Six Trillion Barrels of Oil
Oil shale is a sedimentary rock that contains a high percentage of organic material that is released as kerogen when the rock is heated. The U.S. contains more than half of the world's oil shale resources. Officials estimate that more than 6 trillion barrels of oil potential will exist when production of shale oil becomes commercially viable.
Oil Shale Extraction
To create interest in developing new oil shale extraction techniques, nearly 2 million acres of federal land were opened to the possibility of production from oil shale and tar sands during 2008. The Bush-era project also came with a sweetener of a 5 percent royalty rate for the first five years of commercial production - far below the 12.5 percent charged for conventional oil and gas production on federal lands.
Two Approaches for Commercial Application
In 2010, a number of promising pilot projects continue to show the potential for commercial application both on private and federal lands. Two approaches are currently available for producing shale oil - mining followed by surface retorting and in-situ retorting.
- Surface Retorting
While the technical viability of surface retorting technology has been demonstrated, large-scale testing is still required to develop a first-of-a-kind commercial plant, and only a limited portion of the resource can be produced by mining.
- In-Situ Retorting
As for in-situ retorting - heating oil shale in place and extracting it from the ground -small-scale field tests based on slow underground heating have been successful; but again have not been subjected to larger-scale tests necessary for commercial development due to volatility in crude oil prices and federal regulatory challenges.
New Study
The re-tooling of the production process is only one of several barriers to oil shale success. Nearly 80 percent of U.S. oil shale deposits lie on federal land. These federal leases do not come with water rights and so, in February 2011, U.S. Interior Secretary Ken Salazar announced a new study of the 2008 guidelines for commercial-scale development of oil shale in Colorado, Utah and Wyoming. The new study focuses on the following issues:
- The amount of water available for oil shale operations
- Potential impacts on federal lands, wildlife and watersheds
- The amount of royalties that oil shale production should pay
The Federal study will be adjoined to an on-going assessment by the U.S. Geological Survey group who is also concerned with the amount of water available, as well as the groundwater systems that might be affected by commercial-scale oil shale operations.
Economic Benefits
As one can see, the existence of oil shale reserves within the U.S. represents substantial economic benefits to the nation. Developing an oil shale industry will require both vision and commitment from the private sector, federal and state governments and local communities. Resolving environmental, socioeconomic and key technology issues will determine when there will be an oil shale industry in the Western U.S. and how fast and how large the industry will grow.
