Oil shale developments and future directions

1. Recent Developments and Future
Paths for Production of Shale Oil
Jeremy Boak, Director
Center for Oil Shale Technology & Research
Colorado School of Mines

2. Introduction
 COSTAR and the Oil Shale Symposium
 Oil shale and global resources
 Developments in the U. S.
 World-wide developments
 Future paths

3. COSTAR
 Center for Oil Shale Technology and Research
 Membership - Total, Shell, ExxonMobil
 Research Team
– Colorado School of Mines
– University of Wisconsin
– Binghamton University (SUNY)
– National Center for Atmospheric Research
 Initial tasks:
– rock mechanics,
– geology and stratigraphy,
– geochemistry
– GIS database development

4. Oil Shale Symposium
• Colorado School of Mines, Golden CO,
– October 19-23, 2008
• >300 attendees each year from >20 countries
• Strong representation by countries already
producing shale oil at the surface
• Full spectrum of viewpoints, lively discussion

5. Global Oil Shale Resources

6. Changing Resource Estimates

7. Where is the Green River Formation?
 The world’s largest known
oil shale resources occur
in:
– Eocene lake sediments of
Green River Formation
– Western Colorado and
adjacent Utah and
Wyoming
 Piceance Basin largest
fraction of reserves
 Major basins connected at
times during history
 Each basin has a unique
history
 Even different evaporite
mineralogy

8. Oil Shale - Tremendous Potential
• The U.S. Geological Survey estimates:
• Total U.S. oil shale resource is 2.1 trillion barrels
• 1.5 trillion barrels in the Green River Formation of Colorado,
Utah, and Wyoming
• 800 billion barrels of oil
• Strategic Unconventional Fuels Task Force estimate of
recoverable resource from Green River Formation
• Enough to replace the oil we import for more than 180 years
• Almost three times the proven reserves of Saudi Arabia

9. Recent activity - RD&D leases
 Shell
– permit submitted & withdrawn; tests continue on private land
 Chevron
– 1 core hole, 15 monitoring wells drilled and logged
– Research partnerships - Los Alamos National Laboratory,
University of Utah, and others
– Key issues - kerogen chemistry; rock fracturing; environmental
protection
 AMSO
– hydrologic test well drilled
 OSEC
– lease for surface processing in Utah
– Plan in preparation

10. Recent activity - other
 Other western U. S. activity
– ExxonMobil Colony site
– OSEC partnership with Petrobras & Mitsui
– Total partnership with IEP
– Ecoshale retort pilot field test complete; next step
commercial scale
– ConocoPhillips holds private land
 Regulatory activity
– Leasing regulations
– New RD&D leases
– Shell water request

11. Ecoshale pilot scale test results
 10 barrels product per
BOE energy input
 5 barrels product per
barrel water input
 API gravity 34 with no
fines;
 70% diesel + jet fuel
fraction
 CO2 2/3 of traditional
retort • Mined
 No hazardous emissions • Rubblized
• Impounded
 1 year construction to
• Handled Only Once at Mine Face
reclamation
• Stationary Extraction
 <$25/barrel cost Source: Laura Nelson, Ecoshale

12. Oil Shale Regulations
Proposed Leasing Process
 Call for expression of interest
 Comments from Governors, local governments, and Native
American tribes
 Set geographic area
 Call for lease applications
 NEPA for lease area
 Hold competitive lease sale (high bidder wins)
 Plan of Development
 Site-specific NEPA
 Obtain Permits
 Construction
 Production begins

13. Oil Shale Regulations
Diligence Milestones
 Submit proposed Plan of Development (POD) within
2 years of lease issuance
 Submit final POD within 3 years of lease issuance
 Apply for all permits within 2 years of POD approval
 Begin installation of needed infrastructure before
end 7th lease year
 Begin production by end 10th lease year

14. Oil Shale Regulations
Proposed Royalty Options
 Flat 5 %
 5 % royalty on initial production,
12.5 % thereafter
 Sliding Scale Royalty
– (Based on market price of oil)

15. Comments
 Over 75,000 comments received
 ~74,800 from letter writing campaigns
 Some comments on royalty rate:
– Shale oil costs more than oil and gas to produce and a
lower rate will promote oil shale production.
– The 5% flat rate is too high; a 1% to 3% royalty would
offset start-up cost and promote oil shale production.
– The government should impose a royalty rate higher
than 5%.

16. Competitive Leasing Route
• If regulations finalized, what is ACTUAL
impact?
• Is this a “rush to develop?”
• No environmental or socioeconomic risks – merely
set “rules of the road”
• No on-the-ground activities are authorized
• Projects must still clear 47 Federal, State and
County permitting agencies
• Water rights’ issues reside with the States, not BLM

17. Global Developments
 Total partnering with Petrobras in
Morocco and Jordan
 China contracting with UMATAC for ATP
Retort; expanding production in several
areas; completed survey of oil shale
resources
 Jordan working with multiple partners
 Estonia continues to increase production

18. Current shale oil production
20,000
China
Brazil
Production (BOPD)
15,000 Estonia
10,000
5,000
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

19. Future shale oil production (?)
10,000,000
Production
Production (BOPD)
Growth '90-'08
1,000,000 Growth '99-'08
15% Growth
US 1860-1920
100,000
10,000
1,000
1990 2000 2010 2020 2030 2040 2050

20. Potential influences on oil shale
production
 Local environmental issues
 Socioeconomic issues
 Global environmental issues – carbon
 Peaking of global oil production

21. Environmental issues for oil shale
Development
 Issues
– Water quantity and quality
– Air quality
– Surface and ecosystem impact
 Environmental process needs
– Process, baseline, management,
dissemination
– Model development
– Impact assessment & policy
– Mitigation technology development
 Social and economic impacts
– Multiple developments (tight gas)
– Revenue sharing – time and share
– Concerns about boom-bust cycle
– Public outreach
– Workforce development

22. Greenhouse gases
800
Annual CO 2 (million
700
600
500
tons)
400
300
200
100
0
0 10 20 30 40
Fischer Assay
 How to keep this
 From accelerating this

23. World Oil Production – Peaking?
35,000
Annual Production (MMBO)
30,000
25,000
20,000
15,000
Actual
Hubbert
10,000
Exponential
a*e-bx^2
5,000
0
1950 1970 1990 2010 2030 2050 2070 2090

24. Oil Shale Conclusions
 Oil shale resources are widely distributed
 A great deal of excitement in the revived oil
shale industry
 Countries & companies that have sustained
effort will benefit by their leadership
 Both surface and subsurface processes are
being employed
 New advances offer promise for the future
 Environmental challenges are significant

25. Backup Information

26. Oil Shale and Tar Sands PEIS
Proposed Land Use Plan Amendment
Colorado – Utah – Wyoming –
359,798 acres 630,971 acres 1,000,453 acres

29. What is oil shale?
 Organicrich sedimentary
rock formed in lake or
marine environments
– Commonly carbonate rich; most
not true shale
– Kerogen-rich, primarily algal
and bacterial
– Immature precursor to oil & gas
 Produces oil upon heating