Oil Shale A Suitable Alternative to Conventional Oil-

Gilbert Igwe
Oil Shale: A Suitable Alternative to Conventional Oil?
EC934: Global Energy
Technologies Impacts &
Implementation

Gilbert Igwe | MSc Global Energy Management
University of Strathclyde | Oil Shale – A suitable alternative to conventional oil? 2
Executive Summary:
The global economy is driven by production and manufacturing activities, which
are dependent on one form of energy or another. For decades fossil energy has
remained the driver of economic activities. Depletion, however, has led to an
increase in the cost of finding and producing fossil resources, thus necessitating the
exploration of alternative sources of fuel for economic activities. This paper
compares the cost of exploiting two fossil energy sources (oil shale & conventional
crude oil) at the wellhead, to ascertain if oil shale is a suitable alternative to the
rapidly depleting conventional oil. The type of cost analysis parameter employed
herein is referred to as Energy Return on Investment (EROI), which is a measure of
viability. It is expressed as the ratio of energy accrued to energy invested.
1. Oil Shale
Oil Shale refers to a sedimentary rock formation that houses
solid bituminous materials often referred to as Kerogen, that
are liquefied when the rock is subjected to a chemical
heating (retorting) process known as pyrolysis. (Bureau of
Land Management, n.d.)
The two ways of extracting oil shale from the ground are
surface retorting and in-situ retorting.
1.1 Surface Retorting: Like in coal mining, open pit, strip and underground mining
are the types of mining applied in the extraction of shale. The significant difference
between the various methods is that open pit method is more economically viable,
and allows for more extraction than strip method. (Office of Technology
Assessment, 1980) Underground mining is applicable to deposits that cannot be
directly extracted from the surface. After mining, the extracted oil shale is crushed
and conveyed to a retorting facility, where it is exposed to pyrolysis, which causes
the Kerogene to liquefy and separate from its host – rock. The vessel in which
pyrolysis occurs is known as a retort. “The product of pyrolysis- hot shale oil- is
further processed with hydrogen to remove impurities, and to produce a stable
product through a process known as Oil Upgrading.” (RAND, 2005) The spent
shale/rock may be used to fill mined areas in a process called Reclamation.
(Bureau of Land Management, n.d.)
Fig. 2 & 3 are graphical representations of the processes involved in Surface
Retorting.

Fig 2.
Fig 3.
1.2 In-Situ Retorting: This method cuts down the procedural chain of mining,
crushing, transporting, heating and waste disposal observed in the surface
retorting method. The oil shale is instead heated underground to separate the
kerogene from the host-rock, and the resultant liquid and gas are extracted directly
in a manner similar to conventional crude oil extraction. (AMSO, n.d.)
Fig. 4 In-Situ Retorting
Similarly, a variant to this approach, which was developed by Occidental
Petroleum, called Modified In-situ Retorting allows for a small area to be mined

using surface retorting method and then blasting the void created. To achieve this,
an access tunnel to the bed of the oil shale is developed and enough shale is
extracted to create room for explosives that are detonated to heat the oil shale and
liquefy the kerogene, which is then pumped to the surface. (Office of Technology
Assessment, 1980)
2. Conventional Oil
Conventional Oil is a categorical identity ascribed to hydrocarbons, which are extracted
from natural gas production using
existing, economically viable means
and technology. (International Energy
Agency, n.d.) The process of
conventional oil extraction includes
drilling production wells, installing a
control valve assembly (Christmas
Head) and a central production
facility, which gathers and separates
the extracted fluids (oil, gas and
water). The production facility
ensures that the extracted oil is free of
gas, and that gas is free of water; and
water is treated and disposed. (UNEP, E&P FORUM, 1997)
3. EROI & Energy Payback Time
3.1 Energy Return on Investment: EROI is a quantitative tool for comparatively
analyzing energy systems as a measure of the value a technology delivers to the society
to the total energy required to explore, extract, process, convert and deliver this energy.
It is represented as a ratio of the energy delivered to energy costs. EROI of various
studies vary because of the extent, or boundaries, of cost coverage in the calculation of
direct and indirect costs associated with energy production and extraction. In the case
of conventional oil, the EROI entails the comparison of energy value of the petroleum
product produced to the amount of energy used in the exploration of the field, the
manufacture, transport, construction, operation, decommissioning of the crude oil
production facility; the storage, transport, refining and distribution of the refined
product. Some EROI studies have limited the boundary of coverage to the comparison of

