Shale Oil Definition

What is shale oil?

Shale oil is a type of unconventional oil found in shale formations that must be hydraulically fractured to extract oil. Major uses include fuel oil, marine fuel, and the production of various chemicals. Shale oil can, in fact, refer to two types of oil: crude oil found in shale formations or oil extracted from oil shale.

Shale oil and gas formations can be found all over the world. The countries with the largest amount of technically recoverable shale oil resources are the United States, China, Argentina, Mexico and South Africa.

In the United States, the largest formations providing shale oil are found in the Permian, Western Gulf, and Williston basins. Shale oil is derived from the same name oil shalea type of sedimentary rock that traps and holds precursors to oil and gas.

Understanding Shale Oil

Shale oil refers to hydrocarbons that are trapped in shale rock formations that can be extracted for refining.

Shale oil extraction has been made viable through the development of horizontal drilling and hydraulic fracturing techniques (splitting), which enables oil and natural gas producers to efficiently extract resources from shale rock and other low-permeability rock formations.

Permeability refers to the ability of fluids and gases to pass through rock. At the same time, the development of fracking techniques has grown rapidly since the 1950s, with the discovery and exploitation of shale formations in the United States throughout the 1970s and 1980s.

Producing shale oil from shale rock has always been more expensive than conventional crude oil. Moreover, the process is sometimes criticized for its destructive impact on the environment.

Nevertheless, U.S. shale oil production has increased significantly since 2010, thanks to technological improvements that have reduced drilling costs and improved drilling efficiency in key shale-producing areas, such as the Permian, Williston and western gulf basins.

The US Energy Information Administration (EIA) estimates that more than 300 billion barrels of shale oil could be technically recoverable, representing about 10% of total crude oil resources.

Tight oil vs shale oil

The oil and natural gas industry often uses the term “tight oil” rather than shale oil when estimating production and resources. This is because tight oil can be extracted from rock formations which, in addition to shale formations, include sandstone and carbonates.

Production in 2021 from tight oil fields reached 7.22 million barrels per day and accounted for nearly 65% ​​of total U.S. oil production in 2021, up from 7.31 million barrels per day in 2020.

Shale oil is also different from “oil shale”, which is a type of sedimentary rock that has low permeability and bituminous-like solids (consisting mostly of hydrocarbons) that can be liquefied during the mining process. Simply put, oil shale is the sedimentary rock formation containing a type of organic matter called kerogen that produces oil and gas.

Shale in the United States

Shale became a strategically important resource during World War II, when the United States sought a reliable source of energy that could withstand the pressures faced abroad. supply chains.

In response to this need, the United States began a program of commercial exploitation of its oil shale reserves in the 1960s. However, the added cost and complexity of extracting oil shale made it less efficient as an alternative to conventional oil wells. The shale industry experienced a period of resurgence during the 1970s when the so-called oil crisis briefly made oil shale economically competitive.

However, this trend reversed during the 1980s with the decline in oil prices. In recent years, interest in unconventional oil deposits, such as oil shale and shale oil, has continued to fluctuate with the price of crude oil.

The pros and cons of shale oil

There are both advantages and disadvantages to extracting oil from shale through the hydraulic fracturing process. The main advantage of hydraulic fracturing is that it allows countries and oil companies to exploit oil reserves that were previously too difficult to reach by traditional methods.

The process is also more flexible than traditional oil extraction methods in that once a well is dug and the oil is extracted, the oil can be stored for up to Oil prices are high enough to generate a profit.

There are a significant amount of downsides when it comes to hydraulic fracturing, which has made it a controversial topic. The main argument against it is the immense environmental damage it has. A significant amount of water must be pumped into the pits before mining can begin. This requires either using nearby water supplies or trucking the water supply.

Fracking is also known to have a negative impact on drinking water caused by leaks in a community’s drinking water supply or improper waste disposal. Finally, fracturing causes earthquakes. The high pressure pumping of water into the ground causes them.

Shale Oil Examples

The largest shale reserve in the United States is the Wolfcamp/Bone Spring Shale area in the Permian Basin of West Texas. Production levels in 2020 were 1.3 billion barrels with proven reserves of 11.8 billion barrels. The Permian basin is exploited by most major oil companies, including Chevron, Exxon, BP, Shell and ConocoPhillips.

The second largest shale deposit is Bakken/Three Forks in the Williston Basin, which covers North Dakota, South Dakota and Montana. In 2020, production levels were 431 million barrels and proven reserves were 3.6 billion barrels.

In 2022, ExxonMobil is the largest shale oil producer in the United States

Shale Oil FAQs

What is the difference between oil shale and oil shale?

Shale oil is made up of hydrocarbons found in the formation of shale rock while oil shale is a solid rock that contains kerogen. Kerogen is a petroleum product that is eventually converted into petroleum through extraction and heating. Shale oil is closer to a usable form of petroleum and requires drilling and hydraulic fracturing to extract from the ground.

Can shale oil replace crude oil?

Although shale oil has its uses, it is not a direct replacement for crude oil in many applications. Shale oil may contain traces of other elements which make it a less refined alternative. Additionally, the process of extracting oil from shale is much more capital intensive, making it more expensive than crude oil.

Is shale oil cheaper than crude oil?

Shale oil is not cheaper than crude oil because shale oil is more capital and labor intensive. Generally, when the price of oil is too low, the production of shale oil stops because it does not become profitable to extract it. Therefore, shale oil is only extracted when oil prices are higher, making it a more expensive alternative.

Is shale oil used to make gasoline?

Yes, shale oil can be used to make gasoline, as well as other petroleum products, such as diesel fuel and liquefied petroleum gas (LPG).

How long can US shale oil last?

It is difficult to determine exactly how long US shale oil can last; however, shale oil reserves in the United States have greatly reduced its dependence on oil imports and effectively made the country an oil exporter. As such, the lifespan of U.S. shale oil will depend on international oil demand, domestic oil demand, as well as how much of the energy supply shifts from oil to energy sources. renewable energy, such as wind and solar.

The essential

Shale oil refers to hydrocarbons trapped in shale rock that require fracturing to extract it. a much more capital intensive process than traditional oil drilling. Shale oil is a new source of oil for the world that has only taken off in the last decade as the technology is advanced enough to extract it profitably.

The production of shale oil by some countries, such as the United States, has changed the world oil market, in that it has made the United States a net exporter of oil rather than an importer and has reduced their foreign oil needs.

Although shale oil has increased the world’s oil supply, it has significant drawbacks, primarily due to the immense amount of environmental damage caused by the hydraulic fracturing process.