Oil shale exploration: bonanza or bust?

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The Shell Mahogany facility near Rangely has released 1,700 barrels of oil. The company has been working on oil shale exploration for more than 24 years.

Shell Oil is attempting to wring oil from the rocks in the Green River Formation near Rangely. If successful, supporters say the oil shale could supply the nation’s energy for decades; detractors claim it’s expensive, inefficient and environmentally hazardous.
The United States’ dependence on foreign oil leaves it vunerable to the whims of OPEC, political unrest in Venezuela and Nigeria, and facing increasing competition from China for its oil needs.
Many people believe that the oil shale deposits of the Green River Formation in Utah, Colorado and Wyoming could solve the nation’s energy problems. But unlocking the energy inside the rock has proven illusive.
“Despite a century of trying, and $10 billion in investment, oil shale currently provides an infinitesimal .0001 of world energy,” said Randy Udall, director of the Community Office for Resource Efficiency in Aspen. “The technology is incredible – incredible in an insane way, incredible in a fantastic way, maybe both.”
Shell decided that previous efforts to exploit oil shale used too much energy, too much water and displaced too much land. Instead of taking rock out of the ground, heating it inside enormous retorts and releasing unstable hydrocarbons that must immediately be refined into oil, Shell plans to do something different, said Jill Davis, public relations director for the Shell Mahogany project.

Up to 2,000 feet beneath the surface, the shale layer is a rock formation containing organic matter (kerogen). It is this organic matter trapped in the rock that results in oil and gas when gradually heated.
A chilled liquid would be circulated through a closed system of pipes spaced eight feet apart causing the water in the surrounding rock to freeze and eventually form a wall of ice. This freeze wall will serve as a barrier to keep groundwater out of the contained reservoir.

“Imagine a football field,” Udall said. “Now, imagine that they freeze the perimeter of the field to about 2,000 feet deep. Then, they take the water out of the middle of the field. Once the water is removed, they will drill wells 30 to 40 feet apart, and insert long electric heaters.”
Shell then plans to heat the rock to about 700 degrees Fahrenheit, and keep it that hot for three years – completing the work that nature would have done if the oil shale had been buried deeper, Udall said. The company has withdrawn 1,700 barrels of oil from a test plot, and plans to expand the experiment to more acreage. Retorting creates a stable form of oil that doesn’t need further refinement.
“In four years, they will accomplish what it would have taken Mother Nature over 10 million years to do,” Udall said. “Once the rock is heated, it releases a hydrocarbon called kerogen and some natural gas. To do it on a large scale you’d need a power plant larger than any power plant in the history of Colorado. And you’d need a new power plant for each 100,000 barrel increment.”
Davis says estimates about power plants and energy costs are premature because Shell has not decided to take its experiments to a commercial level.
“We are not releasing what our power needs would be,” she said. “So anything coming from opposition would be estimates. But, when you compare how much energy is spent – apples to apples, BTUs to BTUs – you get 3.5 more energy units out of the oil shale than you put in through the process.”
Davis said those figures come from coal-fired electricity, off the grid. But Shell hasn’t decided how to create the electricity that would be used on a commercial project. She said the company has been having discussions with environmental groups to address any concerns about in situ drilling.
“We’ve been looking at this for more than 24 years,” she said. “And our ideas are the only ones that have been field tested. Shell is taking a long-range approach, and we’re moving cautiously. But we’re optimistic.”
Udall said it’s hard to believe that an oil company would be taking such a risk, but Shell seems to be seriously examining the potential of oil shale.
“I find it fascinating,” he said. “The energy question is insane – if you use coal to make electricity, we’re talking about burning two-thirds of the energy that you get out of the ground, just to release the oil from the rock. It’s a long shot.”
But Shell’s experiments have proven successful, Davis said. The company has removed 1,700 barrels of oil from a small plot outside Rangely. The success means Shell is moving to the next area: testing a “freeze wall” to keep oil from contaminating ground water.
“We’re moving ahead, but we want to protect the environment,” she said. “We’ll be testing on a larger scale on our private property, and we’ll know the results within 18 to 24 months. That will give us more confidence to go forward. We’re being very cautious.”
The Rand Corporation issued a 90-page study examining the potential of oil shale. The study shows that – if an efficient method of extracting oil can be achieved – that direct economic profit of $20 billion a year could be seen by companies. In addition, the group says that more than 100,000 jobs will be created.
But that job creation is exactly what has some officials in the Grand Junction area worried.
In the 1980s, Exxon abruptly closed an oil shale research facility that led to economic devastation in the region. Officials say the region’s roads, schools and infrastructure cannot handle such huge developments.
But the talk about oil shale as a panacea for the nation’s energy woes is growing. Even as Shell submitted the largest patent application in the history of the patent office, Colorado’s Department of Natural Resources is planning to create a task force to examine the potential energy source. Hearings were held last week in Grand Junction.
“People were saying, ‘Oil shale is going to shake the world,’” said Udall. “But it is so costly. If Shell goes ahead with the investment, it’s going to cost $10 billion – about the equivalent of two DIAs (Denver International Airport). That’s the capital investment. It will require hundreds of thousands of workers.”
If oil shale shakes the world, the rumble won’t be felt for quite some time. Shell is the only major company doing research and development, although Unocal and Exxon also have done oil shale research in laboratories. Shell plans to expand their experiment using Bureau of Land Management leases, and will make the decision whether to go ahead with the plan during the next three years.
After that, the Rand Corp. estimates it could take as long as 20 years before the infrastructure is in place to fully realize the potential of oil shale – up to 3 million barrels of oil a day.
Shell’s Web site says the company believes a single acre of oil shale could produce 1 million barrels of oil – oil that can be used for anything from gasoline for cars to jet engine fuel. In addition, the Web site says the Shell process “generates more oil and gas from a smaller surface area; allows access to deeper oil shale reserves; has double the recovery efficiency … (and) minimizes water use.”
Shell is testing heater types and drilling depths. During the next year, it hopes to begin testing the freezing process. While testing has occurred on private property owned by Shell, the expansion requires leasing of Bureau of Land Management lands. Construction could begin late this year, with the project operational by 2009, according to the Web site.
Shell’s next tests will be determining ways to protect the groundwater: Udall’s frozen football field. Construction of the freeze wall is expected to be completed by 2007, and the experiment will run for 13 years, according to Shell’s web site, www.shell.com/us/mahogany.
But with today’s technology, the potential energy comes with a steep price, says Udall and others who are opposed to producing oil from shale.
“The energy required is a ‘gigabunch,’” Udall said. “To produce 100,000 barrels a day, would require raising the temperature of 700 billion tons of shale by 700 degrees Fahrenheit. How much coal, how many power plants? One million barrels a day would require 10 new power plants, five new coal mines.”
Given the expenditure of energy just to get the kerogen out of the rock, oil shale is a poor contender to solve the nation’s energy problems, Udall said.
Still, Shell seems to be taking the gamble, with Davis saying the company’s testing has only increased its “confidence” in oil shale production. But Shell isn’t going to rush the scientific process, she said.
“We’re taking a long term view,” Davis said. “We’ve been looking at oil shale since oil was $10 a barrel. We’re going to make sure that this is economically feasible, environmentally responsible and socially sustainable. Shell is very interested in finding a bridge to a renewable energy future – it’s important to the company, it’s important to our nation. We need more oil resources until we can find that renewable energy source. And Shell is working toward both.”
Amy.Gillentine@csbj.com