Clearing up the Confusion over Shale
There are three types of energy deposits with very similar names that have recently become known to the public. While it is easy to confuse the three, they are all vastly different in their physical properties, their commercial value, and the methods required to extract them. One is a liquid, one is a gas, and the other is a solid.
Shale oil – Shale oil is real liquid crude oil trapped within tight, impervious rock formations. It differs from conventional crude oil only in that conventional crude is found in porous rock formation where it can easily flow to a well, and shale oil is found in non-porous rock and cannot flow unless the rock formations are exploded open by a process called hydraulic fracturing (fracking).
Shale oil is closely identified with a number of subsurface rock formations in place such as the Bakken/ Williston Basin in North Dakota, the Niobrara in NE Colorado/ SE Wyoming, and the Eagle Ford and Barnett shales in Texas.
Shale oil can be brought to the surface by using a drilling rig to drill down and then horizontally into the oil-bearing rocks. The horizontal segment is then fracked to break up the rock formation, permitting the once-trapped oil to flow. To keep wells producing, additional fracking may be required.
This process is economically feasible at today’s oil prices and significant amounts of oil are being produced.
Shale gas – Shale gas is the natural gas equivalent to shale oil. In shale gas deposits, natural gas is tightly held in minute quantities throughout large, dense rock formations. Unlike traditional natural gas, it is not in a porous formation that would permit it to flow to a nearby well. Hydraulic fracturing must be used to break up the gas-bearing rocks, permitting the gas to escape.
A number of shale gas formations are becoming household names. These include the Marcellus shale in New York, Pennsylvania, Ohio, and other Appalachian states, the Fayetteville formation in Arkansas, the Haynesville formation in Texas and Louisiana, and the Barnett shale in the Dallas/ Fort Worth area of Texas, among others.
Shale gas is a commercially viable venture that is spreading to other areas of the world. It can be developed using vertical or horizontal drilling techniques, followed by hydraulic fracturing of the surrounding rock formations.
Oil shale – Oil shale is the one resource of the three that has not proven to be commercially viable. Unlike the other two, oil shale is a solid, called kerogen, impregnated within a dense solid rock called marl. It is possible to liquefy kerogen through an energy-intensive heating or conversion process. Further upgrading and refining can turn liquified kerogen into synthetic petroleum.
If a drilling rig were to drill and frack oil shale deposits, as is done for shale oil, it would not produce and liquid fuel at all. It must either be mined from underground and heated on the surface, or heated underground and then pumped to the surface. So far, efforts to develop oil shale for use as a transportation fuel have not been commercially successful, and many attempts have ended in stunning failures.
The most famous oil shale deposits are a located in the Piceance/ Green River basin area that encompasses northwest Colorado, Southwest Wyoming, and northeastern Utah.
A number of companies are pursuing schemes to develop oil shale commercially using various cooking techniques ranging from underground electrical heaters, to underground fires, hot air pumped underground, supercritical carbon dioxide, microwaves, liquid metal nuclear reactors, and traditional above-ground ovens known as retorts. All of these are risky concepts for investors because they are incredibly capital intensive and none have proven successful on anything other than a very small scale. See our other oil shale pages for more information about oil shale.