Unconventional Oil

The use of petroleum as a fuel source is standard around the world. Every country relies on this finite resource for a multiplicity of purposes such as supplying electricity, powering and maintaining infrastructure, facilitating transportation, and maintaining national security just to name a few. However, as demand and consumption of petroleum continues to rise on a global scale, concerns over the supply of energy, more specifically our ‘conventional’ petroleum resources, have risen to prominence. Countries around the globe are searching for ways to supplement their energy supply. Many of the potential supplemental solutions are unrealistic in our combustible fuel driven world. One of the more realistic and financially feasible solutions to this problem is tapping into our vast ‘unconventional’ oil resources.

Unconventional oil refers to petroleum that is obtained by means other than what has become the conventional method². There are many sources of unconventional oil around the world. The main sources of unconventional oil include, but are not limited to, heavy oils, oil sands, oil shale, and shale oil¹. 

The unconventional oil known as ‘heavy oil’ refers to crude oil that is extremely viscous, and therefore cannot be easily pumped out of the ground³. Heavy oil is considered to be the remains of former ‘conventional oil’ depositsin which the lighter oil has either already been removed or has degraded beyond usable levels³. The main obstacles to utilizing heavy oil on a commercial scale are issues pertaining to pumping the oil out of the ground and transporting it once it is on the surface³. Overcoming these obstacles has proven difficult, but generally a diluting agent is added to make pipeline transportation possible due to the lower viscosity of the oil³.

Oil sands refer to rock deposits in which bitumen can be found³. Bitumen is a semisolid form of oil that has been degraded³. The largest obstacles to the development of bitumen as a replacement for conventional oil on a commercial scale are the inefficiencies involved with mining and refining it into a usable petroleum product. Using current technologies and practices, it takes around two tons of oil sand to produce a single barrel of synthetic crude oil³.
 

Oil shale is a form of petroleum that exists in shale formations around the world.  Petroleum in oil shale comes in the form of Kerogen³. Kerogen is composed of organic matter found in shale rock and is considered ‘immature’ in the process of becoming conventional petroleum³. The organic material in kerogen has not experienced enough heat or pressure to convert it into liquid petroleum³. In order to convert kerogen into a usable form of fuel it must be heated in a process called retorting³. Commercial development of petroleum production from oil shale is underway around the world, but is inefficient due to the costs and time associated with the process³.

Arguably the most realistic unconventional oil resource is shale oil. The petroleum in shale oil exists in liquid form, but is trapped in tight shale formations that make extracting it from the ground difficult. In order to capture the huge sums of oil in shale formations, hydraulic fracturing and horizontal drilling are needed³. Wells are first drilled vertically, then turned 90 degrees and run laterally through the shale formation. Once drilled, the well is pressurized with ‘fracking fluid’. Pressure in the well builds until it becomes sufficient to shatter the shale formation, which allows the contained oil to flow into the well for extraction. Commercial development of petroleum production from shale oil is being explored by many countries around the world, particularly in the United States where it is estimated that over half of the worlds’ supply of shale oil resides³.

Utilizing unconventional oil on a commercial scale would have a profound impact on the global economy, and especially in the United States. The U.S. is the largest consumer of petroleum in the world. An increase in the world supply of petroleum, assuming demand stays constant, would lower the price of petroleum based commodities, under the fundamentals of supply and demand. A lower cost for petroleum fuels would result in an increase in profits for companies, and as a result improve their performance in the U.S. financial markets.