Oil Shale

AAA

DEFINITION of 'Oil Shale'

A type of sedimentary rock composed chiefly of a combination of silt and clay. Shale may contain kerogen, a type of organic matter that yields oil and gas. Shale formations are best known for shale oil, a type of unconventional oil. Deposits of shale are found in many areas around the world, and large areas of the United States, Russia, Argentina, Libya, and China are known to have shale oil and gas reserves.

INVESTOPEDIA EXPLAINS 'Oil Shale'

There are several different types of shale found throughout the world, including oil shale and bituminous shale. These two types are important sources of various grades of unconventional oil. Declining global reserves of convention oil has led to an increased focus on unconventional oil sources, many of which are associated with shale.

Shale became a strategic asset during the Second World War, when the United States sought a more secure source of oil. Commercial development began in the 1960s, but the difficulty of extracting and producing oil from shale made it a less attractive resource compared to oil from conventional wells.

Improvements in drilling technology, such as the emergence of directional drilling, has made extraction of oil from shale less cost prohibitive. Production companies use a variety of methods to extract oil from shale. Hydraulic fracturing (“fracking”) involves injecting pressured water and chemicals into a well in order to break into underground reservoirs. Steam can be injected underground in order to heat up oils in the surrounding shale formation, which then seep into the well. Acids can also be injected in order to increase the permeability of rock surrounding the well.

Extracting oil and gas from shale deposits has been criticized for harming the environment. Most processes use significant amount of water, and the chemicals used may harm humans and animals. The process is energy-intensive, and can require the burning of more fossil fuels in order to provide the necessary power supply.

RELATED TERMS
  1. Unconventional Oil

    A type of petroleum that is produced or obtained through techniques ...
  2. Directional Drilling

    A drilling technique in which a well is bored at multiple angles. ...
  3. Re-fracking

    Re-fracking is the practice of returning to older wells that ...
  4. Gross Acres

    The amount of leased real estate, that a petroleum and/or natural ...
  5. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the ...
  6. Oil Field

    A tract of land used for extracting petroleum, or crude oil, ...
RELATED FAQS
  1. How has fracking helped the U.S. to decrease dependence on foreign oil?

    Learn about the drilling technique referred to as fracking, and discover how this technology has significantly reduced U.S. ...
  2. How does government regulation impact the oil & gas drilling sector?

    Find out how government regulation of the oil and gas sectors is often positive for the large companies, but may be negative ...
  3. What country is the world's largest oil producer?

    Learn which countries are considered to be the largest oil producers in the world, whether natural gas and biofuel are taken ...
Related Articles
  1. Investing News

    Fracking ETFs Or Drilling Services Stocks?

    Hydraulic fracturing — otherwise known as fracking — is a hot topic. But how to invest in this trend?
  2. Stock Analysis

    Fracking Can't Happen Without These Companies

    With all the attention paid to fracking, what is are the good investment opportunities? Are the companies that extract oil and natural gas a good bet?
  3. Stock Analysis

    How Fracking Affects Natural Gas Prices

    Whatever you think of fracking, it has done one thing: kept the price of natural gas from increasing any more than it has.
  4. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  5. Active Trading

    Uncovering Oil And Gas Futures

    Find out how to stay on top of data reports that could cause volatility in oil and gas markets.
  6. Mutual Funds & ETFs

    ETFs Provide Easy Access To Energy Commodities

    Hedge against rising energy prices and diversify your portfolio with these funds.
  7. Economics

    What Determines Gas Prices?

    Gas prices are influenced by more than supply and demand. Find out what determines the price you pay at the pump.
  8. Fundamental Analysis

    Accounting For Differences In Oil And Gas Accounting

    How a company accounts for its expenses affects how its net income and cash flow numbers are reported.
  9. Active Trading

    How Does Crude Oil Affect Gas Prices?

    Find out how this commodity's fluctuating price affects more than just how much you pay at the pump.
  10. Economics

    Meet OPEC, Manager Of Oil Wealth

    This organization's decisions can influence oil prices, but there is a limit to its power.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center