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The Daily Sentinel (Colorado): Shell approaching critical stage in shale oil production

The Daily Sentinel (Colorado): Shell approaching critical stage in shale oil production

“The international oil company that has worked since 1982 on a way to draw oil from the shales of western Colorado is about five years from deciding whether the project can be commercially viable.”

Wednesday, July 06, 2005

By GARY HARMON

The international oil company that has worked since 1982 on a way to draw oil from the shales of western Colorado is about five years from deciding whether the project can be commercially viable.

“We’ve made some progress, and we’re increasingly optimistic, but we’re not there yet,” said Terry O’Connor of Shell Exploration and Production Co., which began work on an innovative oil shale-extraction process just as the rest of the industry gave up on the resource.

Shell’s process, which O’Connor said might be the “most heavily patented” of any oil-production process, involves both heating rock underground to extract a light product, as well as freezing surrounding rock to corral the vaporized material and prevent it from reaching surrounding groundwater, drafting it instead to a production well.

It’s the latter process that Shell is now beginning the process of perfecting and the phase that could determine the fate of the venture, O’Connor said.

Shell began in 1982 with lab experiments to determine whether it was possible to use heat to break molecular bonds holding lighter products in place on shale. After working out a process in the lab, it has been testing in the field in Rio Blanco County since about 1996, O’Connor said.

The stakes are high, but so are the potential rewards, he said.

Oil shale represents the “most concentrated, undeveloped fossil fuel on Earth,” said O’Connor, the company’s vice president for external and regulatory affairs for unconventional resources.

The company estimates it can produce 1 billion barrels of product from a square mile, he said.

Unlike the familiar retorting process that was being used in western Colorado in the early 1980s, the Shell process involves little earth moving, meaning that restoration costs are minimal once a field has been depleted.

Unlike traditional drilling, which is said to recover about 30 percent of deeply buried hydrocarbons, the Shell process can recover about 60 percent, he said.

The next critical step is testing the company’s freezewall technology, in which wells are drilled around the intended recovery area. Just as a refrigerator acts to remove heat from the surrounding rock, the freezewall will be constructed as water molecules trapped underground are frozen, forming a wall thousands of feet deep.

The freezewall won’t use water from outside, O’Connor said.

The company still is studying the amount of water it would need for its process, he said.

Within the wall, heaters dropped down holes drilled by water-well rigs boost the temperature of the oil-bearing rock to 650 to 700 degrees Fahrenheit, freeing lighter products, which O’Connor said could be characterized as a light, sweet crude.

The high temperature, however, means that much of the product is released from the rock as vapor that is collected in a production well and which would be pumped into a pipeline.

The entire process is one that would take years from boring the first holes for the heaters and freezewalls until actual production, he said.

Shell figures that a field could produce for seven to 10 years, he said, and produce about 3.5 times as much energy as it took to draw it out of the earth, he said.

About two-thirds of the product the company expects to recover will be oil and about one-third will be natural gas, which Shell hopes to use for its own generation needs or pump into the existing pipelines. It also is experimenting with the idea of using gas to heat the shale.

The key element, however, is time, said Jill Davis, who handles community relations involving unconventional resources for Shell.

Rising oil prices aren’t driving the research any faster, Davis said.

“You can’t will this along with oil prices,” she said.

Gary Harmon can be reached via e-mail at [email protected].

http://www.gjsentinel.com/hp/content/news/stories/2005/07/06/7_6_Shell_and_shale_WWW.html

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