Shell has patented a new method for wringing oil from a stone — from oil shale, that is:
Problem was, the prevailing production process — known as surface retorting — was dirty and inefficient. Federal subsidies masked the problems, encouraging companies to build businesses they never would have created on shareholders’ dimes. When oil prices collapsed, so did the economic rationale for shale oil. The day Exxon left town in 1982, turning some communities into ghost towns, is still remembered in northwestern Colorado as “Black Sunday.”The basic problem with surface retorting was that shale had to be mined, transported, crushed and then cooked at 1,000 degrees Fahrenheit. Not only were there toxic waste byproducts, but the oil thus produced had to be purified and infused with hydrogen before it could be refined into gasoline and other products. Vinegar may be a physicist by training, but he thinks like an MBA, and to him such a labor- and energy-intensive process reeked of bad economics.
Wouldn’t it be better, he thought, if Shell could extract a liquid that could be pumped and pipelined instead of a solid that had to be mined and trucked? Upon visiting a Shell surface-retorting site for the first time in 1979, he came to a quick, life-changing conclusion: “Wow, we’re going to have to do this in situ.”
The term “in situ” is Latin for “in place.” In an engineering context, it means liquefying the oil shale while it is still underground. That is what Vinegar set out to do. The Eureka moment came in 1981. During a field experiment in Colorado, Vinegar and his colleagues set up camp on a patch of Shell-owned land where the oil shale was close to the surface. Then they drilled seven 20-foot wells within a 36-square-foot zone.
They inserted heating rods into six of the holes and positioned the seventh as a production well. “It was a very low-budget operation,” Vinegar chuckles. “The oil would drain into the production well, and every morning we used a fishing pole with a little bailer on the bottom to get it out.”
Most of the oil Vinegar and his colleagues collected was, in his estimation, “gunky.” However, Vinegar noticed that when temperatures in the ground were still comparatively low, the oil recovered was light and pure. “It was almost optically clear, and that fascinated me,” he says. “What was it that allowed us to make this beautiful-quality product early on but not later on?”
[...]
Vinegar and the Shell team of chemists, engineers and physicists eventually figured out why the oil they collected early in that 1981 field test was so light and clean and the later samples so dark and dirty. They found that a slower, lower-temperature process — 650 degrees Fahrenheit, versus the 1,000 degrees required in the retorting process — allows more of the hydrogen molecules that are liberated from the kerogen during heating to react with carbon compounds and form a better oil.This was a crucial discovery, because one of the hallmarks of a light oil — the most valuable kind because it costs less to refine — is its elevated hydrogen content.
Best of all, Shell was able to replicate the lab results in several field tests; the most recent one, in 2005, yielded 1,700 barrels of light oil. In that test, carefully engineered heating rods were inserted several hundred feet into the ground in order to gradually raise the temperature of the oil shale to 650 degrees Fahrenheit. Now Shell had a proven technology that it believed could produce a barrel of oil for $30.
It also knew it could recover a lot more oil than surface retorting did, since the heating rods and wells reach the entire deposit, not just the oil shale close enough to the surface to be mined.