energy values of barrels of oil produced at the wellhead to the amount of primary
energy used for extracting the crude oil.
Comparing the total energy requirement with the amount of energy produced by a
technology over its lifetime yields a simple ratio for energy return on investment, which
is mathematically represented as:
Energy return on energy invested = Total Energy Produced / Total Primary Energy Required (1)
For example, if the total energy (direct & indirect) required to produce fuel X is
150000MJ and the total fuel produced, in terms of energy, is 200000MJ, the EROI of fuel
X would be mathematically stated as:
EROIx = 200000/150000 = 1.33 or 1.33:1 (2)
This implies 1.33 units of X are produced for each unit of direct and indirect energy
used in the production process. However, if the boundaries of cost considered are
limited to just direct inputs, we may have a higher EROI. It, therefore, means that EROI
is dependent on the boundaries considered during calculations. For the sake of clarity, I
will categorize below some of boundaries used in the calculations of EROI, as postulated
by Charles A.S. Hall et al (Charles A.S. Hall, 2013):
3.2 Standard EROI (EROIST): A standard EROI computation process considers energy
input as the aggregate of on-site and offsite energy required to produce materials
utilized on site during the production process. It does not consider, for example, energy
equivalent of labor, finance and other factors. This approach of EROI is applicable to the
point of extraction (well-head, mine mouth, farm, etc.). It is suitable for EROI
comparison on the basis of Fuel-at-source. For example, comparison between crude oil
at the wellhead and oil shale at the retort facility, or liquefied kerogne pumped out of
the ground, etc. (Charles A.S. Hall, 2013)
3.3 Point of Use EROI (EROIPOU): This is a more comprehensive approach that
considers, in addition to the EROIST, the cost of refining, or converting, and transporting
the fuel. As the costs boundaries are stretched, the EROI reduces as a direct effect of
increased denominator (total energy input). (Charles A.S. Hall, 2013)
3.4 Extended EROI (EROIEXT): This approach considers total cost implication, in terms
of energy, required not only to get, convert, and make available energy but also to use a
unit of energy. “In other words, it is the EROI of the energy at the mine mouth required
for that energy to be minimally useful to society, for example to drive a truck.” (Charles
A.S. Hall, 2013)

3.5 Benefits & Draw Backs of EROI: EROI is an essential tool for designing energy
policies. A resource with the highest EROI would be considered first for exploitation by
the policy making body, and growth inducing policies would be designed to encourage
the exploitation and development of that resource. On the hand, resources with very
low, or negative, EROI are left as options of last resort when the higher EROI resources
are exhausted, or until a more efficient means of extraction and development is
developed.
“Creating time-series data sets of EROI measurements for a particular resource
provides insights as to how the quality of a resource base is changing over time.”
(Murphy et al., 2011). The change in EROI measurements over a period of time indicates
the quality status of a resource base. That is, a negative change in EROI indicates
increase in energy investments without a corresponding increase in energy output; a
positive change in EROI indicates increase in energy output with a constant, or reduced,
energy investments. (Murphy et al., 2011)
The major drawback of EROI is the variability of EROI results of different studies, as a
result of non-uniformity of cost boundaries: extent of indirect energy costs included,
and if internal energy is considered as a cost. It is found that studies that have broader
boundaries gave lower EROI results than studies that applied more conservative
boundaries. The issue of boundaries, however, does not negate the overall usefulness of
EROI in policy making. Nevertheless, having studied a few materials in the process of
preparing this report, I believe EROI would be more beneficial to policy makers if it
were broken down into phases, or stages, of the supply chain. For example, there should
be an accepted input boundaries for Upstream EROI (U)1, Midstream EROI (M),
Downstream EROI (D) and Total-Supply-Chain EROI (U + M + D), to allow an easy and
straightforward system of comparing various technologies in terms of EROI values. For
determining energy affordability in energy policy-making, the Net Energy approach
seems more plausible, because it considers the total input, both internal and external,
and the intrinsic cost to the society, required for a unit of energy to go through the
various stages of the supply chain2.
1 U= finding + extracting+ production + upgrading+ total upstream environmental cost
M=transportation + Storage+ total midstream environment cost
D= Refining/processing+ distribution + retail + total downstream environmental cost
2 Stages of theSupply Chain: Upstream – exploration, drilling/mining, production/crushing, upgrading. Midstream – transportation,
storage. Downstream- Refining, distribution, retail.

