DEFINITION of 'Unconventional Oil'

Unconventional oil refers to hydrocarbons that are obtained through techniques other than traditional vertical well extraction. Unconventional oil may simply refer to tight oil where the sediments holding the oil must be hydraulically fractured to free the oil. The oil extracted in this case is no different than the oil from a reservoir that is tapped by a vertical well. On the other end of the spectrum, there heavy types of unconventional oil. Not only do these hydrocarbons require special extraction, but they will need additional processing and refining to extract traditional petroleum products from them. Sources of this type of unconventional oil include oil sands, oil shale, shale oil, tight oil, and heavy and extra-heavy oil.

BREAKING DOWN 'Unconventional Oil'

 

Unconventional oil production is commonly seen as more costly than conventional oil production, less efficient, and is likely to cause more environmental damage. This is because the well known sources of unconventional oil are heavier and require more complex procedures and inputs to extract and then process into something usable. However, the ever-increasing global demand for petroleum, combined with its shrinking supply, has more firms turning to unconventional oil.

Conventional Oil Versus Unconventional Oil

Historically, the exploration and production of oil and natural gas focused on the sources that were easiest to access. Conventional oil wells are vertical shafts into pools of oil and gas that are under pressure, making them easy to bring to the surface. Unconventional oil sources of oil do not flow near the surface and sometimes do not flow at all in that they are in a solid or near solid state.

The Shift to Unconventional Oil

Unconventional oil sources remained relatively untapped compared to conventional sources while conventional sources were plentiful. This is simply due to the technical requirements and costs associated with production making an unconventional oil reservoir less profitable than a comparably sized conventional one. Over time, however, most of the conventional sources were already tapped and producing, drawing down the conventional oil reserves around the world. So the desire to keep growing production turned to the unconventional sources. In the meantime, advances in technology, particularly steam assisted gravity drainage, horizontal drilling and hydraulic fracturing, made unconventional oil sources more accessible and reduced the cost of extraction while increasing extraction efficiency.

As conventional sources of oil are exhausted, unconventional sources are making up a larger share of fossil fuel production. Moreover, unconventional oil production methods are being used on conventional wells to increase production or restart production on wells that were previously deemed depleted due to the extraction technology constraints of the time.

Types of Unconventional Oil

As mentioned, tight oil and shale oil is basically conventional oil that is hard to get out. Oil sands and heavy and extra-heavy oil, however, are highly viscous deposits of oil that have degraded overtime due to mixing with other materials. Shale oil is a mixture of rock and organic matter that is in the process of turning into an oil reservoir, but requires heating to finish the process. Depending on the depth of these heavier deposits, they can be mined or extracted using in situ processing to heat up the material to separate out the oil prior to extraction.

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