Although usually oil shale economics is understood as shale oil extraction economics, the wider approach evaluates usage of oil shale as whole, including for the oil shale fired power generation and production of byproducts during retorting or shale oil upgrading processes. Weve argued that many players in the shale industry simply wouldnt be able to operate profitably at lower prices. Shale oil february 20 1 executive summary shale oil light tight oil is rapidly emerging as a significant and relatively low cost new unconventional resource in the us. Utica shale play energy information administration. But it must occur within cash flow, and owners and lenders will demand that a disproportionate amount of free cash flow is returned to them. The federal government has a poor understanding of the economic and socioeconomic impacts of commercial oil shale development. Feb 29, 2016 the breakeven price also depends on the company drilling for oil. While american shale gas appears to be here to stay, there is no. Oct 31, 2017 in 2009, in the aftermath of a large financial crisis, u.
We previously estimated the oil price elasticities of employment in coal mining, oil and natural gas extraction, oil field machinery, refining, and petrochemicals at 0. The world economic forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. Energy information administration technically recoverable shale oil and shale gas resources 6 2. While the tight oil revolution will colour the coming decade, the gulf region will remain the backbone of the global oil supply. Oil flows relatively easily through the porous rocks that make up a conventional reservoir, so a conventional well can tap a large area. Dec 23, 2014 for years, weve been warning here at that the economics of the us shale revolution were suspect. Jan 08, 2019 as a result, us shale producers adjusted exploration and extraction techniques to weather the turmoil of low oil prices and saudi oil market policies prior to the vienna agreement. Using a geologybased assessment methodology, the u.
An example of a new approach in the greater green river basin, mr1683wfhf 2003. The us becomes the largest gas producer in the world and the. It extends beneath the utica shale and is composed of interbedded, fossiliferous limestone, shale, and minor siltstone. Shale trends report provides analysis of key trend developments in the north american tight oil and shale gas plays.
Economics, barriers, and risks of oil shale development in the united states khosrow biglarbigi, president, intek incorporated, 2300 clarendon boulevard ste. Unesco eolss sample chapters coal, oil shale, natural bitumen, heavy oil and peat vol. Oil shale oil shale is a negrained sedimentary rock containing a solid material kerogen that converts to liquid oil when heated. Shale economics indicate continued opportunity nysearca. A study on the eu oil shale industry viewed in the light of the estonian. The dangerous economics of shale oil peak prosperity. With oil prices spiking and global demand showing no signs of abating, reexamining the economics of oil shale makes sense. The chevron, egl, and shell leases are located on blm lands in colorado, while the osec lease involves. Prospects and policy issues assessing natural gas and oil resources. Different companies have different business practices, utilize different technologies, and have different cost structures. Geological survey estimated undiscovered, technically recoverable mean resources of 144 million barrels of shale oil and 559 billion cubic feet of shale gas in the mississippian delle phosphatic member of the woodman formation in the eastern great basin province of nevada, utah, and idaho. Determine the areal extent of the shale formations within the basin and estimate its overall thickness, in addition to other parameters.
In 1830, oil shale has been used as a commercial resource in france. A sixth lease was later granted to oil shale exploration, llc osec. Oct 20, 2019 shale oil refers to hydrocarbons that are trapped in formations of shale rock. With the surge in fracking and horizontal drilling, oil and gas production in the.
One important conclusion is that the price competitiveness of electricity produced from shale oil, and also by direct combustion of oil shale, is very sensitive to the price attributed to co 2 emissions. Economic sustainability of estonian shale oil industry until 2030 273 tion of oil shale in estonia since the 1960s has been in power generation, but for several years there has been a significant development of new technology in the direction of shale oil so production. Oil shale deposits exist in 37 countries globally, but the largest and highest quality oil shale deposits are in sparsely populated areas of colorado, utah and wyoming figure 1. The use of oil shale has been known for thousands of years. Shale drilling site in pennsylvania photo helge hansen statoil. For years, weve been warning here at that the economics of the us shale revolution were suspect.
Pdf economic estimation of oil shale development methods in. This is not a comprehensive list of oil shale publications or an endorsement of particular points of view, but rather a list of what we have found to be the most useful and uptodate jumping off points from all sides of the debate. Energy information administration technically recoverable shale oil and shale gas resources 4 ahead of time. A study on the eu oil shale industry viewed in the light of. The economics of shale gas development resources for the future. As a result, us shale producers adjusted exploration and extraction techniques to weather the turmoil of low oil prices and saudi oilmarket policies prior to the vienna agreement. Incorporated as a notforprofit foundation in 1971, and headquartered in geneva, switzerland, the forum is tied to no political, partisan or national interests. September 4, 2017 abstract this paper examines the e ects of the u. Shale oil refers to hydrocarbons that are trapped in formations of shale rock. Hamilton, understanding crude oil prices, department of economics. Until then, the companies need to adjust to this new reality while. The first of these is economic interplay between world prices for ordinary.
