ECONOMICS, BARRIERS, AND RISKS OF OIL SHALE DEVELOPMENT IN THE UNITED STATES

Transcription

1 ECONOMICS, BARRIERS, AND RISKS OF OIL SHALE DEVELOPMENT IN THE UNITED STATES Khosrow Biglarbigi Hitesh Mohan Peter Crawford Marshall Carolus INTEK, Incorporated 28 th USAEE/IAEE North American Conference New Orleans, LA December 4,

2 Resource Technology Economics Environmental Path Forward America s Oil Shale 2

3 What is Oil Shale? Rock Kerogen Syn- Crude F Pyrolysis Naphtha Gasoline Jet Fuel Diesel HC Gas Upgrade 3

4 Most Concentrated Hydrocarbon Deposit 2 Trillion Barrels 6 Trillion Barrels Source: US DOE,

5 Oil Shale Production Approaches Surface Process Resource Mining Retort Upgrading Refinery In Situ Process Choke Point Resource Drilling Heating Upgrading Refinery Source: US DOE,

6 Shell In-Situ Conversion Process Pilot Test (Colorado) PRODUCER HEATER OVERBURDEN High Value Products Light Surface Processing Source: US DOE,

7 Other Examples of In-Situ Technology Pilot Tests (Colorado) Chevron Process Producer IDT EGL Resources Process Injector Fractures Source: US DOE,

8 Alberta Taciuk Processor (ATP) Pilot Test (Utah) Vapour tube Combustion zone Retort Preheat tubes Cooling zone Oil shale feed 750 C 500 C 250 C Source: US DOE,

9 Other Surface Retort Technology Gas Combustion Retort (GCR) High thermal efficiency High retort efficiency Present use Petro-six operating in Brazil Paraho Process being tested for a major project abroad PREHEATING MIST FORMATION PYROLYSIS STRIPPING COMBUSTION RESIDUE COOLING Raw Shale Oil Mist Extractors Source: US DOE, 2007 Spent Shale 9

10 First Generation Project Costs Item Unit Range Capital Cost $/BPD * 40K-55K O&M Cost $/Bbl * Barrel of Daily Capacity Source: INTEK Inc.,

11 Canadian Oil Sands Operating Costs Dollar/ Barrel $40 $35 $30 $25 $20 $15 $10 $23 $30 $35 $5 $0 Source: Suncor, Year 11

12 Canadian Oil Sands Capital Costs $1,000 per Bbl of Daily Capacity $3 Billion $11 Billion 100,000 Bbl/D Project 0 Suncor - Millennium Albian Syncrude - Aurora 2 & UE 1 Nexen OPTI CNRL - Horizon Shell - Muskeg & Scotford PCA/UTS Fort Hills Source: Canadian Association of Petroleum Producers, April

13 Economic Price for Oil Shale Technology $70 $60 Rate of Return - 15% $57 $ Dollars Per Bbl $50 $40 $30 $20 $38 $47 $10 $0 Source: INTEK Inc., 2008 True In-Situ Surface Mining Underground Mining Modified In-Situ 13

14 Cashflow of a Generic Oil Shale Project Cum. Discounted Cashflow (MM$) Before Tax After Tax Room for Government Action Source: INTEK Inc., 2008 Year 14

15 1200 Impact of Incentives on Generic Cashflow Cumulative Discounted After Tax Cashflow (MM$) Before Tax Source: INTEK Inc., 2008 After Tax Year $10/Bbl Production Credit $5/Bbl Production Credit 15% investment Credit 10% Investment Credit Accelerated Depreciation 15

16 Oil Shale Environmental Impacts Air Quality Process Plant Use CO 2 Enhanced Oil Recovery Sequestration Other Industrial Uses Capture and Clean Existing Technology HC Gas CO 2 SO x NO x Oil Shale Processing Source: SPE #110590,

17 Land Use Depends On The Process 1 MMBbl/D Production for 40 Years Surface: 31 Square Miles In-Situ: 14 Square Miles Example for 2.5 MMBbl/D Industry: 52 Square Miles Green River 2.5 MMBbl/d 17,000 Square Miles 52 Square Miles Source: SPE #110590,

18 Water Requirements 1-3 Barrels of Water per Barrel of Shale Oil Challenges: Water rights Water availability Ground water protection Water runoff Source: US DOE,

19 Development Hurdles Access to Land 70% on Federal Land BLM issued final regulation (November 18, 2008) RD & D Environmental Permitting Fiscal Regime Public Education 19

20 The Prize Total Resource 6 Trillion Barrels High Quality Resource 2 Trillion Barrels Technical Recovery 1 Trillion Barrels Reserves Billion $50 - $65 / Bbl Source: INTEK Inc.,

21 Projected Production Potential (Shale Oil in the U.S.) 2,500 Thousand Bbl/D 2,000 1,500 1,000 Accelerated Scenario Measured Scenario Business as Usual RD&D Tax Incentives 500 Base Year 21 Source: US DOE, 2007

22 Example Benefits of Oil Shale Development Cumulative (Over 25 Years) Item Unit Base Incentive RD&D Production Billion Bbls Direct Federal Revenues Billion $ Direct Local/State Revenues Billion $ Direct Public Sector Revenues Billion $ Contribution to GDP Billion $ Value of Imports Avoided Billion $ New Jobs 1000 FTE Source: INTEK Inc.,

23 Summary Over 6 trillion barrels of in place resource The most concentrated hydrocarbon deposits on Earth Conversion technologies are advancing rapidly Sustained production potential of up to 2.5 MMBbl/Day Substantial economic benefits to the Nation Requires concerted effort by the private sector, Federal & State governments, and local communities 23