re american shale oil, inc. -- methods of oil extraction
We'll Get it Right Next Time
RD&D Leases
Testing a New Generation of Technology
In response to the BLM's oil shale development program, 20 companies applied for new oil shale leases in the Green River Formation. Ultimately, the BLM selected 6 proposals - 5 in Colorado (3 separate bids by Shell and one each from Chevron and EGL Resources, the latter of which has since been renamed American Shale Oil) and one in Utah (the Oil Shale Exploration Company) - as worthy of continued consideration.
Each of the Colorado proposals identified 160-acre tracts on public land in the Piceance Basin in Rio Blanco County southwest of Meeker for their RD&D operation, while the one in Utah focused on a parcel in Uintah County (see map). Each company also nominated a contiguous area of 4960 acres to be reserved for preferential commercial leasing options in the future, should their research pan out. The lease period is 10 years with a renewal option of 5 more. In 2007, once the BLM completed the Environmental Analysis required by NEPA and found that the proposed RD&D operations would produce "no significant impact," the agency officially issued leases that allowed the companies to begin work.28
Two Methods of Extraction
Of the 6 RD&D leases awarded, the one in Utah proposed a conventional surface mine and retort method at an existing mine site, while the 5 in Colorado were for in situ operations. The conventional mine and retort method (sometimes called ex situ) relies on digging the oil-bearing shale out of the ground, crushing it into small pieces, and separating the oil-like kerogens from the rock by heating it in a centrally located piece of machinery called a retort. In situ refers to a method of recovering the oil contained in shale rock by heating it in place underground and using wells to extract it.
Essentially, the in situ process mimics the natural geologic process that produced conventional deposits of oil and gas, the process that would eventually take place in Shale Country over millennia. Although the details vary substantially between operators, the general in situ procedure is to artificially heat the rock within shale layers - the richest of which are called the "mahogany zone" because of the oily rocks' rich brown color - over a period as long as several years until liquefied oil is ready to be pumped to the surface through wells.
Despite significant technical obstacles and environmental questions still to overcome, in situ recovery appears to be the most viable approach to oil shale under the current economic and environmental regimes, offering lower recovery costs and a more limited footprint on the landscape compared to the conventional mining methods. The idea is not new, but the in situ techniques being developed at public RD&D leases and on private tracts today represent an original and innovative phase of thought and technology. A quick survey of some of these processes shows the variety of thought encompassed under the broad notion of in situ extraction.
The Leaseholders
Of the 3 companies granted RD&D leases to develop in situ methods, Shell has garnered the most attention so far with its In situ Conversion Process (ICP), which it has been developing since the early 1980s at the company's privately owned Mahogany Research Project site in the Piceance Basin. The process relies on electric heaters inserted down drilled holes to the depth of the targeted layer of shale, where they will gradually heat the rich rock formation over several years to a temperature of between 650 and 700 degrees Fahrenheit. The heat will fracture the shale rocks and convert the kerogen bound within them into oil and gas that can be pumped to the surface with conventional production wells. To prevent the mobilized oil and gas from contaminating groundwater, Shell is testing the viability of an underground freeze wall - a closed system of refrigeration pipes drilled 8 feet apart and 1800 feet down - designed to create an impermeable frozen barrier surrounding the heated zone.
On a lease site just to the south of the Shell claims, American Shale Oil (AMSO, formerly EGL Resources) is pursuing a similar concept, which they refer to as the Conduction, Convection, Reflux (CCR) Process. In the CCR process, rocks in the target zone will be heated by an L-shaped well drilled horizontally into the area. As the organic matter within the rocks boils, it will break the rocks apart and free the oil and gas to be collected and pumped to the surface by a conventional production well. AMSO believes that by heating the rock more quickly than Shell plans to - 3 to 12 months as opposed to several years - the CCR process will consume less energy and require fewer wells, thus minimizing the amount of land disturbed on the surface and reducing the amount of water needed to less than one barrel per barrel of oil produced. To protect groundwater, the company plans to target deeper layers of oil shale below the basin's aquifer (rather than the mahogany zone closer to the surface), leaving in place layers of rock above the target zone that will serve as a natural geologic barrier against groundwater contamination.
In contrast to these steady heating approaches being developed by Shell and AMSO, Chevron is hoping to use chemistry to produce oil from the rock. The company has teamed up with experts from Los Alamos National Laboratory and the University of Utah to explore a variety of methods, but the leading candidate is a process they call CRUSH (a loose acronym for Chevron's Technology for the Recovery and Upgrading of Oil from Shale), which intends to rubblize rich swaths of shale with precisely controlled chemical explosions before injecting a solvent (such as heated carbon dioxide) to separate the kerogen from the shale. Once dissolved by the chemical reaction, the energy-rich hydrocarbons in the kerogen could be pumped out using a conventional production well. Chevron believes that the CRUSH process will require significantly less energy and water than other in situ methods and will sequester much of the carbon dioxide underground, thus reducing its environmental impact and making it more economical even at lower oil prices. In fact, the company predicts that its method will consume less water than the quantity of groundwater pumped out of the target zone (a routine procedure in energy fields), leading the company to claim that it will be a net "producer" of water. To protect groundwater quality, much like AMSO, Chevron plans to target shale beds capped by impermeable geological formations that can permanently prevent groundwater from seeping through the contaminated rubble.
With so much still to demonstrate on these RD&D projects, none of these 3 in situ lessees expect to conclude testing or make any decisions about the next stages of production for several more years. Meanwhile, at the White River Mine RD&D lease site in Utah, the Oil Shale Exploration Company (OSEC) claims that its conventional surface mining and retort process, based on technology developed in the 1950s and used in Brazil for nearly two decades, is ready to produce 4000 barrels a day from deposits that lie closer to the surface than those in the Piceance. However, this more established form of resource extraction also carries a host of established environmental impacts - from carbon dioxide released during the retortion process to the difficulty of reclaiming mined sites and the potential for phpacid mine drainage needing perpetual management - that cast it in a less attractive light for many policymakers than the promise, albeit unproven, held out by in situ processes.29
New Technology, Old Questions
Although in situ technology holds out the hope of producing oil shale with a lighter environmental touch than the conventional method, the companies working on these new processes today face numerous challenges and uncertainties. The viability of in situ extraction hinges not only on perfecting the technology and chemistry but also on significant questions about how they will impact local communities, the land, air quality, and water resources in Shale Country. Will the next generation of operators work with local communities in ways that create a sustainable postive impact on society and the economy? Can they tread lightly enough on the land to preserve the integrity of native ecosystems? What will their presence mean for other uses of the land, such as ranching or recreation? In the arid West, how much water will these processes require? Where will it come from? Will the proposed protections against groundwater contamination be successful? Can operations be powered in a way that safeguards the area's near-pristine air quality?
These questions are not new. The conventional mine and retort operators faced many of the same questions - and too often failed to provide satisfactory responses - during the last boom cycle. But the energy companies developing the next generation of technology in Shale Country today will need to come up with novel answers if they are going to live up to their pledges to "get it right this time."
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