The term 'Oil Shale' is included in the Economics edition of the Financial Dictionary. Get your copy on Amazon in Kindle, Paperback or Audio edition. Check for lowest price here...
Oil Shale, sometimes called shale oil, refers to an unconventional form of oil that exists in shale formations. This shale oil can be used to describe two separate forms of oil. The first is crude oil which has become trapped within shale formations. The second refers to the more traditionally accepted definition. This is oil which the companies extract out from the shale itself.
This shale oil is only a particular kind of sedimentary rock. It exhibits several unique characteristics. These are a lower permeability and contents of solids that are similar to bituminous material. In an extraction process, this oil may be super-heated and vaporized so that it becomes removable and transformable into the traditional viscous form of oil.
What made it conceivable to extract such unusual oil resources in the first place is the advancement of both hydraulic fracturing, known as “fracking” and the improvement of various techniques for horizontal drilling. This has made it technologically possible for the oil majors and minors to pull oil out of the shale rock and other forms of rock formation that have the characteristics of lower permeability.
These cutting edged techniques began to develop and grow starting in the decade of the 50s. It was not until the decades of the 70s and 80s that such shale formations within the continental United States could effectively be tapped. The biggest shale formations which yield up this shale oil in the U.S. lie on the Western coast, in the Monterey-Santos shale formations.
These oil shale and other gas shale rock structures exist all over the planet. The nations which are fortunate enough to have huge amounts of technologically recoverable shale oil are some of the usual suspects for natural resource abundance. This includes Russia, China, The United States, Libya, and Argentina. The United States Energy Information Administration (US EIA) did an estimate on shale oil reserves back in 2013. They determined that an estimate of around 345 billion barrels of this shale oil could be recovered now or in the future. This means that such reserves comprise around 11 percent of all crude oil resources in the globe.
Obtaining this shale oil out of the unique rock formations has never been easy. This also makes it typically more costly to do than simply drilling for conventional stocks of crude oil. Extracting oil shale may also lead to more negative and pronounced effects on the natural environment. The reason for this is that shale oil must be super-heated to force the oil to become a vapor. Once this occurs, the producers then have to process the vapor with various potentially harmful to the environment chemicals in order to separate the oil vapor from the natural gas.
Within the oil and natural gas universe, the major and minor producers commonly make reference to “tight oil” instead of oil shale when they come up with their resource and production estimates. The reason for this is that oil shale can be derived from such rock structures as carbonate and sandstone, not only traditional shale oil formations. The tight oil estimates are therefore always higher than the conventional shale estimates will be.
The oil shale industry had become a massive contributor to American oil production and exports, thanks to the rapid growth of this industry in the years following the new millennium. For several years, it contributed literally millions of barrels of oil products and production per day. The United States briefly became the world’s largest oil producer.
Once Saudi Arabia targeted this industry as a threat to its own dominance of the world oil markets in conjunction with its puppet organization the OPEC cartel, they went after the American oil shale industry. By driving down oil prices to lower levels than the more expensive cost to produce the shale oils, they were successful in forcing many of these operations to close up either temporarily or permanently within the U.S. and Canada.