Sunday, September 29, 2013

Geology beats technology: Shell shuts down oil shale pilot project

The belief that technology can always overcome natural limits just took a big hit this week when Royal Dutch Shell PLC decided to shut down its pilot oil shale project in western Colorado after 31 years of experimentation. The ostensible reason is that the company has opportunities elsewhere. Shell says it wants to shift resources away from the intransigent rock and move it to profitable opportunities.

That sounds logical. But, it might have sounded logical in any of the last 10 years as oil prices rose to historic heights while oil shale projects languished. Even today the average daily price of crude oil hovers near its historic highs set in 2011 and again in 2012.

The prize for anyone who profitably unlocks these deposits is huge, an estimated 800 billion barrels of recoverable resources. So why isn't oil shale yielding to the mighty combination of deep pockets, sophisticated technology and high prices?

A clue comes from one sentence in coverage in The Denver Post: "Full-scale production would probably have required building a dedicated power plant." In simple terms, it takes energy to get energy. Shell's process requires copious amounts of electricity to heat the rock in place through boreholes in order to release the waxy hydrocarbons embedded in it. In this pilot project, the subterranean rock was heated for three years before liquids were captured and brought to the surface for further processing.

(Oil shale is a promotional term. Oil shale is neither shale, nor does it contain oil. It is better characterized as organic marlstone. It contains kerogen, a waxy, long-chain hydrocarbon that must be extensively processed to make it into a synthetic form of crude oil. Oil shale is often confused with oil taken from deep shale formations such as the Bakken in North Dakota, oil properly called "tight oil.")

The ratio of energy outputs to inputs for oil shale is estimated to be about 2 to 1, according to a study by Cleveland Cutler who has long examined energy return on energy invested. Shell claimed a ratio of around 3 to 1 (though that claim no longer appears on the project site). That seems good until you realize that we are currently running the world on crude which has a ratio around 20 to 1.

Furthermore, the need for water to cool power plants associated with oil shale extraction and for processing the extracted liquids is considerable. And, water is increasingly difficult to secure in an area that has seen growing demand combined with more than a decade of drought.

Proponents of oil shale claimed in 1981 that it would be economical to process if oil were to reach $38 per barrel and stay there. The threshold price kept escalating along with the price of oil all the way up to $80 in a 2008 study by the U.S. Bureau of Land Management.

And, yet here we are. Brent Crude, the de facto world benchmark, hovers around $108 dollars. The average daily price for the past three years has remained above $100. In the face of these consistent record high prices, Shell is abandoning oil shale development. And, Shell isn't the only one. Another international major, Chevron Corp., pulled out of its project last year.

There are others who soldier on in the oil shale deposits, and they may eventually find ways to produce a synthetic crude from this rock at a profit. But 30 years of failure suggests that such a development remains far off. And, in a world that is trying to wean itself from fossil fuels because of climate change and the risks of depletion, time may run out.

The path of oil shale is reminiscent of atomic fusion research. Twenty-five years ago, fusion was supposed to be just 25 years in the future. Earlier in the same decade, oil shale was touted as the future of oil. Today, fusion remains the energy source of the future (just as oil shale does), and researchers at the world's main fusion research facility, the International Thermonuclear Experimental Reactor (ITER), say that fusion will perhaps be ready for commercial use by mid-century.

To be fair, the challenges for fusion researchers are daunting. For example, they must build and run a device that operates at interior temperatures of 150 million degrees centigrade--which is 10 times hotter than the core of the sun. And, they must do it safely and in a way that produces more energy than the device consumes.

But, because the challenges are so daunting, it may turn out that fusion will always remain the energy of the future. We already know how to fuse two atoms. And, we know how to process oil shale to produce synthetic oil.

But, we don't know how to do either of these things at an energy or financial profit sufficient enough to make them practical for widespread deployment. There is a strong possibility that we may not learn how to succeed with either in a time frame that matters to anyone living today.

That means we must get on with other technologies, energy projects and energy policies that have a more realistic possibility of addressing our energy needs and the climate change caused by our current energy regime.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now, The Oil Drum,, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at


Elvenrunelord said...

Your article prompted me to switch from my phone to my laptop so I could make a couple comments I feel add to the discussion.

Note, I am not trying to push an agenda here, rather I am promoting what I see as an obvious solution that may in the future become the only solution no matter ho many people yell about it.

Your article states: "The ratio of energy outputs to inputs for oil shale is estimated to be about 2 to 1, according to a study by Cleveland Cutler who has long examined energy return on energy invested. Shell claimed a ratio of around 3 to 1 (though that claim no longer appears on the project site). That seems good until you realize that we are currently running the world on crude which has a ratio around 20 to 1."

This is very true but does not mean that oil cannot continue to be used at ratios even less than 3 to 1 and still be useful on a large scale.

See, oil is VERY profitable for a small group of people. Corporations make moves that make the most profit for those people, not moves that make the most sense for promoting the general welfare of the population of this planet. When the opportunity for profit is gone, so are the corporate sponsors.

This does not mean that the technology or product is any less useful to the general public than it once was, only that it is not producing as much profits as some other approach does. We see this in the pharma industry with every new generation of drugs that can be kept under patent and thus out of generic production.

When such thing happens to something that is as essential as oil is to our society it is time to start considering the nationalization of the resource to prevent shortages occurring simply because the corporate will is not there to continue. Many of the technologies that would improve the quality of life for the general public the most are not very good goals for those who's primary goal is to make the most money.

As for the water problem, that is another that can easily be resolved with some different thinking.

I have an idea that could provide unlimited drinking water to virtually any place in the world at a much cheaper rate of return and extremely low environmental impact. However no one seems interested because I am not interested in the least in making a very profitable business from it. I'm only interested in solving the problem and providing jobs for the people necessary to manage the projects, some of which would be quite large although much of the work could probably be done by robotics so the employment impact would be small.

Fusion seems to be coming along at a snails pace but advances are being made and I suspect that e may see a commercial reactor within the next 20 years. On the other hand there are nuclear technologies that have been largely ignored and I can't understand why.

Thorium for example. For the life of me I can't understand why safe thorium reactors have been largely ignored throughout the world in place of the dangerous reactors we are using today. There are working thorium reactors online today and they seem to be working exactly as advertised, and yet there is no push to move away from the dangerous reactors we are using to these safer reactors that are also cheaper to operate and produce very little waste product.

Something is really wrong with the way the world is ran today. I suspect that all conspiracy theory aside that the people who make the most money off the way the world is today are hindering the push to change to more beneficial technologies that may not be as profitable as the technologies they themselves control. It is a cynical way of looking at the world at large but I invite anyone to prove me wrong.

Anonymous said...

Shell also wanting to sell Eagle Ford Shale (Texas) sector:

Anonymous said...

Last year, the Institute for Energy Research explained that the United States had 1,442 billion barrels of technically recoverable oil.

"The reality is that the U.S. has enough recoverable oil for the next 200 years."

I wrote this comment.

"But using this oil is unrealistic.
American oil shale is estimated to hold more than 1.8 trillion barrels of recoverable oil.
Oil shale must be heated to temperatures between 400C° and 500C°. According to Shell, to produce 100,000 barrels per day, 5 million tons of coal and at least 4.6 billion gallons of water are needed each year.
The largest deposit of oil shale in the United States is near the Colorado River basin, which could run out of water in 2050.
As U.S. is using 18,8 million barrels a day..."

It seems that I was right.

Exposing the 2 percent oil reserves myth.