The Bureau of Land Management approved ExxonMobil’s plan for an oil shale research and development project in Colorado. The approval clears a key hurdle for the oil company trying to revive a quest that has spanned several decades. Also known as kerogen shale, the process is extremely expensive and difficult to do, which requires heating black kerogen rock in order to turn it into a liquid fuel.
Exxon tried to develop oil shale back in the early 1980’s, but cancelled its flagship Colony Project near Grand Junction in 1982 as oil prices dropped. Its new R&D project would be in Rio Blanco County. This time around Exxon wants to heat the kerogen underground and then pump out the liquid oil. Exxon hopes to use advanced hydraulic fracturing techniques to fracture the rock and then heat it electrically. Its Colony project involved mining kerogen and heating it once it was extracted and brought to the surface.
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ExxonMobil and BLM believe that the project could offer lessons about how to viably produce oil shale. There are an estimated 600 million barrels of oil in Exxon’s lease in Rio Blanco County. However, it is unclear at this point if it can be done economically. Other companies have waded into oil shale, only to cancel the projects because of their high costs. Most recently, Shell cancelled its oil shale project in September 2013. And Chevron cancelled its project in Rio Blanco County in 2012. At this point, Exxon’s R&D project is a small step that will inform future investment decisions. Only if its initial test wells prove successful will Exxon pour much more money into the project. Oil shale is also a very dirty process, raising concerns from environmental groups that it can be done in a responsible way.
By Joao Peixe of Oilprice.com