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Bloomberg: Chevron, Los Alamos to Study U.S. Oil Shale Deposits (Update1)

By Stephen Voss

Sept. 25 (Bloomberg) — Chevron Corp., the second-largest U.S. oil company, said it started a joint research project with the Los Alamos National Laboratory to study hydrocarbon reserves trapped in rock formations known as oil shales.

Oil shales are sedimentary rocks that contain a high proportion of organic matter that can be converted into crude oil or natural gas. The research will be based on formations in the Piceance Basin in Colorado and experiment with underground processing techniques that might mitigate greenhouse gas emissions, Chevron said in a statement.

“Today’s unconventional energy sources, such as oil shales and other tight formations, will become part of the core energy supplies in the future, and our alliance can play a significant role in unlocking the potential of these resources,” Donald Paul, Chevron’s chief technology officer, said in the statement.

The U.S. Geological Survey estimates the U.S. holds 2 trillion barrels of oil shale resources, with about 1.5 trillion barrels located in the western states, primarily Wyoming, Colorado and Utah, Chevron said.

The resource is less developed than oil sands, which are oil- encrusted rock particles found in Canada and elsewhere.

Oil sands, oil shales and other energy forms, such as liquid fuels produced from coal or gas, are often grouped under the term “unconventional oil” because they differ from standard oil and gas fields.

Shales vs Sands

U.S. Energy Department estimates show that oil shale will add relatively little in coming years to global oil supply, now about 85 million barrels a day.

Oil shale production is expected to rise to 100,000 barrels a day worldwide by 2030, from none now, Guy Caruso, the head of the department’s Energy Information Administration, said earlier this month at conferences in Vienna and London. Oil sands supply may reach 3.6 million barrels a day by 2030, up from 1 million barrels a day last year, according to Caruso.

Other major oil companies have also been examining the potential for years. Royal Dutch Shell Plc carried out field tests on oil shales in Colorado 10 years ago, using an in-ground heating process, and last year a Shell unit formed a joint venture with Jilin Guangzheng Mineral Development Co. to explore oil shale resources in China’s northeastern province of Jilin.

Governments concerned about the eventual decline of conventional oil production should begin a “crash course” of spending on unconventional oil in order to mitigate fuel shortages, according to a study funded by the Energy Department and led by Robert Hirsch, a former NASA adviser.

The world needs to spend $1 trillion a year developing alternative fuels, starting 20 years before the peak in conventional oil production, Hirsch told the Oil & Money Conference in London last week. Oil executives or policy makers differ on when world production may reach its zenith, with some saying it’ll occur within a few years and others decades.

To contact the reporter on this story: Stephen Voss in London at [email protected]

Last Updated: September 25, 2006 08:19 EDT

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