Primary funding is provided by The SPE Foundation through member donations and a contribution from Offshore Europe The Society is grateful to those companies that allow their professionals to serve as lecturers Additional support provided by AIME Society of Petroleum Engineers Distinguished Lecturer Program www.spe.org/dl 1
Unlocking Ten Trillion Barrels of Global Oil Shale Resources - The State of the Industry Khosrow Biglarbigi INTEK, Incorporated Society of Petroleum Engineers Distinguished Lecturer Program www.spe.org/dl 2 2
Demand For Liquid Hydrocarbon Worldwide 120 25% 24% Increase Increase 100 80 60 40 Million Barrels Per Day 20 2008 2011 2016 2021 2026 Year Source: EIA, 2009 2030 3
Global Liquid Hydrocarbon Supply 120 Million Barrels per Day 100 80 60 40 20 Oil Existing Fields NGL CTL GTL Future Discoveries? Oil Sands EOR Heavy Oil Oil Shale Bio Fuels 0 1990 2000 2010 2020 2030 Source: IEA, 2008 Year 4
What is Oil Shale? Rock Kerogen Syn- Crude 700-800 o F Pyrolysis Naphtha Jet Fuel Diesel Gasoline Hydrogen Upgrade 5
10 Trillion Barrels of Shale Oil Worldwide Canada Estonia Russia France Italy United States Morocco Egypt Israel Jordan China Zaire Brazil Australia Countries With Oil Shale Deposits 6
Known Resources (Barrels) Asia Australia Africa Europe MENA Eurasia Americas 27 Billion 32 Billion 100 Billion 120 Billion 153 Billion 270 Billion 6,100 Billion Source: USGS, 2005 * Jordan NRA, 2009 7
America s Oil Shale Most Concentrated Hydrocarbon Deposit 2 Trillion Barrels 6 Trillion Barrels Source: US DOE, 2004 8
Substantial Areal Density 1000 Barrels Per Acre 1,500 1,250 1,000 750 500 250 0 500 Wyoming USA Oil Shale 800 Utah USA Source: Oil and Gas Journal, August 2004 1,300 Colorado USA 70 100 Alaska N. Slope Oil Canada Oil Sands 9
The Mahogany Zone The Most Prolific Up to 1000 Ft Thick Up to 75 Gal/Ton Source: Redleaf Resources, 2008 10
Europe s Known Oil Shale Resources 120 Billion Barrels Italy 73.0 Estonia 16.0 France 7.0 Belarus 7.0 Sweden 6.0 UK 3.5 Germany 2.0 Luxembourg 0.7 Others 4.5 11
Oil Shale Production Processes Surface Process Resource Mining Retort Upgrading Refinery In-Situ Process Choke Point Resource Drilling Heating Upgrading Refinery Source: US DOE, 2004 12
Shell In-Situ Conversion Process Pilot Test (Colorado, USA) PRODUCER HEATER OVERBURDEN High Value Products Light Surface Processing Source: US DOE, 2008 13
Other Examples of In-Situ Technology Pilot Tests (Colorado, USA) Chevron Process Producer AMSO Process Injector Fractures Source: US DOE, 2008 14
Ecoshale In-Capsule Technology Pilot Test (Utah, USA) COOL GAS HOT GAS Source: Redleaf Resources, 2008 15
Alberta Taciuk Processor (ATP) Pilot Test (Utah, USA) Vapour tube Combustion zone Retort Preheat tubes Cooling zone Oil shale feed 750 C 500 C 250 C Source: US DOE, 2006 16
Gas Combustion Retort (GCR) Brazil (4,000 Bbl/d) China (4,000 Bbl/d) Estonia (6,000 Bbl/d) Australia (Project Scale Up) PREHEATING MIST FORMATION PYROLYSIS STRIPPING COMBUSTION RESIDUE COOLING Raw Shale Oil Mist Extractors Source: US DOE, 2007 Spent Shale 17
12 Energy Return on Investment (EROI) 10 EROI = Energy out - Energy in Energy in Oil Sands 8 EROI 6 10 4 2 Oil Shale 3 7 7 5 0 Oil Shale (In-Situ) Source: US DOE, 2007 Oil Shale (In-Situ, Non.Elec.) Oil Shale (Surface) Oil Sands (Surface) Oil Sands (In-Situ) 18
Oil shale is a local asset under global constraints. Klaus Brendow, Senior Advisor World Energy Council June 9, 2009 19
Oil Shale Project Costs Item Unit Range Capital Cost $/BPD * 45K-65K O&M Cost $/Bbl 15-25 * Barrel of Daily Capacity Source: INTEK, Inc., 2009 20
Canadian Oil Sands Operating Costs Dollar/ Barrel $40 $35 $30 $25 $20 $15 $10 $23 $30 $35 $5 $0 Source: Suncor, 2008 2006 2007 2008 Year 21
