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.


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.

  1. Crude Oil

    Crude oil is a naturally occurring, unrefined petroleum product ...
  2. Unconventional Oil

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

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

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

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

    A slang term for hydraulic fracturing. Fracking refers to the ...
Related Articles
  1. Economics

    Keep Track of Oil News With These 7 Websites

    Discover some of the best online resources about the oil industry that feature news and analysis on the biggest issues and trends.
  2. Active Trading Fundamentals

    The Biggest Private Equity Firms in San Francisco

    Learn about some of the larger private equity firms with a presence in San Francisco, including KKR, the Blackstone Group and Warburg Pincus.
  3. 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?
  4. 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?
  5. 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.
  6. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  7. 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.
  8. Mutual Funds & ETFs

    ETFs Provide Easy Access To Energy Commodities

    Hedge against rising energy prices and diversify your portfolio with these funds.
  9. 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.
  10. 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.
  1. What impact does the growth in horizontal drilling have in the oil and gas sector?

    It is tough to separate the growth in horizontal drilling from the growth in hydraulic fracturing, or fracking; the two techniques ... Read Full Answer >>
  2. What impact has the increase in shale gas drilling had on the oil and gas industry?

    The shale oil and gas drilling revolution, which began and is primarily centered in North America, caused a crude oil and ... Read Full Answer >>
  3. Why do investors consider the rig utilization rates when investing in oil and gas?

    A rig utilization rate measures a company’s rigs that are operating in proportion to the company's total available rigs. ... Read Full Answer >>
  4. What is the long-term outlook of the chemicals sector?

    The long-term outlook for the chemicals sector, as of 2015, is good, primarily due to continuing emerging market opportunities. ... Read Full Answer >>
  5. 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 >>
  6. 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 >>
  7. 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 >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center