Tony Dammer expects his company to soon begin extracting oil from oil shale formations in Utah, a small part of what he deems a “tremendous resource” that offers the potential to wean the United States off imported supplies.
With an estimated 1.5 trillion barrels of oil locked in shale deposits in Colorado, Utah and Wyoming alone, U.S. shale reserves dwarf conventional reserves in oil -rich Saudi Arabia and Canada.
“That makes us a big doggone deal in the world oil market,” said Dammer, senior vice president of Red Leaf Resource and former director of the Office of Naval Petroleum and Oil Shale Reserves within the Department of Energy.
Dammer discussed oil shale development in general and his company’s operations in specific during a presentation at the Energy Forum & Expo in Grand Junction.
The timing to talk about oil shale development is good, he said, given the potential for instability in Libya and other oil-producing counties to affect oil supplies and prices and, in turn, what consumers pay for gasoline at the pump. “Even just a little blip in the supply chain globally hits us. It hits each one of us.”
Oil shale development has a nearly century long history, Dammer said, but that development has yet to match the scale of the resource.
Out of an estimated global recoverable resource of 2.8 trillion barrels of oil from oil shale, nearly 2.1 trillion barrels is found in the United States, Dammer said. The “epicenter” of U.S. deposits is found in Colorado, Utah and Wyoming, an area that includes the Piceance Basin northwest of Grand Junction.
By comparison, Saudi Arabia has estimated oil reserves of 267 billion barrels, while Canada has estimated reserves of 179 billion barrels. U.S. reserves are estimated at 22 billion to 27 billion barrels, he said.
The U.S consumes about 20 million barrels of oil a day, about half of which is imported, he said.
A number of technologies have been developed to extract oil from shale, Dammer said, including the “in-situ” methods companies are researching that leave shale formations in place underground. There also are surface retort methods in which shale is mined, crushed and heated at the surface to produce oil.
The Utah-based Red Leaf Resource has developed a process in which mined shale is heated in a closed surface impoundment called a capsule, something Dammer compared to a “huge dutch oven.”
Shale contained in the lined capsule is heated to about 500 degrees Fahrenheit using hot air distributed by pipes. Oil and other products flow to the bottom of the capsule and are collected there. Vapors produced by the process are recovered at the top of the capsule.
Dammer said the process offers a number of economic and environmental advantages in that capsule liners protect groundwater and vegetation and the process requires no process water and comparatively low temperatures, he said. The spent shale is left in place and the area above the capsule is quickly reclaimed, he said.
Moreover, the process works, he said, as a field test plot in the Uintah Basin south of Vernal, Utah., demonstrated.
Red Leaf Resources has leased about 17,000 acres of state-owned and managed school trust lands near Vernal that include shallow oil shale formations with an estimated 400 million barrels of recoverable oil, Dammer said.
Red Leaf expects to produce 9,500 barrels of oil a day from one site that ultimately will include 132 capsules, each measuring about 500 by 1,000 feet. At that rate of production, the project would employ 200 people and continue for 25 years, he said. It’s estimated that another site in the leased area will produce 30,000 barrels of oil a day, he added.
Red Leaf is looking for additional land to develop and also is considering licensing its in-capsule process for production worldwide.
The process is especially well-suited to extracting oil from smaller shale reserves, he said, and also could work for oil sands, coal and lignite.
Low oil prices that made oil shale development comparatively uneconomical stalled development in the past. But Dammer said declining reserves of conventional oil reserves make it unlikely that will occur again.