embargoes of 1973 and 1979. Nevertheless, because of high extraction costs the
resources remained mostly unrecovered until the late 1990s. But since 2001 shale
oil and gas extraction has developed rapidly and taken a central place in the global
oil market. This major rise in shale oil and gas production resulted in a much
different view that analysts and policymakers originally had regarding the future of
the US as a meaningful oil and gas producer. The Department of Energy projected
that domestic oil production in the US would grow faster than consumption in
coming years. Also outside the US forecast models had to be adapted. Even the
International Energy Agency stated in 2012 that the US would become the world
leader in crude oil production by the mid-2020s and would overtake Saudi Arabia
as the world’s biggest oil producer. The Agency also projected that the US would
grow into a net oil exporter by 2030. The fast development of shale oil production
has created a consequential threat to the conventional oil industry both in the US
and in other oil producing countries (OPEC, Russia). When looking at the geographical distribution of shale oil and gas extraction in the US it is notable that the
production is concentrated in only a few regions. More than half of the total US
production is coming from shale fields in Montana, Texas and Dakota. The world’s
largest deposits of oil shale are located in the Green River Formation covering
portions of Utah, Colorado and Wyoming. Also the need of Canada to export heavy
crudes is the consequence of the lack of local refine infrastructure. The process of
refining heavy crudes is quite expensive due to used technologies. In the United
States, for instance, such infrastructure is principally present along the Gulf Coast.
Whether or not to construct controversial oil pipelines connecting the northern oil
shale fields with the southern refineries is thus an essential political decision.
39.4.2 Technical Approach
Oil shale deposits in the US were formed about 400 million years ago (Devonian).
Although the first known extraction process in Europe dates from the tenth century,
shale oil production became widespread in the nineteenth century. Shale oil production processes can be subdivided into open pit mining and surface retorting on
the one hand and in-situ retorting on the other hand; retorting being the process of
extracting oil from shale. Surface exploitations was by far the most developed
process during the 1970s and 1980s but results were rather mixed because of the
high costs involved in the extraction processes. The spectacular production boom
after 2003 was principally provoked by the price increase of conventional crude oil,
making new production technologies very competitive. Improvement in drilling
engineering are likewise fundamental for the expansion in shale oil and gas
production. Those advancements in drilling technology are the result of considerable technological ameliorations in horizontal drilling and hydraulic fracking. In a
first stage the sedimentary rocks containing bituminous materials in solid form are
exposed to horizontal drilling. Next, hydraulic fracturing (fracking) is used to make
fissures and cracks in the rock formation. The latter allows crude oil to outflow from
650
A.C. Thys
resources remained mostly unrecovered until the late 1990s. But since 2001 shale
oil and gas extraction has developed rapidly and taken a central place in the global
oil market. This major rise in shale oil and gas production resulted in a much
different view that analysts and policymakers originally had regarding the future of
the US as a meaningful oil and gas producer. The Department of Energy projected
that domestic oil production in the US would grow faster than consumption in
coming years. Also outside the US forecast models had to be adapted. Even the
International Energy Agency stated in 2012 that the US would become the world
leader in crude oil production by the mid-2020s and would overtake Saudi Arabia
as the world’s biggest oil producer. The Agency also projected that the US would
grow into a net oil exporter by 2030. The fast development of shale oil production
has created a consequential threat to the conventional oil industry both in the US
and in other oil producing countries (OPEC, Russia). When looking at the geographical distribution of shale oil and gas extraction in the US it is notable that the
production is concentrated in only a few regions. More than half of the total US
production is coming from shale fields in Montana, Texas and Dakota. The world’s
largest deposits of oil shale are located in the Green River Formation covering
portions of Utah, Colorado and Wyoming. Also the need of Canada to export heavy
crudes is the consequence of the lack of local refine infrastructure. The process of
refining heavy crudes is quite expensive due to used technologies. In the United
States, for instance, such infrastructure is principally present along the Gulf Coast.
Whether or not to construct controversial oil pipelines connecting the northern oil
shale fields with the southern refineries is thus an essential political decision.
39.4.2 Technical Approach
Oil shale deposits in the US were formed about 400 million years ago (Devonian).
Although the first known extraction process in Europe dates from the tenth century,
shale oil production became widespread in the nineteenth century. Shale oil production processes can be subdivided into open pit mining and surface retorting on
the one hand and in-situ retorting on the other hand; retorting being the process of
extracting oil from shale. Surface exploitations was by far the most developed
process during the 1970s and 1980s but results were rather mixed because of the
high costs involved in the extraction processes. The spectacular production boom
after 2003 was principally provoked by the price increase of conventional crude oil,
making new production technologies very competitive. Improvement in drilling
engineering are likewise fundamental for the expansion in shale oil and gas
production. Those advancements in drilling technology are the result of considerable technological ameliorations in horizontal drilling and hydraulic fracking. In a
first stage the sedimentary rocks containing bituminous materials in solid form are
exposed to horizontal drilling. Next, hydraulic fracturing (fracking) is used to make
fissures and cracks in the rock formation. The latter allows crude oil to outflow from
650
A.C. Thys