3.6 Energy Pay back Period: Energy Payback Period, also known as energy
amortization, is a measure of the time the annual energy output of a technology would
take to amortize the total energy input during the lifetime of the technology. To
calculate EPBP or EPBT, the aggregate energy required for extracting, installing,
producing, operating, decommissioning, etc. of a technology throughout its lifetime is
regarded as the input I; the annual usable energy produced by the facility (putting
energy losses and capacity factor into consideration) is regarded as the annual output O.
Payback Period = Energy Spent I / Usable Energy Produced Per AnnumO (3)
4. System Boundary
The EROIs analyzed in this study are restricted to the upstream activities of both
conventional oil and gas and oil shale. I have restricted the comparative reviews to
EROIstnd, which assesses energy input at the wellhead. The issue of system boundaries
greatly affects the outcome of EROI measurements, because it determines the weight of
the denominator. Some studies consider external energy input and self generated
energy (internal) as components of the denominator, whereas some others consider
only the external energy costs as components of the denominator.
Internal energy is vital for accurately measuring the EROI for oil shale, because some
oil shale production technologies are able to produce substantial hydrocarbon gas
sufficient for generating electricity required for the retorting process. (Cleveland &
O’Connor, 2011) For example, the in situ retorting method developed by Shell produces
substantial amount of gas, which is useful for generating electricity to power the
process.
For conventional oil, the boundary is limited to energy inputs for exploration,
development and production of oil resources. (Gagnon et al., n.d.)
5. Review of Previous Studies
5.1 Oil Shale - (Cleveland & O’Connor, 2011) (Brandt, 2009) (Brandt, 2008)
Brandt carried out lifecycle analysis of two different processes, or technologies, for
exploiting oil shale resources: Shell in situ conversion process and the Alberta Taciuk
Processor (ATP). The two different studies were based on two different measures of
EROI, which he labeled as “external energy” and “net energy”. The former considers
energy cost as the aggregate of the direct and indirect energy procured for the oil shale

development. The energy generated and used by the oil shale facility, such as the
hydrocarbon gas used self-generate electricity, is not considered an energy cost.
Whereas the net energy approach considers energy used internally and energy
purchased (from the economy) as components of the denominator. In his 2008 report,
Brandt concludes that EROI (wellhead equivalent) of oil shale, produced with Shell’s in
situ technology is in the range of 3.1:1 – 32.5:1, using the External Energy approach; and
1.6:1 – 2:1 when the Net Energy approach is applied. It is observed that the EROI
significantly reduces when internal energy consumption is counted as energy cost,
because oil shale production is more energy intensive than conventional oil, as mining
and liquefying, or heating and conventional extraction, of kerogene place huge energy
demand on the production process. Because more energy is required to produce per
unit of oil shale than conventional oil, greenhouse gas emissions from shale are expected
to exceed conventional oil’s emissions by a range of 20-48%
In his most recent report, Brandt (Brandt, 2009) proposes that oil shale, produced at an
ATP facility, has EROI values ranging from 4.4:1 to 12.1:1**3, using the External Energy
Ratio approach; and 1.63:1 to 2.6:1**4 if the Net Energy Ratio approach is applied. He
concludes that oil shale produced with the ATP technology has emissions significantly
higher than conventional oil production technologies. Emissions from low and high
assumption scenarios are approximately 63% to 87.5% higher than conventional oil
production emissions.
3&4 Pleasesee excel sheet

