Shell to dig a little deeper into oil shale research project
Shell Exploration and Production’s oil shale testing in the Piceance Basin will be modestly expanded this summer.
The company plans to add a fourth one-acre test plot to the three existing plots, said Shell spokesman Rich Hansen.
But that doesn’t mean it’s any closer to becoming a commercial venture.
“This is a field research project, not a development project,” Hansen said.
Shell’s project revolves around what is called an “in-situ” extraction process, in which oil shale is heated deep underground until the oil – or more properly, kerogen – is liquefied and then pumped to the surface.
There it is planned to be upgraded to pipeline-quality crude oil in a refinery-like plant that could be built either at the mine site or in another location.
While the technique was used successfully in Sweden for about 20 years during and after World War II, this is the first time similar technology has been tested in the United States, Hansen said.
Shell has been researching the process for 50 years, he added. It has tested extraction processes in the Piceance Basin since 1972 when the company established a water injection test plot.
Shell owns 40,000 acres in the Piceance Basin, half in Garfield County and half in Rio Blanco County, Hansen said.
In 1996, Shell stepped up testing and expanded its plot from one-third of an acre to a full acre.
“But then the price of crude oil dropped to $10 a barrel,” and Shell management said they couldn’t continue to finance the project, Hansen said.
However, the current cost of crude oil won’t determine whether or not the project will go commercial at a given time, Hansen said.
“That’s the old mindset of oil shale. After the (OPEC oil) embargo crude hit $40 a barrel,” he said, various technologies for extracting oil from shale could never get the cost per barrel close to the market price, making it commercially viable.
“They were always $5 more,” Hansen said.
Oil prices fluctuate these days between $15 and $20 a barrel.
“Our technology has to be robust to make it in today’s market,” he said. “It’s got to be cost effective.”
In 2000, Shell decided to refund the research, and three one-acre plots were established.
Hansen said a fourth plot will be added this summer.
Shell is also testing various types of heaters, to determine which ones run most efficiently. It is now using electric heaters to liquefy the kerogen.
“We’d like to develop a gas-fired heater, and we’re looking at solar powered,” Hansen said.
As with many research projects, the tests raise more questions than they answer.
“If we run two to three tests with two to three questions, we find we have five more questions,” he said.
How long the research will go on is unknown at this time, he added.
But if the project does go commercial, the impact of the development will not be nearly as great as what the region experienced during the boom and bust of the early 1980s, he said.
“In all likelihood we’d be the only oil shale project under construction,” Hansen said.
Because Shell’s process is proprietary there won’t be other copycat companies vying for space in the Piceance, he said.
Most important to Shell, Hansen said, was making sure the citizens of the region accept the project if it does become commercial.
“We want to be a welcome neighbor,” he said.
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