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.

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