Economical criteria for the evaluation of oil shales depends on the process of utilisation. These rates can lead to sufficient oil and gas volumes during the economically critical first four years of production to make the business case for drilling shale gas and light, tight oil wells, though other factors such as oil and gas prices, well costs, etc. Discussion of the main economic considerations for north american shale gas and light, tight oil plays high rates, high declines, and high costs to map out the full potential of the shale revolution, we have to understand the economics of the plays, and how those economics relate to other plays. Pdf in nigeria, oil shale deposits are abundantly located mostly in benue, bornu, adamawa, and ebonyi states. It was mined and cooked in small quantities to produce oil to light oil lamps western resources advocates, 20. The characteristics of shale oil impact refi nery economics while shale oil composition varies from basin to basin throughout the united states, some of its common characteristics can lead to signifi cant disruptions across the refi ning supply chain from transportation from the production site to shipment from the refi nery.
A study on the eu oil shale industry viewed in the light. Us shale oil production has expanded greatly since 2011, and now rivals that of. With oil prices spiking and global demand showing no signs. Fracking is a process that oil companies use to drill down into the layers of shale and open up the rock formations. United states assessments of undiscovered oil and gas resources.
Since the early 1980s, oil shale has not been on the u. Theres scarcely a reason to point out how geopolitically important energy is. Jan 31, 2020 shale oil is a highquality crude oil that lies between layers of shale rock, impermeable mudstone, or siltstone. Toc is generally low in the most samples it is less than 1%. Every country needs it, but only some countries have the resources to procure it themselves. Definition sedimentary rock with a high organic content organic matter is known as kerogen kerogen. In 2009, in the aftermath of a large financial crisis, u. Oil shale deposits exist in 37 countries globally, but the largest and highest quality oil shale deposits are in sparsely populated areas. Technically recoverable shale oil and shale gas resources. When setting environmental policy, regulators may cap the amount of a pollutant allowed, charge per unit emitted, or ban it outright.
The economic feasibility of oil shale is highly dependent on the price of conventional oil, and the assumption that the price will remain at a certain level for some time to come. For those wishing to dig deeper into the current politics and economics of oil shale, headwaters economics recommends the following sources. Oil shale is an organicrich finegrained sedimentary rock containing kerogen a solid mixture of organic chemical compounds from which liquid hydrocarbons can be produced, called shale oil not to be confused with tight oil crude oil occurring naturally in shales. In this report, the authors describe oil shale resources. Volume ii oil shale resources, technology and economics pdf. It focuses on updating research on shale gas, explaining its specifics, discussing the. Oil shale production had reached one million metric tons per year during the 1800s and by 1881. The upper interval of the point pleasant formation is an organicpoor gray shale with abundant thin carbonate beds. The new economics of oil oxford institute for energy studies. United states assessments of undiscovered oil and gas.
Concerns about carbon emissions and climate change have increased materially. This report presents an updated assessment of the viability of developing oil shale resources in the united. The economic and budgetary effects of producing oil and. Shale gas revolution1 karel janda and ivan kondratenko abstract this paper aims to analyze the possible shale gas development in context of energy security as based on the experience of shale revolution in the usa. This research was conducted within rand infrastructure, safety, and envi. Shale oil is a highquality crude oil that lies between layers of shale rock, impermeable mudstone, or siltstone. The march 2019 issue of page one economics explores these policy options and how they may apply to the booming u. Resource estimates change as extraction technologies improve, as markets evolve, and as oil and.
Shale oil boom, the oil export ban, and the economy. But shale oil accounts for less than 10% of the global oil market. World energy outlook, projects that by 2035 several new oil types will replace the loss of nearly onehalf of global conventional oil production. Energy, particularly oil, is a source of geopolitical power. Oil companies produce shale oil by fracturing the rock formations that contain the layers of oil. There is potential for shale oil production to spread globally over the next couple of decades. Any lasting decline in oil prices would be problematic for the arab gulf states, but is not to be expected as long as demand in asia remains strong. Us shale oil production has increased about 4 million barrels a day since 2010. Economics of north american oil and gas shale plays. Shale oil is a substitute for conventional crude oil. The oil market has changed very significantly over the past 10 to 15 years. Prices will rise and shale oil economics will justify a return to moderate growth. In the early 1980s, industry and government took a hard look at the economics of extracting oil from vast deposits of shale that lie beneath the western united states. The economic and budgetary effects of producing oil and natural gas from shale summary recent advances in combining two drilling techniques, hydraulic fracturing and horizo ntal drilling, have allowed access to large deposits of shale resourcesthat is, crude oil.
This growth may serve to drive down oil and gas p rices, thus affecting the economics of shale production. The shale gas and tight oil boom council on foreign relations. The economics of shale oil saudi america united states. Oil shale economics deals with the economic feasibility of oil shale extraction and processing. On december 15, 2006, chevron shale oil company, egl resources, inc. The oil market in the age of shale oil european central bank. And, more importantly, the us shale revolution has introduced a new source of supply, with very different production and financing strcutures. The breakeven price also depends on the company drilling for oil.
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