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Energy Forum 031809

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Oil shale developments and future directions

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Energy Forum 031809

  1. 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. 2. Introduction  COSTAR and the Oil Shale Symposium  Oil shale and global resources  Developments in the U. S.  World-wide developments  Future paths
  3. 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. 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. 5. Global Oil Shale Resources
  6. 6. Changing Resource Estimates
  7. 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. 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. 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 Recent activity - RD&D leases  Shell – permit submitted & withdrawn; tests continue on private land  Chevron – 1 core hole, 15 monitoring wells drilled and logged – Research partnerships - Los Alamos National Laboratory,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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 20. Potential influences on oil shale production  Local environmental issues  Socioeconomic issues  Global environmental issues – carbon  Peaking of global oil production
  21. 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. 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. 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. 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. 25. Backup Information
  26. 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
  27. 27. 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

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