5.2 Enefit –Estonian Oil Shale EROI Report
Enerfit, an Estonian company involved in oil shale production, carried out a lifecycle
analysis of their latest technology (Enefit280) for oil shale production. Though there is
paucity of data on the methodology applied in the LCA analysis, the derived EROI of
11.16:1 (mine to pump), however, does project a glimpse of hope for the future of oil
shale. (Enefit, 2011) A detailed independent study is advised to review this technology
and the EROI result derived.
Source: Enefit
Oil shale industry scheme

5.3 Conventional Oil
According to the studies conducted by Charles et al 17, the EROI of conventional oil at
the wellhead for 1992, 1999 and 2006 were 26:1, 35:1 and 18:1 respectively. These
estimates foretell the urgency for new, cheaper, sources of energy to replace the rapidly
depleting hydrocarbon that powers the global economy. Studies have shown there
exists an inverse relation between drilling and EROI. An increase in the intensity of
drilling leads to a decrease of the EROI. (Guilford et al., 2011) This means that the
decreasing EROI is linked to increasing drilling costs, as depletion and changes in oil
price impacts drilling activities- favorable crude oil price encourages investments in
exploration and production. There is difficulty, however, in deriving the EROI of oil
separately, because oil and gas are usually simultaneously extracted from the same
source. In principle, the EROI of oil & gas (at the wellhead) is computed as the energy
output divided by estimated energy cost of exploration, development and production. It
should be noted that the unavailability of data is a major drawback to this approach of
computing EROI, because there is paucity of data on actual energy input and output per
well or per field. The reason for this is because such information is not publicly
available due to proprietary rights, and most oil assets are yet to be exhausted, which
makes it impossible to accurately determine the total energy production over the life of
the asset (oil well or feed). This study employed data on direct energy costs from the
Census of Mineral Industries (USA) and UK Energy Statistics, and made assumptions of
indirect energy costs, using estimates culled from the Economic Input-Output Life Cycle
Assessment Model developed by the Carnegie-Melon University’s Green Design
Institute. (Gagnon et al., n.d.)
6. Comparison
With a net-energy-ratio of 18:1 at the wellhead crude oil still remains the most
economically viable source of fuel to power economic activities and development in our
world today. When we compare the oil shale and conventional oil technologies at the
wellhead (crude oil), using the EROI derived from the external energy ratio approach, shale
oil performs considerably well with an EROI (EER) of 32.5:1 (2008 low scenario) and
12.1:1 (2009 low scenario). However, when both direct and indirect energy costs are
considered (NER), the resultant EROIs for oil shale are 2.1 (2008 low scenario) and 2.6:1
(2009 low scenario), which makes oil shale an unattractive option. The reason for this
significant difference between EER and NER EROIs is the huge energy cost associated with
the retorting process, which extracts and converts kerogene into shale oil. Although there is
no data for Mine-to-retort (crude oil) EROI of Estonian Shale, the mine-to-pump EROI of
11.61:1 does appear favorable compared to gasoline, which has an EROI range of 6:1 to
10.1:1. See fig below(Cleveland, 2005)

