Oil Shale

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.

BREAKING DOWN '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. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  3. Enhanced Oil Recovery - EOR

    Enhanced oil recovery (EOR) is the process of obtaining stranded ...
  4. Initial Production

    The measurement of an oil well's production at the outset. Initial ...
  5. Hydrocarbon

    An organic chemical compound composed exclusively of hydrogen ...
  6. Energy Sector

    A category of stocks that relate to producing or supplying energy. ...
Related Articles
  1. Investing Basics

    Shale Oil vs. Oil Shale: What's the Difference?

    The biggest difference between oil shale and shale oil is that one is still a money making endeavor.
  2. Investing

    How Shale Fracking May Hurt Your Investment

    With news that shale drilling has caused earthquakes, you may want to rethink your investments.
  3. Investing

    U.S. Shale Oil Production: The Rise and Fall

    Low oil prices are taking their toll on U.S. shale oil producers, but their rise over the last decade is evidence of increasing U.S. energy independence.
  4. Mutual Funds & ETFs

    The 3 Best ETFs to Bet On a U.S. Shale Industry Rebound (XES, PSCE)

    Learn three ETF strategies and corresponding ETFs to bet on a rebound for U.S. shale oil, including indirect plays, hedging and focused exposure strategies.
  5. Investing

    How To Play The Shale Energy Boom's Premature Demise

    Despite its historic bull run, the market is giving investors plenty to worry about. And I’m not even referring to the many potential triggers for a nasty correction you hear a lot about ...
  6. Stock Analysis

    What Could Go Wrong With Shale Plays

    The exploration and production industry loves oil and gas shale plays but these areas are not a lock yet.
  7. Stock Analysis

    Still Waiting For The Floyd Shale

    The Floyd Shale is a promising new area that has been neglected in the Energy Bear market. The full potential is still unknown.
  8. Stock Analysis

    And Yet More Shale Plays

    The industry is slowly moving to develop other shale plays in North America, proving that these unconventional resources will provide us with gas for years.
  9. Stock Analysis

    Shale Plays Gone Wild - The Bakken Shale

    Investments from exploration and production companies have increased in this area as the search intensifies for the next large pool of hydrocarbon resources in North America.
  10. Economics

    How Oil Prices Impact the U.S. Economy

    Now that the United States has increased oil production through shale oil and fracking, low oil prices can harm the U.S. oil industry and its workers.
RELATED FAQS
  1. What impact has the increase in shale gas drilling had on the oil and gas industry?

    Read about some of the domestic and global impacts of the shale oil and gas revolution on the oil and gas industry, particularly ... Read Answer >>
  2. How does fracking increase oil production?

    Learn how fracking, the process of high-pressure oil and gas extraction, has tripled domestic oil production and reduced ... Read Answer >>
  3. What impact does the growth in horizontal drilling have in the oil and gas sector?

    Read about the development of horizontal drilling for oil and natural gas and how the oil and gas sector has benefited from ... Read Answer >>
  4. Why did oil prices drop so much in 2014?

    Learn the roles that decreased global demand, new supply sources in North America and actions taken by Saudi Arabia played ... Read Answer >>
  5. What percentage of the global economy is comprised of the oil & gas drilling sector?

    Read about a rising industry that already composes as much as one-twentieth of total global economic output: the oil & gas ... Read Answer >>
  6. Why do oil stock prices drop?

    Doesn't lower oil prices mean more profit for companies that use oil products?  ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center