Shale Oil PRESENTED BY: ENPPI PROCESS TEAM

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Shale Oil PRESENTED BY: ENPPI PROCESS TEAM MARCH 2013

Oil Shale What is Oil Shale? Rock Kerogen (Oil Shale) Syn - Crude 700-800 F Pyrolysis Naphtha Jet Fuel Diesel Nat. Gas Hydrogen Upgrade

Definition Oil shale, also known as Rock kerogen, is an organic-rich fine-grained rock from which liquid hydrocarbons called shale oil can be recovered Shale oil is a substitute for conventional crude oil

Reserves Worldwide 10 Trillion Barrels

Global Oil Shale Resources OTHERS

World Wide Reserves (Barrels) China Estonia Australia Morocco Italy Brazil Jordan* Zaire Russia United States Source: United States Geological Survey (USGS), 2005 * Jordan Natural Resources Authority (NRA), 2009 16 Billion 16 Billion 32 Billion 53 Billion 73 Billion 82 Billion 90 Billion 100 Billion 248 Billion 6,000 Billion

Worldwide Oil Shale Activities

Oil Shale in Jordon Jordanian oil shale are high quality, comparable to western US oil shale, although their sulfur content is high. The best-explored deposits are El Lajjun, Sultani, and the Jurefed Darawishare located in westcentral Jordan Jordan has 8th largest oil shale resource in the world.

Oil Shale in Jordon Jordan Energy and Mining Limited (JEML) is developing the Al Lajjun oil shale project. The project is expected to produce an average 15,000 bpd of refinery-grade oil over a mine life of about 29 years.

Oil Shale In Egypt Oil shale was discovered in 1940s during phosphate mining Researches in 1970s showed that Egypt has plenty of Oil shale with shale oil reserves at: Western Desert Eastern Desert

Oil Shale in EGYPT- Eastern Desert Found at the red sea. Contains around 4.5 billion barrels of shale oil. Only accessible by underground mining methods.

Oil Shale in EGYPT- Western Desert Found at Abu-Tartour. Contains around 1.2 billion barrels of shale oil. Can be extracted during mining for phosphate and then utilized for power production for use in the mines.

Extraction Technologies Extraction Technologies In-Situ Technology Ex-situ Technology

Ex-Situ Processing Relies on digging the oil-bearing shale (Oil Shale) out of the ground. Crushing it into small pieces. Separating the oil-like kerogen from the rock by heating it in a centrally located piece of machinery known as a retorter.

Ex Situ Processing Steps MINING CRUSHING RETORTING OIL UP GRADING OIL TO REFINERY

Ex-Situ Retorting: Ex Situ Process Types VERTICAL TYPE HORIZONTAL TYPE Fushun Generator (China) Galoter Retorting (Estonia) Kiviter Retorting (Estonia) Alberta Taciuk process Retorting (ATP ) Australia Petrosix Retorting (Brazil)

TYPICAL RETORTER

Horizontal Retorter Suppliers Retort Company Fushun Generator vertical type Retorting Fushun Shale Oil Kiviter vertical type Retorting Petrosix vertical type Retorting Galoter horizontal type Retorting Alberta Taciuk process horizontal type Retorting Viru Keemia Petrobras Narva power SPP Oil Yield,% 65 75-80 90 85-90 85-90

In Situ Processing Is the technology for processing oil shale in-situ (i.e. underground). The innovation of this process was originally adopted to solve the problems of mining, handling, and disposing of large quantity of material, which is encountered with ex-situ processing.

In-situ Process Steps DRILLING & FRACTURING RETORTING OIL UPGRADING OIL TO REFINERY

In-Situ Technologies a. Shell In Situ Conversion Process (ICP) b. American Shale Oil Process c. Conduction, Convection, Reflux (CCR) Process Externally Generated Hot Gas Chevron CRUSH Process

Shell In Situ Conversion Process (ICP) Deep vertical holes are drilled through a section of oil shale. Heating underground oil shale using electric heaters placed in the deep vertical holes. The entire oil shale is heated over a period of two to three years until it reaches 650 700 F (340 and 370 C).

Shell In-Situ Conversion Process (ICP) High Value Products Light Surface Processing PRODUCER HEATER Source: US DOE, 2008

Shell s Technique for Ground Water Protection Shell's current plan involves use of ground-freezing technology to establish an underground barrier called a "freeze wall" around the perimeter of the extraction zone. The freeze wall is created by pumping refrigerated fluid through a series of wells drilled around the extraction zone. The freeze wall prevents groundwater from entering the extraction zone. The freeze wall keeps hydrocarbons and other products generated by the in-situ retorting from escaping from the extraction zone perimeter.

American Shale Oil Process Conduction, Convection, Reflux (CCR) Process Horizontal wells are drilled beneath the oil shale layer. Superheated steam or another heat transfer medium is circulated through the horizontal pipes. As the organic matter within the rocks boils, it will break the rocks apart and free the oil and gas to be collected.

American Shale Oil Process Technique for Ground Water Protection To protect groundwater, the company plans to target deeper layers of oil shale below the basin's aquifer, leaving in place layers of rock above the target zone that will serve as a natural geologic barrier against groundwater contamination. The CCR process will consume less energy and require fewer wells, thus minimizing the amount of land disturbed on the surface and reducing the amount of water needed to less than one barrel per barrel of oil produced.

Externally Generated Hot Gas Chevron CRUSH Process Controlled chemical explosions. Hot gases heated above-ground (such as heated carbon dioxide) and then injected into the oil shale formation via drilled wells. Heating the formation through a series of horizontal fractures at the injection well through which the gas is circulated.

