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?

    Fracking has led to substantial increases in U.S. domestic oil and gas production, thereby significantly reducing the need ... Read Full Answer >>
  2. How does government regulation impact the oil & gas drilling sector?

    The oil and gas drilling sectors are recognized as being a vital part of the U.S. economy in both the long- and the short-term. ... Read Full Answer >>
  3. What country is the world's largest oil producer?

    The Kingdom of Saudi Arabia is often cited as the world's largest oil producer. The country produces 13.24% of the oil consumed ... Read Full Answer >>
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. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center