What Is Oil Shale?

Oil shale is a sedimentary rock formation containing kerogen, which is a type of organic matter that yields oil and gas. Kerogen will burn when exposed to flame. Meanwhile, 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 an unconventional play in the oil and gas industry.

Understanding 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, which are commonly seen as more costly than conventional oil production, less efficient, and likely to cause environmental damage. 

Key Takeaways

  • Oil shale is sedimentary rock that contains a type of flammable organic matter called kerogen, which yields oil and gas.
  • Recovering oil from shale requires unconventional production techniques that are more expensive and less efficient.
  • Extracting oil from shale has been criticized due to the negative environmental impact.
  • Technologies can recover oil from shale below the surface (ex situ) or convert it while it is still underground (in situ).
  • Oil shale becomes economically viable during periods of high oil prices, such as the oil crises of the 1970s.

Recovery of oil shale typically involves either surface or sub-surface mining to extract the minerals, which are then sent elsewhere for additional processing. Technologies for doing so are classified broadly as ex situ (displaced) or in situ (in place).

Ex situ processing is also known as above-ground retorting and involves mining oil shale underground or near the surface, then transporting the materials to a facility for processing. On the other hand, with in situ processing, oil shale remains underground and the kerogen is converted while it's in the form of deposits. It is then extracted with wells like conventional crude oil

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.

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, 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.