What is 'Oil Shale'

Oil shale is a sedimentary rock formation containing kerogen. Kerogen is a type of organic matter that yields oil and gas and will burn when exposed to flame. The term shale covers a variety of sedimentary rock formations containing a combination of clay and other minerals.

The difficulty inherent in recovering petroleum from oil shale has traditionally made resources containing it unconventional plays in the oil and gas industry.

BREAKING DOWN 'Oil Shale'

To be considered an oil shale, a formation must contain enough bituminous materials to produce flammable, petroleum-like liquids. In general, rocks mined from an oil shale formation will burn without further processing. Recovering oil from shale requires unconventional production techniques. Unconventional oil production is commonly seen as more costly than conventional oil production, less efficient, and is likely to cause environmental damage. 

Recovery of oil shale typically involves either surface or sub-surface mining to extract the minerals, which are then sent elsewhere for additional processing. Some patents exist for processing methods which take place without mining the minerals first, known as in situ retorting. The use of these methods is currently limited, and most in situ processes appear to be experimental at this time.

Note that oil shale differs from shale oil, which refers to pockets of gas or liquid petroleum that occur within shale formations, such as the Bakken formation in North Dakota, Montana, Saskatchewan, and Manitoba. Hydraulic fracturing and other unconventional drilling techniques allow access to shale oil reserves, whereas the petroleum in oil shales remains embedded in the rock itself after mining, absent further processing.

Extracting oil shale deposits has been criticized for harming the environment. In addition to the impact of surface mining on the landscape, most processes use a significant amount of water and introduce pollutants into both air and surface water. Processing oil shale is also energy-intensive, contributing to carbon dioxide emissions.

 Short History of Oil Shale

The Green River Formation in Colorado, Utah, and Wyoming hosts the most significant deposits of oil shale in the world. Historically, however, Estonia has processed the majority of the oil shale extracted worldwide, predominately for use in power plants. Substantial oil shale resources also exist in China, Russia, and Brazil.

Shale became a strategic asset during the Second World War when the United States sought a 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.

Oil shale processing became popular during the oil crisis of the 1970s. During this time, when high prices briefly made oil shale economically viable in comparison to more conventional plays. Reductions in oil prices in the early 1980s reduced corporate interest again until the early 2000s when declining global reserves of conventional oil began to drive renewed interest in unconventional plays.

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