Unconventional Petroleum

As indicated in other pages of this Website, energy analysts tend to split the unconventional petroleum group into three segments, heavy oil, tar sand, and oil shale. As we’ll see, this mode of categorization is somewhat artificial, but since it is accepted in the industry, we shall retain it.

Heavy Oil

Heavy oil is a form of petroleum of thick consistency—generally somewhere between molasses and honey. Heavy oil is characterized by the pervasive presence of aromatics, hydrocarbon molecules lacking hydrogen bonds for every carbon atom, which must be transformed into olefin and paraffin molecules during the refinery process in order to meet stringent emissions standards. Generally this is done by treating the feedstock with hydrogen gas. Moreover, heavy oils are normally rich in asphaltenes, sulfur, heavy metals, and nitrogen—all undesirable components that must be removed in the refining process. To make matters worse, heavy oils are difficult and sometimes impossible to pump, so extraction can be a rather expensive process.

Incidentally, there is no sharp division between light and heavy crudes. Instead they are part of a continuum, and tar sand, considered next, is at the far end of that continuum.

Heavy oils were often left undisturbed in the past because the economics of recovering them and refining them were unfavorable. Now, with the apparent decline of high grade light crudes, oil companies have begun harvesting heavy oils aggressively. The largest reserves of fluid heavy oil are believed to reside in Venezuela which was also blessed with large quantities of lighter crudes, now much depleted, unfortunately.

Bitumen and Tar Sand

Tar sand is a somewhat different animal than the more fluid heavy oils. It is predominantly composed of bitumen, a sort of degraded petroleum which requires much additional processing to produce highly refined products. Bitumen itself is a tarry substance, and is a constituent of asphalt paving which combines bitumen with crushed stone and sand.

Bitumen is found in many areas of the world, and is particularly prevalent in Alberta, Canada, and in the oil regions of the Middle East. The Canadian deposits are immense, and may harbor a greater energy content than all of the remaining conventional oil on the planet.

Tar sand, much in the news of late, is simply bitumen mixed with clay, sand, and water. It forms a gritty sludge and cannot be pumped, only excavated in a process somewhat akin to the strip mining of coal.

For many years bitumen was chiefly used for paving, and practically no liquid fuel was derived from it. Now, with the dramatic and seemingly persistent increases in oil prices, the tar sand bonanza has begun in Canada. In the past, many industry pundits insisted that tar sand exploitation would never be economically feasible, but they appear to have been proven wrong. Tar sand is being processed into petroleum products today in Canada at a profit, and the exploitation of this resource has barely begun. In the years to come, millions of barrels a day will emanate from the Alberta tar sand fields.

In order to refine bitumen one must first liquefy it by means of pyrolysis, exposing the semisolid substance to extreme heat and pressure in an oxygen free environment. This additional procedure greatly increases the cost of refining, but is not deemed prohibitively expensive today in the light of current elevated prices for light crudes.

As is the case with the strip mining of coal, tar sand excavation is environmentally destructive, and only the fact that most of the resource is located in particularly barren regions of Canada has muted the protests of environmentalists. At least for the time being, protesters have not succeeded in blocking exploitation of the tar sands.

Oil Shale

Oil shale is misnamed. Actually the term refers to a type of marl, a sedimentary rock that is black in color and oily to the touch. The rock contains kerogen, a precursor to petroleum that forms as compacted biomass is broken down over the course of millions of years. Kerogen is a step further removed from light crude than is bitumen and requires further and costlier processing in order to produce petroleum products, i.e. diesel, kerosene, gasoline, lubricants, etc., but the basic production methods are rather similar. Pyrolysis is utilized to render the crushed marl into a liquid which then is cracked and upgraded to produce light distillates.

Most of the oil shale in the world is located within the vicinity of a single ancient dry lake bed in the Rocky Mountains where Colorado, Wyoming, and Utah meet, an area known as the Green River region. The field is largely but not entirely cohesive, and geologists have identified a number of adjacent outcroppings of oil shale including the Piceance Creek Basin, Uinta Basin, and Washakie Basin. Still, the resource is incredibly concentrated, with solid oil shale deposits going down hundreds of feet into the earth, and extending for mile after mile. The energy content of what is in effect this single mega deposit is believed to surpass that of all remaining conventional oil reserves, and is roughly equivalent to that of the Alberta tar sands.

Oil shale is also found in some abundance in the eastern United States as well, and in Australia, China, Brazil, Israel, and Estonia. All of these nations have undertaken pilot programs to excavate and refine oil shale, and in Estonia pulverized oil shale is used as a substitute for coal in electrical generating facilities.

The economics of refining oil shale into petroleum products are still somewhat uncertain. Because the oil shale has to be literally quarried out of the earth, or alternately melted on site, the excavation process is more difficult and expensive than simply shoveling out tar sand, and the refining process is somewhat more complex as well. Established technologies for processing oil shale—and there are several—are only marginally cost effective even with $50 per barrel crude, but a number of newer processes promise to be less expensive.

Many of the techniques for rendering oil shale into petroleum products consume a great deal of water, and the excavation process itself produces an immense amount of unsightly and toxic wastes and residues. Because the American beds are found in prime wilderness areas, opposition to the opening of the fields has been intense.

Nevertheless, we believe that oil shale will be less expensive to process into liquid fuels than is biomass, and that massive exploitation will take place.

Unconventional Oils in Perspective

Currently, unconventional oils, particularly Venezuelan heavy oils and tar sands, are the area of most intense activity among fossil fuels generally. We expect the dominant position of unconventional oils will remain unchallenged for some considerable period of time because of the size of the resource, the ease with the refined products fit within existing infrastructures, and relative maturity of extraction and processing techniques.