing can be captured, and put to beneficial use or sequestered. Techniques are under development by oil shale and other industrial firms to meet regulations when they are enacted. Not all technologies under development require large external sources of electric power. The gas produced during oil shale retorting is sufficient to supply the retorting energy needs of most processes. Electric power required for an oil shale industry can be generated from sources other than coal, such as co-generation, natural gas, solar or wind turbines.
FICTION: Spent shale is a hazardous material and blows-up like popcorn when produced.
FACT: Spent shale is not a hazardous material. A recent finding by the U.S. EPA confirms that conclusion. Spent shale embankments resulting from semi-commercial oil shale operations in the Western United States in the 1960-80’s are stable landfills, support vegetation and have not contaminated surface or ground waters. Techniques developed in that era and experience from similar industries are planned to be demonstrated by current developers. Spent oil shale from above ground processes does not expand like popcorn but does have a slightly larger volume than the original rock primarily because of voids introduced by grinding. There is no surface disturbance from spent shale disposal associated with in-situ oil shale processing because it remains in the ground.