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Production of Synthetic Crude from Kerogen Trapped in Shale Advances Through New Technologies, Business and Industry Trends Analysis

While the U.S. has much smaller oil sands deposits than those of Canada, it is rich in a different unconventional oil formation: kerogen-rich oil shale. This is found as a rock formation containing the oil precursor kerogen, which can be processed into synthetic oil of very high quality, similar to sweet crude. Kerogen-bearing shales are younger, in geologic terms, than formations that contain crude oil. Natural forces have not yet converted the sedimentary kerogen deposits into crude.   (This type of field is not to be confused with the production of actual crude oil from shale in the Bakken Shale and other fields.) Oil shale yields between 10 and 60 gallons of kerogen-based oil equivalent per ton of rock. Vast reserves are in the Green River Formation in the Western U.S., including parts of Colorado, Wyoming and Utah. The richest U.S. fields (those that contain at least 15 gallons per ton) are thought to hold a total of 1.8 trillion barrels of oil equivalent.
During the 1970s, after the oil embargo crisis, the federal government strongly encouraged both energy conservation and alternative production. In 1979, it established the U.S. Synthetic Fuels Corp., endowing it with billions of dollars for research and development of new fuels. As a result, major oil companies attempted to commercialize oil shale, but those efforts were largely abandoned by the 1980s as oil prices fell. There were also concerns about environmental damage from shale mining, and there were many technical hurdles to face. Commercial production seemed impossible. By 1985, Congress killed the Synthetic Fuels Corp.
Today, producing oil from shale remains a major challenge, and it will not see any major development until the price of crude oil remains above $60 or more per barrel. Efforts in the recent past include Shell Exploration & Production’s well-advanced test site in Colorado where it is attempting to perfect a technology that warms the kerogen while in the ground, by using heated rods that are sunk into layers of shale and then pumping out the resulting liquid. The system is called the In Situ Conversion Process (ICP). ExxonMobil has a similar technology called Electrofrac which cracks shale deposits with hydraulic pumps and then pours in electrolytic fluid to separate the kerogen from the rock. Shale deposits can be deep—up to hundreds of feet below the surface. Shell’s technology has more than 200 oil shale development patents filed. Shell has even announced that it will work with the government of China to develop shale deposits there. Estonian energy company Enefit has a cutting-edge process in which shale is heated in airless retorts to extract oil and gas. The remaining material is burned to create steam which then drives a generator, altogether yielding electricity, natural gas and synthetic crude. The ash left over is used to make cement.
Other firms seek to “mine” the rock and then process the oil from the shale using high heat in furnaces. There are vast environmental problems with this method, however, as the process is very similar to strip mining.
A number of new projects have been planned around the world, but today’s low market prices for oil are likely to delay them. In June 2014, the Jordanian government signed an agreement with Enefit to build a $2.1 billion, 540 megawatt shale-fueled power station. Jordan ranks fifth in the world for oil shale reserves. Queensland Energy Resources in Australia is hoping to convert its demonstration shale plant to commercial status, with production planned to begin as early as 2018. Yet another project in Utah in the U.S. is planned by Canada-based Questerre Energy.

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