Cheveron s Technique for Environment Protection Chevron believes that the CRUSH process will require significantly less energy and water than other in situ methods and will sequester much of the carbon dioxide underground, thus reducing its environmental impact and making it more economical even at lower oil prices.

Environmental Impact

Environmental impact Greenhouse gas emissions and global warming. Disposal of spent shale (Ex-Situ Processing). Production of SOx and NOx. Possible Ground Water Contamination with hazardous byproducts. Land Reclamation Concern. Excessive amount of water requirement in production process (1-3 Barrels of Water per Barrel of Shale Oil).

Economics Overview

Questions and Answers Question What are the prospects of the oil shale development? Answer Massive resources but costly to extract; technology advances are promising, especially with the increasing conventional oil prices What is the strategic significance for developing oil shale industry? What are the critical policy issues surrounding the prospect of oil shale development? Large economic gains, lower oil prices and new jobs Resolving technical, environmental, governance issues will determine whether a strategically significant industry will develop

History of investment In the 2 nd half of the 20th century, oil shale production ceased in Canada, Scotland, Sweden, France, Australia, Romania, and South Africa due to the low price of oil and other competitive fuels. In the United States, during the 1973 oil crisis businesses expected oil prices to stay as high as US$70 a barrel, and invested considerable sums in the oil shale industry. World production of oil shale reached a peak of 46 million tonnes in 1980. Due to competition from cheap conventional petroleum in the 1980s, several investments became economically unfeasible. On 2 May 1982, Exxon canceled its US$5 billion Colony Shale Oil Project near Parachute, Colorado because of low oil-prices and increased expenses.

Economic Estimates & Analysis The various attempts to develop oil shale deposits have succeeded only when the cost of shale-oil production in a given region comes in below the price of crude oil or its other substitutes (break-even price) 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%. The International Energy Agency estimates, based on the various pilot projects, that investment and operating costs would be, that means would be economic at prices above $60 per barrel at current costs.

Economic Estimates & Analysis Yet, according to a survey conducted by the RAND Corporation, the cost of producing a barrel of oil at a surface retorting complex in the United States (comprising a mine, retorting plant, upgrading plant, supporting utilities, and spent shale reclamation), would range between $70 95. From this point of view & in order for the operation to be profitable, the price of crude oil would need to remain above these levels. The analysis also discusses the expectation that processing costs would drop after the complex was established ( Hypothetically, cost reduction of 35 70% is expected after its first 500 million barrels were produced.)

Economic Estimates & Analysis Assuming an increase in output of 25 thousand barrels per day during each year after the start of commercial production, the costs would then be expected to decline to $35 48 per barrel within 12 years. In 2005, Royal Dutch Shell announced that its in situ extraction technology could become competitive at prices over $30 per barrel. However, Shell reported in 2007 that the cost of creating an underground freeze wall to contain groundwater contamination had significantly escalated. As the commercial scale production by Shell does not foreseen until 2025, the real price needed to make production economic remains unclear

Capital cost According to the United States Department of Energy, in 1980s the costs of a 100,000 barrels per day ex-situ processing complex ranged from $8 12 billion at 2005 prices. It is estimated that the current capital costs are $3 10 billion at 2005 prices.

Potential Projects Because of the losses in 1980s, companies were reluctant to make new invests in shale oil production. Currently however, USA, Canada and Jordan were planning or had started shale oil production test projects, and Australia was considering restarting oil shale production. [15][18]

Summary Over 10 trillion barrels of in place resource Conversion technologies are advancing rapidly Estimated reserves of up to one trillion barrels worldwide Oil Price is a key driver for its development, at current conventional oil production costs Requires concerted effort by the private sector, governments.

Thank You

Economic Concerns* EROI is the ratio of energy delivered to energy costs. The most reliable studies suggest that the EROI for oil shale falls between 1:1 and 2:1 when self-energy is counted as a cost. Self-energy is energy released by the oil shale conversion process that is used to power that operation. This places the EROI for oil shale considerably below the EROI of about 20:1 for conventional crude oil at the wellhead. Even in its depleted state smaller and deeper fields, conventional crude oil generates a significantly larger energy surplus than oil shale. *An Assessment of the Energy Return on Investment (EROI) of Oil Shale by Department of Geography and Environment, Boston University, 2010

Economic Concerns* The larger energy surplus produced by conventional crude oil is due to the fact that kerogen in oil shale is solid organic material that has not been subject to the temperature, pressure, and other geologic conditions required to convert it to liquid form. Whereas upgrade the oil shale resource is required phase to step-up to the functional equivalent of conventional crude oil. This extra step results-in much lower EROI for oil shale. *An Assessment of the Energy Return on Investment (EROI) of Oil Shale by Department of Geography and Environment, Boston University, 2010

Economic Concerns* Firm conclusions regarding the EROI are difficult to establish for a variety of reasons: - very few reliable studies of current oil shale operations - many studies use a poor or undocumented methodology - Some studies exclude important categories of energy inputs that generate inflated estimates of the EROI for oil shale. - much of the discussions are regarded as preliminary or speculative because of the very small number of operating facilities that can be assessed. - The considerable uncertainty surrounding shale oil production suggests that it cannot yet be certified as a clear net energy producer if one includes internal energy as an energy cost.

Economic Concerns* The low EROI for oil shale is closely connected to: - retorting process, produces considerable carbon dioxide and other greenhouse gas emissions. (more than conventional liquid fuels from crude oilfeedstock by a factor of 1.2 to 1.75 - large quantities of energy needed to process oil shale - Huge amount of water is required (For every barrel of oil produced in an oil shale operation, between 1 and 3 barrels of water are Required).