page_title: Shale oil extraction
section_title: Economics
hierarchical_section_title: Shale oil extraction / Economics
caption_attribution_description: English: The graph from here: http://en.wikipedia.org/wiki/File:Oil_Prices_Medium_Term.png Completely redone from the ground up. Same source is used: Ten-day moving average of prices of NYMEX Light Sweet Crude, taken from data at the New Mexico Institute of Mining and Technology. Prices are nominal (not adjusted for inflation). http://octane.nmt.edu/gotech/Marketplace/Prices.aspx
context_page_description: Shale oil extraction is an industrial process for unconventional oil production. This process converts kerogen in oil shale into shale oil by pyrolysis, hydrogenation, or thermal dissolution. The resultant shale oil is used as fuel oil or upgraded to meet refinery feedstock specifications by adding hydrogen and removing sulfur and nitrogen impurities.
  Shale oil extraction is usually performed above ground by mining the oil shale and then treating it in processing facilities. Other modern technologies perform the processing underground by applying heat and extracting the oil via oil wells.
  The earliest description of the process dates to the 10th century. In 1684, Great Britain granted the first formal extraction process patent. Extraction industries and innovations became widespread during the 19th century. The industry shrank in the mid-20th century following the discovery of large reserves of conventional oil, but high petroleum prices at the beginning of the 21st century have led to renewed interest, accompanied by the development and testing of newer technologies.
  As of 2010, major long-standing extraction industries are operating in Estonia, Brazil, and China.
context_section_description: The dominant question for shale oil production is under what conditions shale oil is economically viable.  According to the United States Department of Energy, the capital costs of a 100,000 barrels per day (16,000 m³/d) ex-situ processing complex are $3–10 billion.  The various attempts to develop oil shale deposits have succeeded only when the shale-oil production cost in a given region is lower than the price of petroleum or its other substitutes. According to a survey conducted by the RAND Corporation, the cost of producing shale oil at a hypothetical surface retorting complex in the United States (comprising a mine, retorting plant, upgrading plant, supporting utilities, and spent oil shale reclamation), would be in a range of $70–95 per barrel ($440–600/m³), adjusted to 2005 values.  Assuming a gradual increase in output after the start of commercial production, the analysis projects a gradual reduction in processing costs to $30–40 per barrel ($190–250/m³) after achieving the milestone of 1 billion barrels (160×10⁶ m³). The United States Department of Energy estimates that the ex-situ processing would be economic at sustained average world oil prices above $54 per barrel and in-situ processing would be economic at prices above $35 per barrel.  These estimates assume a return rate of 15%.  Royal Dutch Shell announced in 2006 that its Shell ICP technology would realize a profit when crude oil prices are higher than $30 per barrel ($190/m³), while some technologies at full-scale production assert profitability at oil prices even lower than $20 per barrel ($130/m³).
  To increase the efficiency of oil shale retorting and by this the viability of the shale oil production, researchers have proposed and tested several co-pyrolysis processes, in which other materials such as biomass, peat, waste bitumen, or rubber and plastic wastes are retorted along with the oil shale.  Some modified technologies propose combining a fluidized bed retort with a circulated fluidized bed furnace for burning the by-products of pyrolysis (char and oil shale gas) and thereby improving oil yield, increasing throughput, and decreasing retorting time.
  Other ways of improving the economics of shale oil extraction could be to increase the size of the operation to achieve economies of scale, use oil shale that is a by-product of coal mining such as at Fushun China, produce specialty chemicals as by Viru Keemia Grupp in Estonia, co-generate electricity from the waste heat and  process high grade oil shale that yields more oil per shale processed.
  A possible measure of the viability of oil shale as an energy source lies in the ratio of the energy in the extracted oil to the energy used in its mining and processing (Energy Returned on Energy Invested, or EROEI). A 1984 study estimated the EROEI of the various known oil shale deposits as varying between 0.7–13.3; Some companies and newer technologies assert an EROEI between 3 and 10.  According to the World Energy Outlook 2010, the EROEI of ex-situ processing is typically 4 to 5 while of in-situ processing it may be even as low as 2.
  To increase the EROEI, several combined technologies were proposed. These include the usage of process waste heat, e.g. gasification or combustion of the residual carbon (char), and the usage of waste heat from other industrial processes, such as coal gasification and nuclear power generation.
  The water requirements of extraction processes are an additional economic consideration in regions where water is a scarce resource.
caption: NYMEX light-sweet crude oil prices 1996–2009 (not adjusted for inflation)
exif: {}