Fig showing gasoline EROI.
7. Policy Implication
The decline in the EROI of oil & gas, the major driver of the global economy, by almost
100% from 1999 to 2006 calls for an urgent need to develop alternative sources of fuel.
The depletion of easy-to-extract resources has begotten the desperation to exploit
hydrocarbons located deep within the earth, which require more ‘resources and energy’
to ‘locate and extract’. This increase in energy input, especially drilling, has negative
impacts on the EROI of conventional crude oil. Alternatively, we may decide to exploit
shale resources, but the EROI of oil shale, from a net energy perspective, does not
conform to the theory of the minimum EROI that a society must attain from an energy
source to support continued economic activity and social function, which is 3:1. (Hall et
al., 2009) However, if the case of the Estonian Oil Shale is to be considered, then we may
have a likely alternative to crude oil in the nearest future, assuming same EROI is
applicable to oil shale reserves around the world.
We may decide to consider the EROI of shale, in terms of External Energy Ratio, which
seems reasonably favorable, assuming the internal energy has no opportunity cost to
the society. Though it is worthy of note that the energy-intensive process of converting
kerogene to shale oil produces more greenhouse gasses than conventional crude oil. I
do, nevertheless, wonder if Carbon Capture Storage, which could minimize emissions,
would have a drastic effect on the EROI (EER) of oil shale. I suppose that further studies
may be required to evaluate the outcome of such a hypothesis.
In conclusion, I infer that EROI may not be necessarily sufficient for policy decisions. It
is, however, useful for defining a scale of performance between competing energy
sources. (Murphy, 2010).

Appendix:
Works Cited
1.UNEP, E&P FORUM, 1997. ENVIRONMENTAL MANAGEMENT IN OIL AND GAS
EXPLORATION AND PRODUCTION. [Online] Available at: HYPERLINK
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b02c883fb2303c/1394834852799/AttAoverview.pdf"
https://static1.squarespace.com/static/52d71403e4b06286127a1d48/t/53237da4e4b
02c883fb2303c/1394834852799/AttAoverview.pdf .
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"http://amso.net/about-oil-shale/oil-shale-extraction-methods/"
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Greenhouse Gas Emissions of the Shell in Situ Conversion Process. Environmental
Science Technology, 42(19), pp.7489–95.
5. Brandt, A.R., 2009. Converting Oil Shale to Liquid Fuels with the Alberta Taciuk
Processor: Energy Inputs and Greenhouse Gas Emissions. Energy Fuels, 23(12),
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6. Charles A.S. Hall, J.G.L.S.B.B., 2013. EROI of different fuels and the implications for
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States. Energy, 30(5), pp.769–782.
8. Cleveland, C.J. & O’Connor, P.A., 2011. Energy Return on Investment (EROI) of Oil
Shale. Sustainability, 3(11), pp.2307-22.
9. Enefit, 2011. Carbon intensity, water use and EROI of production of upgraded shale oil
products using the Enefit280 technology. [Online] JACOBS Consultancy Available at:
HYPERLINK "http://www.costar-mines.org/oss/31/F-pres-sm-sec/12-
4_Aarna_Indrek.pdf" http://www.costar-mines.org/oss/31/F-pres-sm-sec/12-
4_Aarna_Indrek.pdf [Accessed 2 Jan 2016].
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Assessment of Energy Return on Investment (EROI) for U.S. Oil and Gas Discovery and
Production. Sustainability, 3(10), pp.1866-87.

11. Gagnon, N., Hall, C.A. & Brinker, L., n.d. A Preliminary Investigation of Energy Return
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"http://www.iea.org/aboutus/faqs/oil/" http://www.iea.org/aboutus/faqs/oil/
13. Hall, C.A.S., Balogh, S. & Murphy, D.J., 2009. What is the Minimum EROI that a
Sustainable Society Must Have? Energies, 2(1), pp.25-47.
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invested.. ANNALS OF THE NEW YORK ACADEMY OF SCIENCES, 1185, pp.102-18.
15. Murphy, D.J., Hall, C.A., Dale, M. & Cleveland, C., 2011. Order from Chaos: A
Preliminary Protocol for Determining the EROI of Fuels. Sustainability, 3(10), pp.1888-
907.
16. Office of Technology Assessment, 1980. An Assessment of Oil Shale Technologies.
Technology Assessment. U.S. Government Printing Office.
17. RAND, 2005. Oil Shale Development in the United States. [Online] RAND Corporation
Available at: HYPERLINK
"http://www.rand.org/content/dam/rand/pubs/monographs/2005/RAND_MG414.pdf
"
http://www.rand.org/content/dam/rand/pubs/monographs/2005/RAND_MG414.pdf

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