140000 Canadian Oil Sands Capital Costs $1,000 per Bbl of Daily Capacity 120 100 80 60 40 20 $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 2001 2003 2006 2007 2008 2010 2011 22 Source: Canadian Association of Petroleum Producers, April 2008
Shell CEO Says Higher Costs Limit Canadian Oil Sands Projects Oct 8, 2009 23
Total Canada Chief Says Oilsands Need Pricier Oil Oct 4, 2009 24
2007 Dollars Per Bbl $80 $70 $60 $50 $40 $30 $20 Economic Price for Oil Shale Technology Rate of Return 15% $60 $50 $35 $75 $10 $0 In-Capsule Source: INTEK, Inc., 2008 True In-Situ Surface Mining Underground Mining 25
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, 2007 26
Land Use Depends On The Process 1 MMBbl/D Production for 40 Years Surface: 30 Square Miles In-Situ: 15 Square Miles Example for 2.5 MMBbl/D Industry: 52 Square Miles Green River (USA) 2.5 MMBbl/d 17,000 Square Miles 52 Square Miles Source: SPE #110590, 2007 27
Water Requirements 1-3 Barrels of Water per Barrel of Shale Oil Challenges: Water rights Water availability Water runoff Ground water protection Source: US DOE, 2007 28
The Prize (USA Example) Total Resource 6 Trillion Barrels High Quality Resource 2 Trillion Barrels Technical Recovery 1 Trillion Barrels Reserves 600 750 Billion Bbls @ $50 - $65 / Bbl Source: INTEK, Inc., 2008 29
1,400 1,200 Reserves Potential Worldwide U.S. Worldwide Billion Barrels 1,000 800 600 400 200 0 $50 - $65 $75 - $90 $90 - $130 Oil Price ($/Bbl) 30
Summary Over 10 trillion barrels of in place resource Conversion technologies are advancing rapidly Estimated reserves of up to 1.3 trillion barrels worldwide Oil Price is a key driver for its development Requires concerted effort by the private sector, governments, and local communities 31
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Appendix 33
Activities in Estonia VKG VKG Oil Plant Balti Power Plant 15 Million Tons of Oil Narva Shale Oil Plant Eesti Power Balti Plant Kerogen Oil Production ~ 1.8 Million Bbls Eesti Narva Mining Area 425 Km 2 Power Generation ~11 Billion (KWh) 34
Breakdown of Economic Price for Generic Surface Project Taxes 19% $60/Bbl Transfer Payments 14% Risk Premium 9% Operating Costs 38% Source: INTEK, Inc., 2008 Cost of Capital 19% 35
Cashflow of a Generic Oil Shale Project 1200 1000 Cum. Discounted Cashflow (MM$) 800 600 400 200 0-200 -400-600 Before Tax After Tax Room for Government Action -800-1000 5 10 15 20 25 30 35 40 Source: INTEK, Inc., 2008 Year 36
Average Drilling Cost ($/Foot) 400 300 200 100 Rocky Mountain Region 1,000 Dollars per Barrel of Daily Capacity 100 80 60 40 Oil Shale Costs are Impacted A Few Examples Drilling Costs 60 $2,000 0 2004 20 2005 2006 2007 Year40 $1,500-1,000 Dollars per Barrel of Daily Capacity 100 80 Mining Costs Upgrading Costs $2,500 2003 2004 20 2005 2006 2007 2008 $1,000 20 Price per Ton - 15 $500 2003 2004 2005 2006 2007 2008 $- Operating Costs ($/Bbl Produced) 30 25 10 Tubular Steel Price 2003 2004 5 2005 2006 2007 2008 2009 Year 0 Suncor Syncrude COS Trust Operating Costs 37 2003 2004 2005 2006 2007 2008
Worldwide Oil Shale Activities Production 6,000 Bbl/D 2,430 Mw Exploration 12 Companies Estonia Production 4,000 Bbl/D RD&D 8 Pilot Tests 29 Companies USA Brazil Morocco Jordan China Commercial Scale-Up Production 4,000 Bbl/D Australia Source: INTEK, Inc., 2008 38
10 Trillion Barrels of Shale Oil Worldwide North America 6,015 Billion bbls South America 82 Billion bbls Eurasia 271 Billion bbls Europe 116 Billion bbls Africa 159 Billion bbls Middle East 38 Billion bbls Asia 27 Billion bbls Australia 32 Billion bbls Sources: World Oil Shale: Dyni 2003 Map: maps.google.com 39
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 0 2005 2010 2015 2020 2025 2030 2035 Year Source: US DOE, 2007 40
Development Hurdles Access to Land 70% on Federal Land No Commercial Leasing Program RD & D Environmental Permitting Fiscal Regime 41