Now that the price of oil is hovering around $40 a barrel again, it’s time to talk about oil shale.
I predict that you are going to be reading more about this source of fuel in the next few years, as the inevitable (eternal) decline in world oil production continues and businesses scramble to develop alternative sources of energy.
But before you invest your hard-earned cash into an oil-shale venture, you’d better know what it’s really about.
So-called oil shale (it’s neither oil nor shale, by the way) appears to be an obvious place to turn for energy. But life is rarely that simple, as Suncor Inc. found out the hard way.
Oil shale’s key ingredient is an organic compound called kerogen – basically half-baked petroleum – that can be extracted from the plentiful shale. In the United States alone there is more kerogen than there is crude oil in the entire world – estimated at 2.1 trillion barrels.
Canada has a modest supply of kerogen, which after refining becomes a low-grade petroleum product. The stuff has been used as fuel since the 1850s, but historically, it has never been economical to mine and process. It’s also notoriously ashy and toxic. But that hasn’t stopped plenty of people from exploiting its properties – it’s used for fuel in Estonia, Brazil and China.
But problems extracting and refining this little-known energy source into something relatively clean and useful, such as gasoline, are enormous. And the more we learn about carcinogens and other toxic waste, the less attractive oil shale becomes.
The only Canadian company that has made any real strides in developing oil shale is Calgary’s Suncor, which joined a large joint-venture in Australia back in 1995. But the company abandoned it three years ago in the face of stiff resistance from Greenpeace activists, who claimed it was the dirtiest of all fossil fuels.
Suncor spokesman Darcie Park told me environmental considerations were a factor in the withdrawal from the Stuart Oil Shale Project, but added, “It was a strategic decision to focus on oilsands to achieve our growth.”
I found a knowledgeable Suncor shareholder, Walter Youngquist, to talk to me about the venture and oil shale in general.
Youngquist is no ordinary Suncor investor. He is one of the world’s foremost experts on alternative energies. Before he served in the Second World War, he worked for the U.S. Geological Survey, and after the war he worked for ExxonMobil – one of the companies that developed a massive oil-shale venture in Colorado. As a geologist (he has a doctorate), Youngquist has published extensively on the subject of alternative fuels, recently giving a speech to the U.S. Geological Survey on the subject of comprehensive substitutes for oil. When I called him at his home in Oregon, he was busy revising his book, GeoDestinies.
He speaks with a rapidity and droll humour that is disarming at first. But I’ll let his eloquent words speak for themselves:
Why is kerogen called oil shale?
“It is a promotional name. I have a (privately published) book here called The Rock That Burns, and this guy says if you go to New York and talk to investment bankers and tell them the truth, saying that you’ve got a low-grade hydrocarbon marl (limestone and clay) deposit, they’ll say, ‘Forget it.’ But if you tell them the next day that you’ve got a shale oil deposit, they’ll say, ‘Oh great, we are interested in that.’ So that’s the deal.”
On Suncor: “I have some stock in Suncor and I think it’s a pretty good outfit – but they blew it. They really lost their cork in northeast. Australia, in Queensland . . . I still have my Suncor stock, but at one time they went off the deep end on the deal.”
What’s wrong with oil shale?
“You’ve got to mine it, drill it, blast it, haul it to the processing plant. Then you have to crush it. Then you’ve got to heat it to 900°F.
“Then you have to add hydrogen so it becomes a liquid. Then you’ve got to dispose of the shale. (And where do you get the hydrogen? That’s a problem.)
“And the shale pops like popcorn, so when you start out with a given volume, by the time you’ve extracted 30 gallons per ton, you have got more volume than you started with, so you can’t put it back where you found it.
“And it’s got a lot of toxic minerals in it, so it damn well better not get into the groundwater or water system. Furthermore, it takes about three or four barrels of water to produce one barrel of shale oil.”
With prices rising, won’t it be worth addressing these concerns?
“The initial process of taking the shale out . . . is almost zero net energy recovery and people ignore that all the time,” says Youngquist.
“That is a very fundamental point – how much you get out for how much you put in. I don’t think shale oil is going to fly in any appreciable amount. Maybe locally some place they could produce oil for some special purpose in limited amounts. But in terms of making a dent in the world oil supply problem, that isn’t even going to come close.”
His conclusion: “You will never live long enough to see shale oil produced in any quantities . . . I think it’s the fuel of the future and always will be.”
